6. What are other people saying? Remember those wise old words about there being two sides to every argument? The same applies to investment opportunities: there is usually one side that believes in the opportunity wholeheartedly, and another that’s more skeptical, or even downright hostile to the idea. Before you make up your mind about which side you’re on, it’s a good idea to listen to both perspectives. Indeed, this ability to seek out and listen to both sides of the investment argument is a critical factor behind long-term investment success. By forcing yourself to acknowledge and digest perspectives that diverge from your initial “take” on an opportunity, you keep yourself from becoming blind to “what ifs” and less-than-ideal outcomes that can sometimes be hard to see in the face of the excitement and optimism. Ask yourself: what are the contrary opinions regarding this current opportunity? What’s the “glass half empty” analysis? What happens to your projections when you factor in more conservative growth and revenue estimates than the one you’re looking at right now? Is there anything in those opinions that make you reconsider your own? Or does the opportunity look just as good as it did before? What (if anything) are people missing? The Internet has made it possible to take in a wide range of investment opinions and analyses from a variety of research firms, pundits, journalists and financial analysts. Finding and evaluating them can be an essential defence against emotion-driven investing, and can be an important “gut check” that can help protect your portfolio from unforeseen problems. Finance 7. How might this opportunity impact my income? Some investors aren’t all that concerned with income – they’re in it for long-term capital appreciation. But most snowbirds rely to some degree on their portfolio for basic cash flow, so it makes sense to view every investment opportunity you come across from this perspective. With some investments, this question is easy to answer. When buying a government bond, for example, or a GIC, or stock in a dividend-producing company, simply determine the interest or dividend payments it provides, and there you go – that’s the impact. But with other assets, the question gets a bit more complicated. A rental property is a good example. Usually, the goal of investing in a rental property is to generate income in the form of rent. But most of the time, the purchase requires a sizeable down payment (typically 20% or more of the purchase price). And, of course, most investors will need to make ongoing monthly mortgage payments, as well as property tax, renovations and repairs, and other associated costs. Sure, you could get a sizeable portion of that outlay back in your monthly rent. So how exactly will such an investment impact your income? You’ll have to do the math to be sure. By no means are we pooh-poohing rental property. It’s just that with some investments, tying up a significant amount of your capital, as well as paying monthly investment loan payments and other associated costs, can have an income impact that’s not immediately obvious when you’re first looking at the opportunity. So, make sure that you take a look now. CSANews | SUMMER 2023 | 29
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