Investing basics Getting started

money into stocks, bonds, mutualfundsand real estate, to name justa few.<br><br> Each ofthese has prosand cons, which we discusslater in thisguide. Whatinvesting isnot Investing isnota get-rich-quickscheme and itisnotgambling. Gambling isputting your moneyatriskbybetting on a random outcome with the hope thatyou mightwin more money.<br><br> Wise investorsdon 9tleave itto chance. They have a plan and commitmoneyonlywhen theyhave a reasonable expectation ofprofit. Yes, there isstillriskand there are often no guarantees, butinvesting should be more than hoping luckison your side.<br><br> Whyyou need to be involved The bottom line isthatit 9syour moneyand who willcare more aboutyour moneythan you? No matter who 9sactuallyhandling your investments, onlyyou willknow ifyou are comfortable with the investmentchoices. And it 9sup to you to stayon top ofyour investmentsto make sure theykeep working for you.<br><br> On the following pages, you 9llfind these tipsto help you getstarted: "know where you 9re going with your investments "know who you 9re dealing with "know whatyou 9re investing in "know where to go for help 1 StatisticsCanada. October 15, 2007. Pension Plan in Canada and Labour Force Survey.<br><br> 3 Know where you 9re going with your investments Everyone hasa differentidea ofwhatmoney meansto them 4personalfreedom, a sense ofsecurityor the abilityto afford the things theywantin life. Having a plan can help you getwhere you wantto be. Know whatyou wantto do Lookatthe bigger picture.<br><br> How do you see yourselfdown the road? Setfinancialgoalsby writing down whatyou wantto accomplish and bywhen. Some examples "Make a down paymentof$25,000 on a house in two years.<br><br> "Contribute $10,000 toward your child 9s education in 10 years. "Retire in 15 yearswith an income of $50,000 a year for atleast20 years. Know who you are Each investmenthasitsown characteristics and some investmentswillbe better suited to you than others.<br><br> When you understand who you are asan investor, itwillbe easier to make the choicesthatare rightfor you. How much riskare you willing to take? Your abilityto take on riskiskeyto finding outwhatworksfor you.<br><br> In investing, the higher the potentialreturn, the higher the risk. There 9sno such thing asa high return, risk-free investment. Ifyou wanthigher returns, you have to be prepared to accept the risksthatgo along with them.<br><br> Your tolerance for riskmaydepend on: "whatismore importantto you 4keeping your moneysafe or seeking higher growth "when you need your money "how you reactto the upsand down ofthe markets "ifyou have anydebts "ifyou have anyother sourcesofincome to fallbackon For manypeople, the tried and true testis whether theycan sleep atnight. How comfortable are you investing on your own? Your desire to do your own research and selectinvestmentsisanother important consideration.<br><br> How much time are you willing to spend sorting through investment choicesand keeping up with the markets? How confidentare you in your investment knowledge and abilityto carryoutyour decisions? Ifyou need some guidance, you maywantto seekthe servicesofa financialadviser.<br><br> Finding the moneyto invest Your age, personalcircumstancesand financial situation willaffectyour abilityto reach your goals. The CSA 9s Yourinvestmentplanning worksheet can help you figure outwhere you are now financiallyand how to find the moneyto puttoward your goals. Know who you 9re dealing with Ifyou decide thatinvesting on your own is notfor you, your mostimportantinvestment decision maybe choosing the rightadviser.<br><br> How to find an adviser Askfriends, family, workassociatesand other professionalsyou trust, like your accountantor lawyer, for referrals. Keep in mind thatwhat 9sgood for one person may notbe good for another. You can also contactyour localsecurities regulator to find outwho isregistered in your area.<br><br> The MutualFund Dealers Association ofCanada (MFDA) and the InvestmentIndustryRegulatoryOrganization ofCanada (IIROC) can give you a list ofregistered member firms. You can also contactthe InvestmentCounselAssociation ofCanada (ICAC), the FinancialPlanners StandardsCouncil(FPSC) or the Institut québécoisde planification financière (IQPF) for additionalinformation. Whatto lookfor You maywantto interview a few advisers before you make your decision.