Warren Buffett once said that what takes a lifetime to build takes 5 minutes to ruin… but learn to invest like him and maybe you’ll also avoid this path. Some people think that to be a good trader you must buy and sell at a frantic pace everyday. those people are what I like to call – wrong. The best investors not only in North America but all over the world know that long term is the theme of success.
The first thing you do when you want to invest is to find a company that you know and understand. If you generally can’t explain a company’s products’ use and target then it’s probably a company that won’t last. You brush your teeth – invest in Colgate Palmolive. You use everyday health and cosmetic products – invest in Johnson and Johnson. You drink a cold soda – invest in that drink brand. The companies I just mentioned need no introduction but when I mention Canadian companies I will give a general history.
The advantage of stocks is not only that given it is a well established company that it will have growth but also that stocks pay dividends unlike savings accounts and casino bets. Look at a company’s dividend history right before you purchase shares. The biggest banks in North America generally pay dividends over several decades while increasing the yield consistently. Now here’s the most important point – always sign up for DRIPs. DRIPs mean your dividends are reinvested. A 20 year old who makes a $5,000 dollar stock purchase will make $600,000 more by retirement – do the mathematics.
Since Canadian companies haven’t been mentioned here are three Canadian stocks that should be in your portfolio.
The Bank of Nova Scotia serves over 21 million customers in more than 50 nations worldwide and has a broad range of products and services including normal, commercial, business and trading. Consumer-lending increase was boosted by Scotiabank’s $3 billion acquisition of ING Direct Canada this year, which boosted loans and added about 2 million clients.
Royal Bank of Canada started in the 1860s in Halifax of the east. It is the biggest financial institution in Canada. RBC is known as the biggest Canadian company by sales by a top newspaper and was named as a top contender on Forbes magazine. They have consistently raised their dividend over the past century.
Enbridge has the globe’s biggest oil pipeline system, found in North American countries. Enbridge’s solar energy efforts are the largest, and contend in wind energy market. Renewable energy production is steadily growing for enbridge.