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Most common mistakes people make with their finances

There are a few common mistakes that people make with their finances.

  • Being overconfident - when the market rises, rises and rises it seems that everyone knows how to pick the winners. This is only determined when the market drops like it always does.

  • Staying the course - when the market drops the most important thing is to not sell your position unless absolutely necessary. This only locks in your loss and takes you out of the market for the eventual recovery. It is possible to time the market recovery, but extremely difficult.

  • Having the wrong system for investing - it is imperative that your goals, financial knowledge and risk tolerance are aligned with your investing system. There are basically three ways to invest - Do it yourself, robo advisor or a financial advisor - and you need to make sure that you are using the one that is best suited for you.

  • Using the wrong savings account - do you know the difference between a RRSP, RRIF, TFSA, LIF, etc? Each one has unique characteristics that make them ideal for certain situations and not for others. You need to make sure that your accounts are optimized for your situation now and into the future.

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