What if successful investing isn’t about perfection — but a few key decisions that matter most?
Speaker Key:
GS Gregory Sweet
JD Justin Dufresne
VO Voiceover
00:00:00
GS Welcome back to Let's Talk Investing. I'm your host, Greg Sweet. Today, we're tackling a belief many investors carry, this idea that building a strong financial future means getting every move exactly right. Today, we're going to challenge that idea, and what we uncover might completely change how you think about investing. I'm joined today by Justin Dufresne, Director of Investment Advice here at Scotiabank. Really glad to have you on, Justin.
00:00:25
JD Great to be here, Greg. Looking forward to this one.
00:00:28
GS When many Canadians think about investing, there's this assumption that doing it well means getting a lot of things right, timing things perfectly, picking the right stocks, and staying on top of everything, including financial markets in the news, and I think most people carry that weight with them when making decision.
00:00:48
JD It's a very natural assumption, and there's no shortage of information out there that reinforces it. And to be clear, those things can influence an investing journey, but what surprises people is this: when you look back over time, those day-to-day decisions aren't what truly set one investor apart from the other. In fact, focusing too much on them can sometimes do more harm than good,
00:01:12
GS Right? Instead, it tends to come down to a few key decisions, ones that maybe didn't seem so significant at the time
00:01:29
JD Exactly and unpacking that can really change how you approach investing altogether.
00:01:24
GS All right, let's get into it.
00:01:26
JD So, for the first moment, and this one may be the most deceptively simple is the decision to start. That's right, just the beginning,
00:01:35
GS And I think that sounds more straightforward than it actually is, because I'd say most people know that they should start, but it's that moment when they truly commit that can feel like the hard part.
00:01:47
JD That's exactly it. And the reason for waiting always feels legitimate at the moment. Markets are at all-time highs. Maybe I'll wait for a pullback and buy when things are cheaper. Markets drop. I don't want to put my money in case markets go even lower. There's uncertainty. I'll wait for things to settle, and then suddenly days become weeks, weeks become months, and sometimes even years.
00:02:12
GS So, the search for the right moment can end up being the very thing that delays you from starting it all. It's like standing on the shore. The water always feels too cold. It doesn't warm up while you wait, but once you're in, your body adapts, and what felt uncomfortable at first quickly becomes much more familiar. You just need to take the plunge,
00:02:33
JD And it's not always obvious to see the cost of waiting until you see it side by side. Take two people, both investing regularly with similar strategies, one starts at 30 and the other starts at 45 Now, here's the thing, the one who started later actually contributed more per pay check, roughly double, in fact, and yet by the time they both reach 65 the person who started earlier has contributed less, and actually ended up with significantly more. We're talking over 50% more.
00:03:08
GS So, the person who invested less came out ahead, just because they started earlier.
00:03:12
JD That's it. And it's not a small gap for the person who started earlier. Most of their assets came from growth, not contribution. Their money has been compounding for so long that it did most of the heavy lifting. People who started later, well, they're relying mostly on their contributions just to try and close the gap. Same effort, very different result. And that's why I often refer to time as an investor's most important asset.
00:03:41
GS So, you don't need to have everything figured out before you begin. I think that's another thing that holds people back, waiting until they feel fully ready.
00:03:49
JD It's like signing up for the gym or going. You keep saying you'll go next week, and then it gets pushed out to next month, and before you know it, time has gone by, and you realize you should have gone way earlier. You know what they say, the best time to start was yesterday, but the second-best time is today.
00:04:10
GS I like that. So, the decision to start is the decision, and once you're in, that's really where the next decision shows up.
00:04:18
JD Let's say you've made the decision to invest. Great, now the next decision, honestly, the one that gets tested over and over throughout your entire time as an investor, is the decision to stick to the plan, and this gets challenged from a lot of different directions, right? Oh, constantly, and one of the biggest challenges is the noise, and look, this isn't something new. Investors have always had to navigate with uncertainty. What's different today is the volume and the speed at which information reaches you. You open your phone and there's a headline telling you that the markets are on edge. You scroll and someone's posting that a crash is imminent, and then in real life. Life, you hear it too from colleagues, friends, or people around you who sound confident and convincing.
00:05:06
GS Yeah, and the last one can be the hardest to shake, because it's not just the headlines anymore, it's someone whose opinion you respect, giving you well-intended advice, which makes it much harder to ignore, even if you know better.
00:05:20
JD Exactly, it comes with the relationship. There's actually a well-documented tendency for investors to move together when uncertainty is high. The instinct to follow what everyone else seems to be doing is very human, but in investing, the crowd mentality or the herd mentality can lead people away from the better outcomes, not towards them,
00:05:42
GS And yet it's so hard to ignore them in the moment.
