Like I mentioned in my first post, I have about half of my money currently in GICs. More specifically, I have it in an Oaken Financial One Year GIC with an interest rate of 2.75%. Now, this is a great interest rate (especially for only a one year term), but unfortunately Oaken no longer offers these interest rates. The highest interest rate they currently offer is 3.00% with a five year term, you can find their rates here: https://www.oaken.com/gic-rates/.
The GIC I own is obviously very safe, but I am willing to risk more to gain more. This is why I am going to enter the world of stocks and throw my money at speculation…well hopefully not, I’m not buying any bitcoin, don’t worry. I plan to focus on companies with a high market cap and good dividends, also known as blue chip stocks. I don’t plan on making huge gains but hopefully I will not lose much either. This will be true unless we experience a large correction in the markets, which isn’t ridiculous with the high valuations we are currently seeing. Regardless, these investments will hopefully be long term and I will likely hold them while prices bounce back in the case of a crash.
I also plan on buying a simple S&P 500 ETF such as SPY offered by SPDR (see our stock recommendations). The Motley Fool Investment Guide highly recommends this strategy, and I recommend anyone interested in passive investing to read this book. They explain how this strategy relives you from some volatility by allowing for you to greatly diversify your assets into 500 different companies. An ETF also offers much lower interest rates as compared to mutual funds allowing you to keep more of the money you make where every fraction of a percent counts in the long term (I plan on posting about this in a later article). It is also known that most funds created by fund managers fail year after year to outperform the market, and with long term average growth of 7-10% a year, I would happily match the market rather than pay someone 2% to underperform.
I plan to begin my entrance into the stock market come January, and will likely will not dump all my in at once. I will wait for prices of specific stocks to lower in order to create a better deal for myself, though I will not wait too long as I would like to minimize the amount of time my money is in cash. As for the specific stocks I plan to purchase, I plan to introduce them one by one on this blog and break down the specific reasons I like them. Thanks for reading and stay tuned for more.