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Insight Into Investing

Editor's Note: John Ogilvie is an AEBC member and an adaptive technology trainer. Several years ago, he completed the Canadian Securities Course.

To invest, you need capital (money), and the usual way of acquiring this is to start a savings program. There are many books on this subject, such as "The Wealthy Barber" by David Chilton. The general idea is to save gradually, by transferring small amounts of money (preferably automatically) to a separate savings account that can't be touched. Keep this amount small but regular. Even people on limited income should be able to do this, be it necessary to skip the odd coffee out, and the earlier in life the better, though later is better than nothing.

Once you have some money, you need to decide how to invest it--either via a professional or entirely self-directed. Specialists have experience and expertise and may make all or just some of the decisions, depending on your preference, and are paid either based on the products they sell (mainly mutual funds) or on a fee for service basis. If you choose an advisor tied to a particular product (again, usually a family of mutual funds), be sure you like that product line.

Please also note that advisors are by no means perfect, and it is possible to lose money even through financial professionals.

If you choose to make the decisions on your own, more work is required on your part, but it can be rewarding both personally and financially.

Regardless of whether you use a financial advisor or manage your investments yourself, you need to understand the risk/reward equation. Generally speaking, the more risky an investment is, the greater the possible gain or loss. If you buy a penny stock in a new venture, for example, it may be worth several dollars or more in time, or maybe nothing, if the venture does not work out. And if you invest in something that is close to risk-free, like a guaranteed investment certificate (GIC), you will have your money and interest at the end of the term, but it might not even keep up with inflation. Probably the best route for the conservative individual is to invest in something that is a little more risky than a GIC, like preferred shares, an income trust, or a stock that pays a decent dividend or has some growth possibilities.

If you research and manage your own investments, you can use fundamental analysis where you study past earning records, growth estimates, and various standard ratios that measure some of these, or you can use technical analysis, where You study the actual moves in price and volume of the securities and apply moving averages, chart patterns, and other standard measurement tools.

How do totally blind people do these things? With the advent of the internet, there are many sites with enough text in them to make it possible, and I know a few people who are doing it. Even in technical analysis, which is very chart reliant, graphic values can be converted into numbers, which can then be studied. For example, the technical signals of support and resistance can be checked just by reviewing the closing numbers for a stock over a period of time by using Yahoo Finance, which can send the performance of a stock or index over a given timeframe to a spreadsheet for study. The chart can then be "drawn in your mind", so to speak.

Here are a few websites with enough text to be useful to totally blind users:

{http://investored.ca}--an unbiased, non-profit site with lots of general information covering most aspects of investing geared to the newcomer.

  • {http://stockcharts.com}--a technical analysis site with enough text to understand the topic. Start with the Chart School link. See if you can find the section on support and resistance.

  • {http://barchart.com}--If you go to the Signals link, then a stock symbol link, and then the Technicals link, you can hear a number of widely followed technical indicators in text format.

You can also get current information on market conditions from TV shows like "Nightly Business Report" on PBS, and from the Business News Network, a cable channel emphasizing the Canadian perspective. On radio, local "all news" stations typically provide "business" updates at least twice an hour, and shows like "Power and Money" and "Right on the Money" are broadcast Sunday mornings on stations not otherwise devoted to business content. VoicePrint also airs a business report on TV or you can access it anytime on the internet (visit {http://www.voiceprintcanada.com}) for more details). Finally, for getting security prices and doing actual trades, some discount brokers offer automated touch-tone or voice-recognition phone services, as well as internet-based order entry systems.

Taxes are also an investment consideration. Not all income is taxed in the same manner. If you buy a stock and sell it later for a profit, for example, only one half of the gain is taxed as a capital gain at current rates; if you receive interest income, it is taxed at your full tax rate; if you receive dividends from a Canadian corporation, the income is taxed somewhere in between regular income and a capital gain; also, if you borrow money for the purposes of generating income, that interest is deductible for tax purposes.

And, of course, there is the Registered Retirement Savings Plan, which has some immediate tax advantages. There is even a new savings plan that goes into effect this year that defers tax on future income that does not have a current tax break.

As I'm writing this, there is enormous turmoil in the markets due to the bankruptcy filing of Lehman Brothers, as well as many other consequences of the credit crisis, which has been in the news lately. The bottom line is that there can be periods of uncertainty, and people with money in the market must ride it out. In good times, rewards do return.

I hope this article has given you a better idea of what the investment world is like.