Your Complete Guide to Index Investing with Dan Bortolotti

Why Practice Doesn’t Make Perfect in Investing

2017-04-30T14:32:08+00:00July 16th, 2014|Categories: Behavioral Finance|23 Comments

In almost everything we do—whether it’s learning the violin, playing chess or excelling in sports—practice makes us better. In his bestselling book Outliers, Malcolm Gladwell popularized the “10,000 hour rule.” It says no matter how talented one might be, becoming a virtuoso musician, a chess grandmaster, or an elite athlete typically requires approximately 10,000 hours of practice.

Even more important, you need to receive useful feedback during your practice. In Thinking Fast and Slow, the psychologist Daniel Kahneman explains that learning to drive is one activity where feedback is immediate and clear. When you’re taking curves, you instantly know whether you’ve turned the wheel too sharply or applied the brakes too hard. This makes it relatively easy to improve as a driver. By contrast, a harbour pilot learning to guide large ships experiences a longer delay between his actions and their outcomes, so the skill is harder to acquire.

Now consider how these ideas apply to investing. Someone who has little experience is likely to make many mistakes—which is normal in any new activity. They might think they’re well diversified even if they own just five Canadian stocks, or they may choose a bond based solely on its yield, without considering the risk. They might trade frequently based on what they see on BNN, or hold inappropriate investments in taxable accounts rather than using proper asset location. These errors would all be easy enough to correct. But will the investor get immediate and clear feedback about them?

In many cases, there’s no feedback at all: if you pay too much in taxes or hidden fees because of poor investment choices, how would you ever know that? True, sometimes the feedback is immediate: a stock could soar or plummet in value within days of purchase. But since investing is a long-term process, real success is impossible to measure over periods of even a few years. An advisor I know likes to use a golf analogy: imagine hitting a shot from the tee and not knowing where the ball landed for five years.

Nice guys can finish last

Moreover, the feedback you get from investing is rarely clear. On the contrary, prudent strategies often look like errors in the short to medium term, while many bone-headed moves are rewarded with outstanding returns, at least for a while. This is what Larry Swedroe calls confusing strategy with outcome.

Imagine two investors in the first weeks of the 2008 financial crisis: one stayed disciplined while the other sold everything and moved to gold. Over the next six months or so, the market would have made the balanced investor feel like a moron while giving bragging rights to the gold bug. But did that feedback provide useful information to help these investors improve their decisions in the future? Or did it do the opposite?

So if the feedback you get from the markets is slow and unreliable, what’s an investor to do? I suggest changing your approach to “practicing.” Unless you’re a day trader, you can’t improve your knowledge and skill as an investor by buying and selling investments and evaluating the results over short periods. Instead, why not spend your time and effort learning about what you can control?

Start by deepening your understanding of risk: novice investors often underestimate the potential losses they can suffer in the stock market. (A rule of thumb: Assume your stock holdings can lose half their value.) Build your technical knowledge by learning how bond math works, or how dividends are taxed, or how to properly calculate your rate of return. And the most important insight of all? Learn about the most common behavioural mistakes and how to avoid them. Unless you get that part right, no amount of practice will help.



  1. Brian S July 16, 2014 at 7:04 pm

    It’s been less than 1 year since I’ve taken an active interest in my investments, but I think I’m pretty lucky that my beginner’s mistakes have been fairly trivial (naively paying $29 per trade) or actually been rewarded (chasing yield w/ individual stocks, wound up with 15% capital gain on top of the 9% yield). Big thanks to the bull market for masking my early incompetence!

    I think I’ve learned a lot in a short time, thanks in big part to this website. I’ve now got a diversified portfolio of index ETFs that is appropriate for my risk tolerance, investment goals, and is allocated properly between registered and non-registered accounts.

    Not only that, but I also rescued my girlfriend from bank mutual funds and set her up with a simple diversified ETF portfolio much like mine.

    Practice doesn’t make perfect, but knowledge fills in the gaps. Thanks CCP!

  2. David Wiitala July 16, 2014 at 8:17 pm

    Very good article. I have been investing and advising for 20+ yrs now, and, as described, had to learn the hard way. There is no substitute for experience. The great thing about investing is that one can “practice” when younger, and the portfolio is quite small, and gain experience as the amount grows. Make mistakes while you are young. A few market cycles really put things into perspective.

    The guidance provided by CCP is as close to ideal one can get for investing in publicly traded securities.

    As compared to the majority these ideas are quite refreshing.

