T Nation

Starting Investing


I planning on starting to invest, and I am having a hell of a time figuring things out. I live in Canada, so if anyone is familiar with how things go around here, please give me a hand.

In terms of brokerage, I'm considering CIBC investors edge, because I can't find (ordon't know how to find) any better alternatives. The fee for the account is $15 per quarter, which is waived if the account is worth more than $5000. They offer no-commision purchase and sale of CIBC mutual funds, and a seemingly reasonable commission on trades of stock and precious metals.

My biggest concern is "is it worthwhile?" I obviously don't have enough money to go into stocks (I have $1000, maybe up to $1500 that I don't need for life sustaining essentials for the next 3.5 months, and after that I don't know what will happen. I will be briefly entering the workforce for around 8 months, but wage/salary is impossible to predict. It will likely be between $6.50/h and $20/h, with the lower end being much more likely (at 6.50/h 40h/week I can save about $400/month). What I am afraid of is my account fees (since it will be a while before a have over $5000) will take up a significant portion of my gains, making the return lower than even a GIC.

If anyone, particularly anyone that has started investing with extremely low net worth, has any advice, I would greatly appreciate it.


This is probably not the answer you are looking for, but IMHO the right way to spend it is education.

You are young and bright so this should pay off tenfold. Try to beat this with stock markets returns.

What KIND of education is tricky. Maybe one or two months of an unpaid internship at an organisation that interests you? I think this would be the kind of education you could get with 1000-1500 $ and it could lead to other opportunities.

If you invest it in stocks, what will you make in a year 200-300$, if you are really lucky ? If you play it smart now you will blow your nose with 200$ in ten years.


To put it short: The stock you really should invest in at your stage is you.


First of all why are you going to be working only for the next 8 months? What will you be doing after that? Also the brokerage you refered to sounds like a discount broker, the cheaper the better.
Assuming that you will have a steady source of income and you aren't going to remove yourself from the work force after 8 months i would advise that you first find out how much you need to live off for 3-4 months assuming that you had no other income in case you lost your job or got laid off. Next in order to find out how you should invest we need t o know more about you: How old are you? Do you have a wife and child(ren) that you need to provide for? ect Do you have any financial goals , like buying a car or a house or sending your kids to college.


Sorry guys, I should have provided more information. I am a student, in my last semester of a 5 year undergraduate program (psych/business). I graduate in dec, and will be in the workforce until next sept, when I'll start a graduate program in organizational behaviour. The investing in my education/myself part is covered. I live with my gf, who is a recent graduate, also waiting to start grad school, and she supports herself (although whoever has more money does provide for the other at times). No kids, no house, no car, and no plans on getting any of these in the next few years.

I've wanted to invest since I was around 16, but at first was unable to, and later was just too intimidated to start. It has been frustrating, since every stock I seriously wanted to buy (or tried to talk someone into buying for me) ended up being a winner (RIM being the biggest winner), but it's probably for the best, since I really didn't know what I was doing. I have since gotten plenty of book learning on it, and I got a part-time job analyzing capital structures in major canadian firms (I start in a couple of weeks). However, I obviously still don't know what I'm doing, but I'm better off learning playing with peanuts now, and use this experience for when I have some real money to play with.

What I am considering is taking out a student line of credit (no principal payments while in school +1yr after finishing) and using it to leverage my investment. Depending on what kind of a rate I can get, this may be a good idea, since I get awesome student specials on the line of credit, but get full returns on the investments. It's pretty high-risk, I know, but I think it may be worth exploring.

The other thing I am considering is being conservative, and just working with what I have now, trying to create a base of capital to work with later.


Based on the rest of your post, I don't agree that you self-education is covered.

Very few individuals are successful at picking individual stocks to consistently beat market returns. It's bordering on gambling. But I won't discourage it if you have your mind set on investing in this manner, just tread carefully.

In the first paragraph you admit that you don't know what your doing and then in the second paragraph you mention that you think your taking out a line of credit and gambling it in the stock market? Are you f*ing crazy? This is a recipe for failure. This is absolutely the worst thing you could do. Look, I don't want to dampen your enthusiasm for the stock market because it's an excellent way to invest your money but never do it with borrowed money. That is insanity.

I can almost guarantee if you start borrowing money to invest that you will be broke in a few years time. Guaranteed.