<br><br> Choose an adviser who hasthe necessaryqualifications and experience, who isregistered with your localsecuritiesregulator and who you believe istrustworthy. Justasimportantis choosing someone you are comfortable with. A good adviser willwanta clear understanding ofyour financialsituation and your goals, explain how theyplan to help you reach them and review the plan with you atleast once a year.<br><br> Askand be sure Before you sign on with an adviser, ask: "Whatisyour education and professional experience? "How long hasyour firm been in business? "How long have you been with the firm?<br><br> "Are you and your firm registered with a securitiesregulator? "Whatproductsand servicesdo you offer? "How willyou help me reach mygoals?<br><br> "How often willyou contactme or meet with me? "How are you paid for your services (salary, commission or flatfee)? "Can you give me referencesfrom clients who are like me?<br><br> Follow up with your localsecuritiesregulator to find outifthe adviser isregistered. They can also tellyou ifan individualor firm hasa record ofanydisciplinaryaction. The CSA 9s Working with a financial adviser guide has more information abouthow to find an adviser who is rightfor you and whatyou should expectfrom the relationship.<br><br> 4 5 Know whatyou 9re investing in Aswe mentioned earlier, there are manyways you can investyour money. While there are thousandsofinvestmentsto choose from, in general, each willfallinto one ofthe four main categoriesbelow. These categoriesare also called cassetclasses d.<br><br> Cash and cash equivalents Thisincludesmoneyin your bankaccount and ccash-like d investments, such as Canada savingsbonds, treasurybillsand moneymarketfunds. These are generally verysafe and give you quickaccessto your money. However, theyhave relativelylow ratesofreturn compared to other kindsof investments.<br><br> Fixed income securities Bondsand other cfixed income securities d are investmentsthatare based on debt. When you buya bond, you are lending your moneyto a governmentor companyfor a certain period oftime. In return, they promise to payyou intereston your money and to repaythe cface value d atthe end of the bond 9sterm.<br><br> The face value isthe value ofthe bond when itwasissued. Manyfixed income securitiescome with a guarantee and are relativelysafe. Theytend to offer better ratesofreturn than cash- equivalentinvestmentsbecause you 9re taking on more riskbylending outyour moneyfor a longer period.<br><br> Other bonds, like cjunk d bonds, offer much higher ratesofreturn, buttheycan be veryriskyand have no guarantees. Equities When you buystocksor cequities d, you become a partowner in a business. You maybe entitled to vote atthe shareholders 9 meeting and willreceive anyprofitsthe companyallocatesto itsshareholders.<br><br> These profitsare called dividends. You can make moneyon a stocktwo ways: if the stockincreasesin value and ifthe companypaysa dividend. However, there are no guaranteesthata stockwillmake money or thatthe companywillpaya dividend.<br><br> The value ofa stockcan go up or down 4 sometimesfrequentlyand sometimesbya lot. The CSA 9s Investmentsata glance brochure describesin more detailvariousinvestmentsunder each category. Whataboutmutualfunds?<br><br> Mutualfundsare simplya collection ofinvestments from one or more assetclasses. Each mutualfund focuseson specificinvestments, like government bonds, stocksfrom large companies, stocksfrom certain countries, or a mixofstocksand bonds. The levelofriskand return ofa mutualfund dependson whatitinvestsin.<br><br> When you buya mutualfund, you 9re pooling your moneywith manyother investors. The main advantagesare thatyou can investin a varietyof investmentsfor a relativelylow costand leave the investmentdecisionsto a professionalmanager. 6 Know whatyou 9re investing in Compared to fixed income securities, stocks can provide relativelyhigh returns, butyou mayalso have a higher riskoflosing some or allofyour investment.