  3. Jim O July 17, 2014 at 8:46 am

    I agree that most people do underestimate potential losses and what it takes to get back to zero after a big loss.

    “(A rule of thumb: Assume your stock holdings can lose half their value.)”

    A few thing to ponder:

    When the market takes a 50% drop, as it did twice from 2000 – 2009, you can actually lose more than 50% of your original equity exposure. This happens when you rebalance as the market is still falling. If it falls 25% and you rebalance, and then it falls another 25%, you have dropped 50% of your original equity position PLUS 25% of the amount you put in when you rebalanced. This would be 56.25% drop of your original equity capital.

    During the the Depression the market fell almost 90% and took over 20 years to get back to zero. A 90% loss requires a 900% return to get back to zero. It can take a VERY long time to make 900% on your money. (Yea, they did not think a 90% drop could happen either!)

    During the Depression, if you had waited until the market was down 80% and then put money into the market, you would have seen your money drop 50%, as the market fell to an overall loss of 90%. This is one is tricky to understand, If you have money in the market and the market falls 80%, you have 20% left. if the market then falls to an overall loss of 90%, you have lost another 10% of your original investment, or 50% of what you had when the market was down 80%.

    Here is a great graphic illustrating the return needed to get back to zero, after a market drop.

  4. Canadian Couch Potato July 17, 2014 at 10:24 am

    @Jim O: It’s certainly important to understand the mathematics of recovery: i.e. it takes a 100% return to recover from a 50% loss. But the problem with the Crestmont chart (and many others like it) is that it uses price-only indexes and ignores reinvested dividends. When applied to the Depression this is even more misleading, because there was deflation, which means negative nominal returns did not necessarily reduce purchasing power.

    I wonder if Crestmont is still saying we’re in a secular bear market?

  5. Jim O July 17, 2014 at 2:20 pm

    There was deflation in the Depression, so if you had money, you had more buying power as prices went down. But you needed to have cash to take advantage of this.

    The problem is, if your equity position lost 90%, you don’t have a lot of cash left, that is able to benefit from the increased buying power.

    From what I can find, there was 27% deflation from 1929 – 1933, which is apparently an increase of purchasing power of 37%

    If you had $100,000 in 1929 in equities, you had $100,000 in purchasing power.

    In 1933, if you had lost 90% of your equity value, you now have $10,000. In 1929, that $10,000 could purchase $10,000 of goods, in 1933 it could purchase $13,700.

    So in 1929, your equity value could buy you $100,000 worth of goods. In 1933 (after the market crash and including deflation), your equity value could buy you $13,700 worth of goods. That is a massive real loss in buying power.

    You lost 90% of your equity portfolio, and you lost 86.3% of your purchasing power. Deflation did not cushion the blow by much, just a few percentage points.

    In contrast, the fictional guy who kept $100,000 in his home safe, had $100,000 of purchasing power in 1929 and $137,000 of purchasing power in 1933. You have to have cash (or bonds – there is a plug for bonds!) to benefit from deflation. Losing your cash in the stock market, means that cash does not benefit from deflation, because you no longer have it in your possession.

    So any way you look at it, from 1929 to the end of 1932, the equity part of a portfolio lost more than 86% of its value, even including deflation.

    There would have been some dividends to add in, but dividends were cut during the depression too. Companies profits were down, because they had to lower their prices (deflation), because no one had money to buy stuff, because many of them lost their money in the market crash (or they lost their jobs because of the market crash). Talk about a vicious cycle feeding on itself!

    There is no problem with the Crestmont chart I linked to in my last post. It merely shows the return you need to recover from a loss. That return can come from capital gains or dividends or a combination of the two. it does not matter where the return comes from, the percentage you need to recover your loss is the same.

  6. Jas July 17, 2014 at 7:15 pm

    I’m not sure I follow Jim O’s argument. Between 1926 and 1955, a 100% equity portfolio has outperformed balanced portfolios in all but 4 out of 57 “30 years” period. This analysis include the depression in 1929-1932:

    “The above graph is for risk-taking savers who decided to remain 100% in large stock equities for a full 30-year savings period. The graph shows what would have happened for all possible 30-year savings periods starting with1926 through 1955,then 1927 through 1956 all the way to 1982 through 2011. Each scenario is for $6,000 saved and invested per year adjusted annually up for inflation and down for deflation to maintain a constant $6000 worth of purchasing power saved annually. Two lines are high lighted in dark red just to better illustrate the volatility. (…) However, the balanced approach in all but four of these 57 real data cases, delivered a lower ending portfolio value. The four times where the balanced approach ended with a higher value were the most recent cases, ended 2008 through 2011, the 30-year savings scenario started at the beginning of 1979 through 1982. In many cases the 100% equity approach delivered two times more wealth by the end of 30 years. The biggest out performance was for the brave investors who started during the 1930’s at the end of the great crash and used a 100% equity approach.