This is the best idea you've written. Why not diversify your money in some mutual funds and grow your base of capital over time. I don't see anything wrong with taking a portion of your money (say 10%) and picking individual stocks to see how well you do over time. If you lose it, no big deal because you have a majority of your money in diversified funds with much less risk. Just my 2 cents.


Bear in mind this is advice from a non-guru:

Most investments require a long-term commitment otherwise you get heavily penalized for removing funds.

Just get a nice high-interest savings account for now. The account I have is through ING, and my interest rate is almost as high as CDs are at this point.

The nice thing about a savings account is that taking money out at any time is fine. Since you have possibly unstable income issues, this seems like a reasonable alternative.

PM me if you want more info on ING.


Randman, could you elaborate on your opening statement? What do you mean when you say you don't think I have my investment in my education/self covered? What would you suggest doing to correct this? I maybe I wasn't clear enough, I definately would not borrow to invest in stocks. Simply put, I don't have the time to manage a portfolio. What I had in mind was mutual funds. This is why I said it's probably best I didn't get into investing earlier, when I had in fact picked winners, because I just didn't understand the economics of what was going on. Right now, I sort of do, but the practical aspects of it are what I need to learn.

I have always had a propensity for high risk investing (I have made, even as a child, some "unofficial" investments, and made some nice pocket change doing it), so long as the risk is reasonable. The reason I think a line of credit may be reasonable is I wouldn't have to repay it until I finish school, and I am going into a field that is extremely well paid. Obviously, I'd rather not lose money, but if I did, it wouldn't be the end of the world.

The biggest factor will be what kind of rate I can get on a line of credit. If it's lower than I would expect the return on my investment to be (NOT individual stocks), I might give it a shot.

In terms of savings accounts, that's a bit tough. I don't have much to work with, and it's really not a winning proposition. I'd actually have a much greater return if I stopped buying olive oil than if I put every cent I have into a savings account. In addition, since I will be doing all my banking within the same group of companies, I wouldn't have any transfer fees or buying/selling fees for mutual funds.

I don't know, it's going to take a fair bit of research to come to any decision. The conservative approach seems unlikely, because I just have so little to work with at the moment. Taking this approach should be much more likely next year, however, as graduate studies in my field are very well paid.



1) Listen to randman

2) You are fucking nuts if you want to take out a loan to leverage your investment. The only reason I could see you doing that is if you wanted to max out a no interest loan, and then put it into something with 0 risk like a CD. That's a quick way to make some cash, but it might not be worth paperwork. Not sure if this is allowed either.

3) Get a handle on all of your expenditures. You aren't going to do better than an 8% average for investments and may do much worse. I am really baffled by people with credit card debt or high cellphone bills who ask for investing tips.

3) Go to www.fool.com and read up.

4) I personally like a mix of low-cost index funds. I personally have some S&P 500, a natural resource index, and an international index(very poor right now but that will change over time). If you have a variety of index funds, you can limit your risk to one market. In my case while my S&P went down, my international fund went up. I then rebalance my profolio every year so that I sell high and buy low. Eventually I will start picking individual stocks, but only in industries I know very well.

Seriously though you deserve to have your diploma revoked if you take out a loan to buy stocks.



Read Robert Kiyosaki's Rich Dad Guide to Investing. Cool stuff. Try Rich Dad poor Dad if you haven't read that either.
Take it easy.


I'll take a look at fool.com

There is a difference between giving advice, and being a prick. This post is really on that line. You are making crazy assumptions about me that jsut aren't warranted. I don't have a cellphone, I have paid $1.54 of credit card interest in my life, and then only because I never got the statement one month. My expenditures are rock-bottom (about $550/month for everything), there is no minimizing that.

Saying my diploma should be revoked, that's just unnecessary. Willing to take high risk really isn't the same thing as being stupid. And it is never, ever stupid to consider doing something. After I get some quotes on rates, and explore various funds, then I'll make a decision. Frankly, I think it's much worse not to consider something because you've decided it's a bad idea.



I wouldn't put to much faith in anything Kiyosaki has to say.


I will elaborate. First, very few people are covered when it comes to investment education. And it's not like you reach this "enlightened" stage of knowledge where you don't need to learn any more. Education should be a life long journey. And the biggest reason I say you are not nearly educated enough to make calculated risks in the stock market is based on your comments below.

