Are you an investor? It’s a simple enough question, but one that a surprising number of British Columbians answer “no” to, even though the majority of them are.
Indeed, according to a new study by the BC Securities Commission (BCSC), almost three quarters of Vancouver Island residents (71%) have investments of some kind, yet only 35% see themselves as “investors”.
Now no one is expecting you to be the next Warren Buffet, but this information is troubling nevertheless, especially because investors who don’t see themselves as “investors” may be unnecessarily limiting their investing potential, or worse, negatively impacting it.
“The study results are concerning because, if you have investments, you really are an investor,” says Pamela McDonald, Director of Communications and Education at the BC Securities Commission. “We want people to adopt that mindset – to feel empowered to do the things that lead to good investment outcomes.”
Understanding the importance of investment fees
One of the best opportunities for making the most of investments is in the area of fees, where small differences can add up to a big impact.
Even a 1% difference in your investment fees can leave a significant dent in your financial future. For example, by paying 2.5% rather than a 1.5% fee on a $50,000 investment, you could reduce total returns by more than $17,500 over 20 years. That’s a lot of money that isn’t making its way into your pocket.
“We all have to pay investment fees, but it’s important to understand what you’re paying for and what you’re getting in return,” says McDonald. “We want people to understand that they have choices available to them. We know, for example, that when you go to buy a car you won’t hesitate to ask questions about fees or commissions, and people shouldn’t feel anxious about asking those same questions when it comes to investments.”
Since 2016 investment firms have been required to provide investors with annual investment statements that outline the fees they paid in the previous year. It’s important that British Columbians not only consult these reports, but also ask questions about them.
What are your fees? Are they negotiable? What are you getting in return? Is there another product that could offer the same return for a lower fee? These are all examples of the kind of questions you can ask to ensure that you are getting the most bang for your buck.
Knowledge is power
Whether you’re working towards something short term like buying a new car or planning for the long haul by getting ready for your retirement, investing is a great way of reaching your financial goals. Whatever you’re investing for, one key to success is understanding what you’re investing in.
“They say that knowledge is power, and nowhere is that more true than when it comes to the world of investing,” says McDonald. “Reliable investment advice is not hard to come by when investors turn to a registered investment advisor,” says McDonald.
During the course of their study, the BCSC found that British Columbians are not sure where to look for reliable, unbiased information about investing. In fact a staggering 71% of those questioned said they aren’t sure where to look for independent investment information.
"You can’t make informed decisions without reliable information,” McDonald says.
The BCSC’s investor education website at InvestRight.org, has all the information you need to make sure your investments are working for you. Alongside advice on fees and various financial products; the website also offers interactive calculators, tools and quizzes that are designed to help you make more informed decisions about your investments.
"We want to help people feel like they are investors,” adds McDonald, “because when they think like that, they’ll do the right things.”
Useful information
www.InvestRight.org - Your one-stop-shop for information, tools, and insight into the world of investing.
www.InvestRight.org/informed-investing/know-your-advisor- A great resource for understanding your relationship with your investment advisor and how to get the most from it.
www.youtube.com/BCSCInvestRight - Filled with easily digestible videos offering advice and guidance to investors whether they're hardened experts or complete beginners.