  7. Jim O July 17, 2014 at 8:09 pm


    You and I are not talking about the same thing.

    You appear to be talking about 30-year rolling returns.

    I am talking about the loss of purchasing power from 1929 – 1932/33, including the negative effect of the market loss and the positive effect of deflation.

    The chart I linked to, does not say how long it takes to recover, it merely states how much of a return you need to get back to where you were before a crash.

    The links CCP included in his response to me, indicate it took about 4.5 years (from the bottom of the crash) to recover, including dividends. It still needed an almost 900% increase in that time period (4.5 years) to come back from an almost 90% loss from 1929 – 1933. If you look at charts of the period, less than 300% came from capital gains, so around 600% must have come from dividends to get the investor back to zero. It is amazing that the investment came back so fast from such a crash.

  8. Nathan July 17, 2014 at 9:29 pm

    @Jim O: That’s the nature of crashes, though, right? They’re going to overcorrect, so if you count from the bottom you will see large percentage gains. In the past 5 years (since late 2008) we’ve already had 160% gains (investment multiplied by 260%), and that was a much more mild crash than 1929. (This is looking at the S&P 500 total return.)

  9. Jim O July 17, 2014 at 11:11 pm

    This is wild: The topic of this blog post is covered in another blog I came across dated today.

    I think CCP’s comments re: feedback make his post much more relevant than the one at

  10. Edward July 18, 2014 at 3:00 pm

    I think many investors suffer a trial by fire–especially when they first start out. There is so much information, conflicting accounts, bad advice, that until you get your feet wet you really can’t separate honesty from the chaff out there. There’s really no way to do that until you learn it all properly for yourself. It’s like if you had an honest teacher in school but then a lying teacher came in and told you the exact opposite, how could you know who was telling the truth? Not only that, but they have conflicting textbooks which are both professionally put together. You really couldn’t know what was going on until you got out there and witnessed/experienced/saw for yourself whatever it is they were trying to teach you. Even then it’s not an instant “a-ha, I understand everything!” Like learning a new language you decipher bits and pieces until it makes sense.
    I began investing in 1998. Mom said labour-sponsored funds were a great investment because they lowered taxes and I’d get a huge return. Vengrowth II managed to half my $2000 in no time and eventually locked it so no investors could take their money out. My $2K is now less than worth $200 and they still won’t let me take anything out. 2015 is now when it’s supposed to open up. I feel really bad for the folks who put their life savings into that thing only to die penniless. was a sure thing. David Bowie and Alanis Morissette were both on board and shareholders. A fantastic music web site for independent artists which wasn’t breaking any copyright rules! Well, that didn’t matter–Recording Association went after them anyway and shut it down. $1K down the toilet. The same thing happened with a good DVD rental company. Downloads took over and DVDs got super-cheap. Nobody could have known that Facebook (when it started) would surpass My Space or Friendster.
    Now terrified at stocks, I did the TD bank adviser RRSP mutual fund thing. It floundered around. Didn’t make money, didn’t lose much either. Found my bonds were doing best so kept putting cash heavily there. (Over the long-run they’ve done me the best service.)
    Years later I got into the sector funds and started putting money there–financial, natural resources, mining. This is where I learned about recency–past performance not a guaranteed indicators of future performance for a given sector. Now I was getting angry.
    Then I thought maybe gold would be a good buy. Luckily, I stopped myself before committing to it at the bank.
    Then I tripped across a video of Jack Bogle. “Wow! He seems honest and like he really knows what he’s talking about! Nothing like Jim Cramer.” The numbers didn’t lie. Not foolproof for sure, but certainly the best game in town. Couldn’t figure out how to get Vanguard in Canada at the time, found this site, and converted all TD stuff to E-series; copying the model portfolio. Haven’t looked back since. For the first time since I dropped down a bill investing, I’m happy. Sorry–you didn’t need my life story. Great article, Dan!

  11. Tyler July 18, 2014 at 5:59 pm

    Wow, Edward. I hadn’t heard of labour-sponsored funds before. I just read a piece on VenGrowth on Macleans’s website. Holy crap. I’m just glad you didn’t have more invested with them.