You say here you wouldn't borrow money to invest in stocks but 2 paragraphs below that is exactly what you are proposing to do with a line of credit. This is absolutely crazy, borrowing money on credit and investing in the stock market is asinine. I don't know how much clearer I can make it.

This is what I mean when I say you don't have your self education covered yet. You even admit you have a lot to learn. Most people that pick individual stocks are not nearly educated enough. It's usually gambling. Do you know the factors of what it takes to pick winning stocks and if so what are they? Are you looking at balance sheets, how much of the company's assets are listed under the intangible category or good-will? How do the company's intangible assets change from year to year? How does it compare to other company's in similar industries? How much working capital does the company have?

Do you know how to calculate this? How has it changed year over year? What is the ratio of current assets to current liabilities? Do they have an unusually large receivables compared to their industry? How much cash do they have on hand? Is most of this cash dedicated to reserve accounts? What about their earning statements? How does that compare year over year? When is a stock a good value? Do you look at price to earnings ratio only? How about price to sales? Do you understand everything I just talked about? If not, your stock picking is going to more resemble gambling than it is educated stock picking.

This is where you can get yourself in real trouble. When your looking for a potential line of credit to invest in the stock market it is the same as borrowing money to invest in stocks. Something you said you wouldn't do just a couple of paragraphs previously.

You seem to be looking for a quick fix. I don't have much money so I'm going to gamble it in hopes of a high return. You'd be much better off taking the little you have and start investing in diversified funds now and continue to add a portion of your money every month (even if it is just $50) to take advantage of dollar-cost averaging. You are young but impatient. Start investing a little now and will become a lot of money later. Successful investing isn't a game that you give a year and hope you make money. Successful investing is a long term proposition (10, 20, 30 years) that takes patience, consistency and fortitude and at some point later in life you will indeed become very wealthy.


OK, so it seems that you don't have any debt. That's good. Soco's advice shouldn't be ignored however. He made one assumption that wasn't correct (your potential debt) but everything else about his post was spot on. You can choose to ignore all the advice given here, that's your choice. But believe it or not, Soco and myself are just trying to be helpful and save you some headaches now and have you avoid unnecessarily losing money instead of risking it for the "hopes" of a high return in a short period of time.


randman, I truly do appreciate your position. My complaint with soco was he has unnecessarily abbrasive in his response. It may very well be a bad idea, and if it is, I won't do it.

When I said I have my education covered, I ment in terms of a primary means of making money (a career), not in terms of my knowledge of investing. That being said, I do know how to compare stocks, price them, determine and compare ratios, and all that mess. Like I said, I just got a job analyzing the capital stucture of firms, and it was given to me because I routinely got the highest grades in my finance classes. I do admit, however, that I have a lot to learn, and a shortage of time (since I am working on a couple of studies right now) and that's why, right now, I would find a good fund manager to do it for me.

Your point on the foolishness of borrowing to invest is well taken. However, I have also heard the opposite position, and the people that hold that view would call you overly conservative. The reason I am considering it is that, as a student, I have access to awesome loans. If I were to get 3% while in school, going to 15% a year after I start working (which would be in about 7 years, during which I would likely be getting 20-30k a year as a grad student), it would be kind of foolish not to take it, since the odds of any well managed fund, diversified fund not getting over 3% a year average over 7 years is pretty low IMO. Obviously, this is hypothetical and unlikely. I will be in the bank on monday to see what kind of rate I would get, since I could use a line of credit anyway, for when I move away.

Your point on my impatience is also taken. However, another way of looking at it is my time frame is much longer than yours, and I can take high risks right now and get away with it, since it should, in the long term, be a winning proposition.

Thanks for the advice, however.


Hey Bro,

Go to www.smartinvestment.ca

Leveraging isn't so risky when done right, but since you are starting don't do it.

If you want to put your money into something that will a nice divident try peyto energy. pey/un.to

Right now, you should be in GOLD. The sector is turning around, look at NEWMONT the largest gold producer for clues. The large producers always break out before a big move in gold.

I would recommend

CSG.TO Capstone Gold
PBX.V International PBX Ventures



Congratulations on surviving school with so little debt, it sounds like you know how to keep your expenses in control as well. I would wait until you have 3-4 months of living expenses that would allow you to live in case you lost your job which i already mentioned, stick it in a savings account.