<br><br> Alternative investments These include thingslike options, futures, foreign currencies, hedge funds, gold and real estate. Theyrepresentsome ofthe most complicated typesofinvestments. For this reason, theyusuallyhave higher-than-average riskin return for higher-than-average return potential.<br><br> Alternative investmentsare typically meantfor sophisticated investorswho can afford to take high risks. Getting the rightbalance Notallinvestmentsperform wellatthe same time. Differentinvestmentsreactdifferently to world events, factorsin the economylike interestrates, and businessprospects.<br><br> So when one investmentisdown, another might be up. Having a varietyofinvestmentscan help offsetthe impactpoor performersmayhave on your portfolio, while taking advantage of the earning potentialofthe rest. Thisis called cdiversification d butit 9sreallyjust putting into practice the old adage of cnot putting allyour eggsin one basket d.<br><br> First, you need to decide on the assetmix. The rightbalance willdepend on your goals, when you need your moneyand how much riskyou are willing to take. The nextstep is picking the specificinvestmentsin each assetclass.<br><br> Ifyou 9re notcomfortable doing these thingson your own, you maywantto consultan adviser. Be an informed investor One wayto help protectyour moneyisto be an informed investor. Whether you have an adviser or investon your own, askthe following questionsbefore you buy: "How willthe investmentmake money?<br><br> Doesitpaydividendsor interest? Doesithave the potentialto go up in value? Ifso, whatneedsto happen for it to go up in value?<br><br> "Whatare the totalfeesto buy, hold and sellthe investment? Do you have to pay a penaltyor fee ifyou have to sellthe investmentquicklyor before itsmaturity date? "Whatare the specificrisks?<br><br> Could you lose some or allofyour investment? In general, the higher the expected rate of return, the greater the risk. "How easywould itbe to sellthe investmentifyou needed your money rightaway?<br><br> "Doesthe investmentfitwith your goals and risktolerance? Never investin anything thatyou don 9t fullyunderstand. Take your time making investmentdecisionsand never sign documentsyou have notread carefully.<br><br> The CSA 9s Take notes! notepad can help you record detailsofphone callsor meetingswith your adviser and anyrecommendationstheymake. 7 Know where to go for help Membersofthe Canadian SecuritiesAdministratorswww.securities-administrators.ca Alberta SecuritiesCommission www.albertasecurities.com (403) 297-6454 1-877-355-4488 British Columbia SecuritiesCommission www.investright.org (604) 899-6854 or 1-800-373-6393 (BC& AB only) Manitoba SecuritiesCommission www.msc.gov.mb.ca (204) 945-2548 1-800-655-5244 (MB only) New BrunswickSecuritiesCommission www.nbsc-cvmnb.ca (506) 658-3060 1-866-933-2222 (NB only) FinancialServicesRegulation Division Newfoundland and Labrador www.gs.gov.nl.ca (709) 729-4189 NorthwestTerritories Registrar ofSecurities www.justice.gov.nt.ca/SecuritiesRegistry (867) 920-3318 Nova Scotia SecuritiesCommission www.gov.ns.ca/nssc (902) 424-7768 NunavutRegistrar ofSecurities (867) 975-6587 Ontario SecuritiesCommission www.osc.gov.on.ca (416) 593-8314 1-877-785-1555 Prince Edward Island Office ofthe AttorneyGeneral www.gov.pe.ca/securities (902) 368-4550 Autorité desmarchésfinanciers (Québec) www.lautorite.qc.ca (418) 525-0337 (514) 395-0337 1-877-525-0337 Saskatchewan FinancialServicesCommission www.sfsc.gov.sk.ca (306) 787-5645 Yukon Registrar ofSecurities www.community.gov.yk.ca/corp/secureinvest.html (867) 667-5225 Securitiesregulatorsoversee Canada 9scapital marketsand the adviserswho selland manage securitiestraded in those markets.<br><br> We strive to protectinvestorsfrom unfair, improper and fraudulentpracticeswhile fostering a fair and efficientmarketplace. Our free, objective guidescan help you learn more aboutinvesting, how specific investmentsworkand choosing an adviser. They 9re available on the Canadian Securities Administratorswebsite at www.securities-administrators.ca or by contacting your localsecuritiesregulator listed below.<br><br> Your investmentplanning worksheet Investmentsata glance Working with a financialadviser Take notes! notepad Understanding mutualfunds Protectyour money: Avoiding fraudsand scams

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