  12. Nathan July 18, 2014 at 8:17 pm


    Nice to get all that out of the way with $1000 and $2000 instead of tens or hundreds, eh? My path was very similar. Even my smart moves weren’t very – for example I noticed that whenever Cramer highlighted a stock, it would jump significantly, then generally fall over the next few days. So my plan was to short the stock on the jump, then sell once it returned to around its original value. Probably could have made a bit of money doing that too, until others caught on and diluted the effect. But not knowing what I was doing, I would sink every cent (and some margin) into each position, which meant it was too risky to hold them overnight, since positive news could wipe me out – so I just tried to catch as much of the drop as I could over a day, which made it so random that I ended up losing money after costs.

    I then, like you, moved into bank mutual funds. I had some vague idea of diversification, so I would invest in both growth and value funds for instance, not realizing that I was essentially approximating a total market fund, except at 50 times the cost.

    My ‘aha’ moment (if I recall correctly) was when I started doing a bit of research into why small caps supposedly outperform (one of the bank guys had suggested that I could expect to make maybe 12% annually with his small-cap fund – hah!). That lead me to Bill Bernstein’s 4 Pillars book, and eventually here and Bogleheads. Now that I understand this stuff it’s painfully obvious how backwards most of the info out there is – but you’re right, without that perspective, it’s almost impossible to tell what’s true and what’s complete nonsense.

    Fortunately, the one advantage that the truth has is that it makes real sense, so if you think things through for yourself, you can recognize it when you eventually find it.

  13. cecilhenry July 18, 2014 at 11:03 pm

    This is a great website and has been very helpful. Thanks a lot.

    I want to simplify my investment portfolio and develop a simple Couch potato model.

    Problem is, arguments about market timing and diversified portfolio aside, I can’t justify buying either stocks or bonds right now.

    Bonds are sitting on the lowest interest rates in 30+ years, and either stay the same or go up which means losses— maybe for many years??

    Stocks have inflated enormously since 2008 without stopping and are likely overvalued. They are due to correct at any rate.

    I want to STOP the double guessing, get a portfolio set up that I won’t feel the need to watch every month or even day, and worry about other things.

    I would love to be able to get this set up, but the markets just won;t let me–and I know the risks of ignoring that reality. I am really in despair about this.

  14. Ross July 19, 2014 at 12:27 am


    ‘despair’ is a strong word.

    it sounds like you are trying to time the market. i recall my father, rather a few years ago, telling me ‘if you expect to buy low and sell high then you’re guaranteed one thing … disappointment!’ i used to think that i could beat-the-market but alas it has taken a deep breath or two to reflect that i likely did not and cannot. sad but true :( but arguably neither can anyone else :)

    given ‘despair’, then you may wish to reflect on your risk appetite and time horizon – especially if your priority is on loss-avoidance.

    there is no right time. there is only risk-appropriate, high-diversified portfolios. at low cost :)

    in case useful, when i was exploring CPP style investing then i experimented. initially with my daughter’s RESP. relatively modest balance and self-contained account. it was educational. i knew there was a reason that i had a child :))) i also used several trades to learn. a modest few trades to try norbit’s gambit in real world ( … a modest position to learn about real-return bonds. even held a small US ETF in a taxable and non-taxable account to learn about dividends/tax ( for me, greater education lowered execution risk.

    you mention ‘markets won’t let me’ but i question what this means in practical terms. if the equity markets or bond markets fell by a significant percentage then would this make you more likely to progress a certain investment approach? Really?

    one approach against market timing is averaging new investments over a period of time. research and views on this seem to vary. but it is possible that such an approach may provide comfort, and get you past ‘despair’.

    or a fee-only advisor may help.

    there is a whole lot of highly educational content on this website (thanks dan). ‘baby steps’ are ok, in my view.

    good luck

  15. Human Capital July 20, 2014 at 6:00 pm

    Your goldbug example is flawed. It’s getting harder to remember the black hole of fear, uncertainty and doubt that existed in the fourth quarter of 2008 today, gently lulled as we are by the hammock that is this stampeding bull market. No one knew back then that the world’s central banks would successfully prevent a planetary economic collapse that would write a new chapter in the annals of human civilization. You’re treating MPT as revealed truth and an invincibility shield against loss so long as the believer’s faith holds fast. In reality, it is just a practical technique that experience seems to show works well, in a context, a certain historical and economic context that we can speculate about but can never absolutely characterize and are never sure will continue to exist. An argument to the contrary is an argument for the end of history. This time is never different, until one day, one decade, one century, it *is* different, and then it is too late.