You have to figure out what you are saving for first of all. Is it retirement? a car down the road? a wedding b/c you wont want too much risk and then let it go to waste if the market crashes next year. Assuming its retirement, at your age start off with a more aggressive mutual fund , the added risk will allow you to have a higher rate of return.

Your going to have to research it yourself and find out the minimum amount that you can buy shares in and find something that will work for you i would think it would be from $2000-$5000 but i dont know that. Assuming all of this is for retirement again; you won't ever want all of your retirement money in an agressive fund so you may want to put something like %50 in the agressive fund , %35 in a bond fund and %15 in a money market fund most of which allow you to write checks against the balance.

The money market fund is to be a safegaurd in case you run into a emergency w/ financial implications and need the cash quick. This would keep you from having to go into debt in the first place.

Another alternative would be to ignore what we are saying and bring that $5000 you will have saved up to an Edward Jones Rep or any fee-only financial planner, they will be better able to assess your financial situation but as a finance major if you fill confident enough to do it yourself it should be beneath you to go visit a Financial planner and the do it yourself would be just as good if you figure out how to do it right.

With all of these finance classes you have never taken a financial planning class? Its an easy easy A but one of the most practical you can take because its your finances that are on the line. If not, find some financial planning books like the Rich dad poor dad that was suggested, or suze orman stuff , or you can find textbooks for financial planning classes these will give you the finer points of what you want to do. Good luck!


I'm not "saving" for anything, that's why I feel free to take high risks. I have lived my whole life on $10,000 a year or less (mostly less), and my parents lived most of their lives in Cuba and the USSR. Consumerism just isn't something I was ever exposed to, and I have no interest in buying a house on the hill, having a shiny car, or filling my apartment with junk. I just think business is fun.

Oh, and I'm sorry if I gave the impression I have no debt, I actually have a huge government student loan (I think it's around 45k, and I shouldn't be needing any more). This loan is tax-free while I'm in school, and about half of it may be converted into a non-repayable grant. Also, the interest is tax-deductable, and I think I have about 50k worth of tuition tax credits.

It's not something I worry about too much, since I expect to have most, if not all of it paid off before I enter the work force (remember, I live on 10k a year).

The way things are looking, and based on all the advice, I am most likely going to go the more conservative route, and put the money I have now into a well managed mutual fund. I am considering putting it into a (canadian) energy-focused fund, since I expect the energy crisis to keep getting worse, and as such energy firms doing better and better. Any thoughts? I'm afraid this is a bit too specialized.


Yeah , any business that includes oil refineries... which are running at max capacity and can sell their refined oil for high dollar. Also alternative energy companies are a growth industry b/c oil prices are so high. or toyota b/c of their hybrid vehicles which will be very popular soon.


One paragraph from a current book I'm reading sums up my feelings on investing:

The art of investment has one characteristic that is not generally appreciated. A creditable, if unspectacular, result can be achieved by the lay investor with a minimum of effort and capability; but improve this easily attainable standard requires much application and more than a trace of wisdom.

If you merely try to bring just a little extra knowledge and cleverness to bear upon your investment program, instead of realizing a little better than normal results, you may well find that you have done worse.

Also, 98% of active money managers have been unable to beat the average stock market returns throughout history; what makes you think your different? Just food for thought.

Although I can be classified as conservative investor it is certainly not becuase of my advice in this circumstance. My advice to not to take out loans to gamble on the stock market is actually common sense and is not based on a conservative investing outlook. I'd question these "others" that you are listening to. I'd be real interested what has been their stock market returns over the last 10 to 20 years.

No, I don't care if their "picks" went up 68% in the last 3 months, but the thing you should care about is have they consistently beat the average stock market return over a 10 to 20 year period. I'd bet my house the answer is no.

Hey, it's your money dude. Take all the risks you want. But to assume the "market" is not going to go down over the next few years as you invest your borrowed money is an extremely risky proposition.

Why you should know that after living through the dates of March 2000 to October 2002, when U.S. stocks lost 50.2% of their value-or $7.4 trillion. And to think we are out of the woods yet, stocks are still considered overvalued by many compared to historical measures.

You missed my advice on this one. There is a difference between calculated risks and speculative risks on borrowed money. Speculative risking of borrowed money doesn't get less risky over time. There is a huge difference between investing with a long term horizon and just speculating. Again, do what you want. You already seemed to have made up your mind. No need to respond to this post. I'm done giving advice on this thread. Good luck.