Thank you Britt & Rod for participating in our client hero feature and for your questions with regards to investing.

Britt & Rod: What type of investment should someone who is new to investing invest in?

Most of our clients begin by utilizing mutual fund investments. The reason why these products are suitable for beginners is because it provides access to professional fund managers and provides instant diversification. The mutual fund structure will spread each dollar you invest across several different companies, geographies and industries. We look for mutual funds that have long track records (10+ years) and low portfolio management turnover.

As a beginner you should have access to global equity mutual funds that have Management Expense Ratios (MERs) of less than 2%. This of course, is assuming that you are investing with the advice of a financial adviser. If you set up a portfolio on your own this ratio will be much less. If this is the path you choose we recommend that you are selecting an appropriate mutual fund for your investment objective and are comfortable with the risk profile.

What type of investments do you recommend to business owners who don’t have a pension?

Most small business owners do not have access to a workplace pension (other than the Canada Pension Plan) and the key, we think, is to start contributing to an investment account either inside a holding company (if incorporated) or within a RRSP/TFSA, using the same approach outlined in our response to your question above. With that being said, one of the biggest advantages that employer-sponsored pension plans have in comparison to setting up your own plan is that the contributions are forced and consistent. So, the main piece of advice we would give business owners is to set up automatic contributions and try to stick to them as much as possible.