    2008 could have turned out to be epochal. The goldbug would have been the one expounding professorially on the Canadian Gold Potato blog then. We got hair-raisingly close to this outcome — closer than many of us can be bothered to recollect these days.

    I’m not a goldbug. I hold a simple 50-50 portfolio and have for years. I will continue to hold it even though I know from hard experience that risk is real and real loss is all too possible. But, I will continue to understand that MPT is a seat-belt, not an invincibility shield. People die wearing seat belts every day. It’s just a better idea than the alternative.

  16. Oldie July 22, 2014 at 3:02 pm


    “Problem is, arguments about market timing and diversified portfolio aside, I can’t justify buying either stocks or bonds right now.

    Bonds are sitting on the lowest interest rates in 30+ years, and either stay the same or go up which means losses— maybe for many years??

    Stocks have inflated enormously since 2008 without stopping and are likely overvalued. They are due to correct at any rate.”

    Your first paragraph seems logically at odds with itself.

    Why did you preface you statement of problem with the first paragraph? i.e. why ” arguments about market timing and diversified portfolio aside,”? You must know that these argument are logically and rationally powerful and, presumably at some fundamental level, you intellectually understand them to be valid. So far, so good, that’s part of the basic Couch Potato education. But, likely, intuitively the emotional “arguments” against ignoring trying to market timing and portfolio diversification seem very strong, to you, impossible to resist, perhaps, that’s why, presumably, you are “temporarily” setting them aside.

    So, welcome to the human race. That’s the whole point of the Couch Potato education — to understand that irrational feelings which cause you to favour market timing are normal human emotions, but are just that and only that — emotions, and we must learn to coldly ignore them when building a strategy based upon rational economic logic.

    Review your logic and feelings and your Couch Potato lessons again. Remember there will never be a time that feels “perfect”. Your least likely to fail asset is length of investment time, and you’re wasting it now. I’ve done that a lot, myself, and have endeavoured to change this behaviour, hopefully in an educated, thoughtful, and self insightful manner. I come back to this website a lot for help and emotional support!

  17. cecilhenry July 22, 2014 at 5:51 pm


    You make a good point.

    But I ask: Can you deny that Bonds are in a unique place in history?

    And do you admit that stocks have run tremendously, not just modestly, since 2008 on little else but lose monetary policy?

    You’ve see the very good points other commentors have made about how long it can take to recover losses. It a valid point to be concerned.

    I only ask.

  18. Jas July 22, 2014 at 5:58 pm

    If it is not a good time to buy stocks or bonds, do this also means you should sell all your current stocks/bonds and try to time the market?

  19. Oldie July 22, 2014 at 7:21 pm

    @cecilhenrry: Please understand that I am a Newbie, having first stumbled on this concept only 2 years ago (but immediately recognising that its logic re-explained and transcended everything that “helpful” investment advisors had been throwing at me for 40 years.) I have been diligently studying and practicing since that first “aha” moment, but finding at each step that there are many barriers to putting this unassailable theory into practice. Overcoming emotional resistance is one of the major recurrent hurdles.

    “But I ask: Can you deny that Bonds are in a unique place in history?” I don’t know about unique place in history, but in this Couch Potato Site, the head spud has been for at least 4 years posting repeated refutations to conventional wisdom that had been screaming to avoid bonds “because they were guaranteed to lose money due to the fact that interest rates had been dropping for 30 years and they were poised to take a sudden increase”:
    He has repeatedly pointed out since then that had this advice to not invest in bonds been followed, the investor would have missed out on (“xyz — insert the various computed profits on bonds) in returns.

    As I said, I am only a Newbie; but while it is true, at low interest rates, the opportunity for further huge interest rate drops is minimal, ruling out one component of bond fund return that has been present for the past couple of decades, translating this “unique place in history” into “the worst possible time to buy bonds” would be an oversimplification, and in my understanding, an inaccurate one.

    On your other question, while every Equity crash has to be preceded by a rise lasting several years, and while in retrospect, the longer the rise lasts, the further out on the standard deviation plank does the present situation seem to place itself, there exists no method of calculating the optimum time not to buy equities based upon current economic conditions (or when to sell them) that has stood the test of time based upon objective return and performance testing.

    A possible less frightening way of looking at this situation may be to understand that predictions (such as basically what we are discussing, regarding the immediate fate of stocks and bonds) which may seem so reasonable, are incomplete and useless unless specific timing is included as part of the prediction statement. This site has several posts over the years along this theme, and several exposing of the poor accuracy of these predictions, once specific timing is included in the prediction.

    So, as a diligent CP acolyte, I am learning to give the answer to your question posed in paragraphs 2 and 3 — “no, and perhaps not, but while one has to treat the possibility of loss of value very seriously, I do not purport to know the specific future with any significant precision, so I will undertake to pursue an investment strategy that takes into account all significant future economic probabilities, optimising the best chance of future profit that my risk tolerance allows, while limiting my losses to what I can accept.” If I believe my own answer, if I were in your position, I would construct my asset allocation based upon my time horizon, and buy it all in one chunk now.

    I must say, though, that for me, some residual reptile brain fear of making a tragic mistake, might tempt me to break the total purchase if it were large, into arbitrary portions, say 4 chunks over the course of a year, although statistics do not support this strategy. On the other hand,I have just rejigged my largish portfolio yesterday, due to availability of more tax efficient vehicles for the same underlying asset classes that I have not changed, and I just held my nose and bought and sold in one go. That does not match your situation exactly, of course, but what I meant was that I briefly looked at the short-term curves of which way prices were going and very briefly considered waiting for a “more advantageous” time to complete my switch, before realising that this was a thinly veiled attempt at market timing, and held no valid place in my investment method.

  20. Chris B July 23, 2014 at 2:34 pm

    Well, I’ve struggled with the issue of stocks and bonds the risks involved and the potential returns. And I’ve looked at various market timing strategies or not, experts ranging from Bogle, Browne, to Buffet, 1929 crashes, corrections and I’ve come to an approach that I am comfortable with.

    It’s a risk-parity, one year momentum (gasp!) strategy.

    My current portfolio looks like this:
    20% in stocks divided equally between Canada, US, and international
    20% in real estate, divided equally between Canada and the world.
    20% in long bonds, divided equally between government and corporate
    20% in goofy bonds I don’t understand (high yield and inflation protected)
    20% in gold.

    I then subject each asset class to a one year, momentum screener at the end of each month.

    I understand that such timing methods may under perform in strong bull markets. I am quite comfortable with that as I view the market with such suspicion, I can’t honestly say that I would have the mental fortitude to hold on after a significant market correction. 2008? Unlikely. 1929? Never. I know myself and realize that an *imperfect* strategy that can be followed is far superior to a perfect one that can’t.

    The heavily diversified, momentum approach I subscribe to has done very well this year. As it has for the past forty+ years.

    Will it continue? Who knows.

    The initial goal was threefold:

    1) Not lose money.
    2) Minimize variance.
    3) Have the potential for return.

    I had considered a heavy bond portfolio, but found the arguments for diversification amongst many asset classes compelling and when combined with a simple momentum screener, gave me the low volatility and risk I craved, with the added bonus of scraping returns off the market. I have a slight fetish for systematic, mechanical approaches and delight in doing things that an equation tells me… irrespective of the rest of the world whooping and hollering.

    I don’t recommend it for others, but it works well for me as I am an odd one.

  21. Sansi July 26, 2014 at 9:54 am


    I completely empathise with what your are saying. I have been in a similar position to yours. Read tons of books, blog entries, suggestions how to not time the market etc.

    Then, I decided last year that the most important thing was that I (!!!) am happy with my decision and that it passes the ‘sleep well at night’-test.

    Here is what I did:

    1) Put together my desired asset allocation based on my parameters – in my case this involved trimming down the equity part
    2) Researched the best possible investment solutions/products I have access to (I live in Europe, therefore choice is limited)
    3) Decided to substitute the bonds part with cash (savings account, cash ladder)
    4) Set up a (manual) regular savings plan buying into the equity portion every month
    5) Decided I will accelerate/increase the regular savings rate when the markets will correct 10%+

    Will there be better ways? Yes. Will there be someone trying to tell me I should be doing a, b or c instead? Of course. Most importantly this is my solution that makes me feel good, it’s simple + cost effective + let’s me focus on more important things in life.

    Sunny greetings from Europe & best of luck!

  22. […] practice doesn’t make perfect in investing.  (Canadian Couch Potato via […]

  23. Financial Canadian June 28, 2016 at 2:22 pm

    Hey CCP, another great post. It seems like the more of your stuff I read, the better it gets!

    I was very fortunate because I started my investing journey during a pretty rigorous bull market. This made some of my early mistakes much more forgivable. “A rising tide lifts all boats,” as they say.

    When you think back to your beginnings as an investor, are there any mistakes that you can think of that dramatically impacted your success?


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