00:05:45
JD Honestly what I find helps, and what I've seen help a lot of people, is coming back to the fact that none of these sources are speaking to your specific situation, your goals, your timeline, or your plan. The news speaks of broad strokes. Your colleagues speak from their own experiences, but neither one is speaking to your reality the way your plan does. Anchoring it back to that can really help put things into perspective.
00:06:15
GS That's a really good way to look at it, but what happens when it's not just noise that you're dealing with, when the markets are actually moving and you're watching your portfolio, feeling it in real time.
00:06:25
JD Oh, that's when it gets real. Because now it's not a headline, it's your money. You open your account and the number has dropped, and every instinct inside you tells you to do something, get out, stop the bleeding, protect what's left.
00:06:41
GS And that instinct makes complete sense in most situations in life. When something isn't working, cut your losses can be the right call.
00:06:48
JD You're right, it is a natural instinct, but in investing, the most impactful thing you can do in the moment is often nothing at all, which feels completely wrong when you're in the middle of it.
00:07:00
GS So the best move is sometimes not to make a move at all,
00:07:05
JD Usually. Yes, and here's why. Typically, some of the strongest stretches in market performance come right on the heels of the most difficult ones. The best and worst periods tend to cluster together. In fact, historically, eight of the 10 best days in the market have landed within just five days of the worst ones. So, if you exit during a downturn, even though it feels like a safe call, you're very likely missing the recovery that often comes right after it.
00:07:37
GS And it's one thing to get out, it's a total other thing to time your way back in, that's the part I think people don't realize, it's not one decision, it's actually two,
00:07:47
JD And that second one is when it gets really difficult, nobody knows when that moment is, the real cost isn't just a drop you stepped away from, it's the recovery you missed,
00:07:58
GS so what I'm getting from this is staying invested isn't a passive decision, it's actually an active decision you're making, choosing to trust the plan right at the moment. Everything is telling you to walk away from it. Anyone can react, it takes intention to stay.
00:08:13
JD And then there's the flip side of all this, because everything we've talked about so far has been about fear pushing you off course, but there's another thing that does the same damage.
00:08:24
GS Hmm, what do you mean by that?
00:08:26
JD Well, when markets are going well somewhere else, when you're hearing about a stock that just ran up, a sector that had a massive year, the pull towards that is just as real as the urge to sell when everything is dropping,
00:08:40
GS Because let's be honest, nobody wants to be the one watching from the sidelines while everyone else seems to be winning,
00:08:46
JD and they call that FOMO, and it's not a good feeling, but by the time something is exciting enough to make the headlines and come up on your feed, the best of their returns have already happened. People love to boast about when they purchase a stock that takes off, but rarely talk or post about a stock that tanked. You often don't hear that side of the story, but in reality it happens just as often, and maybe even more often.
00:09:13
GS And by the time you've seen enough of those posts to feel like you're missing out, you're probably already too late. It's like switching lanes in traffic because the other lane looks faster, only to hit the slowdown while your original lane keeps moving, and isn't that just the worst feeling? The worst,
00:09:30
JD But that's it, though. You leave a strategy that was quietly working for you. You see everyone zooming past in the other lane, so you decide to jump in, but now there's a pile up there, and then you wish you never would have changed lanes. It happens to the best of us. It happened to me this morning. So, to summarize, fear can pull you one way, temptation can pull you the other, and in both cases, sticking to the plan is what keeps you on course,
00:09:57
GS And the anchor to all this is staying focused on your own goals. Your own timelines, what someone else is getting out of the market has very little to do with what you actually need from it,
00:10:06
JD and that's really where the third decision comes in. Because knowing your goal and knowing your plan, and actually sticking to it through thick and through thin, in those moments, that's a lot of navigating on your own.
00:10:19
GS So, even if you understand all of this, having someone in your corner who's seen these moments before could be very helpful.
00:10:27
JD It really is, Greg, and I think that's what makes it its own decision, because everything we've talked about today sounds straightforward in a conversation like this, but living it real time, when your portfolio is dropping, when everyone around you is convinced the sky is falling, when something looks exciting and you want in, it's a completely different story. it's like the difference between textbook knowledge and the real-world experience. People know what they should do, but it doesn't mean they actually do it.
00:10:49
GS You know, some might think having a financial advisor is about building a plan, but it's also about having someone there with you when that plan gets tested, because remember when we said news outlets, your friends, colleagues, or that social media influencer doesn't know your situation, here's someone who does, someone who knows your situation, your goals, your timelines, and someone who can help you think clearly when emotions are running high, that can really make the difference to help you make the right decisions, the smart decisions.
00:11:31
JD That's really the value of your advisor shows up most when things get hard.
00:11:36
GS So, speaking with a Scotiabank advisor is a great place to start. They can help you build a tailored plan around your personal circumstances and help you stay the course when those moments come. So, let's look back at where our conversation has gone today. We talked about starting, sticking to the plan, and seeking advice. None of these feel like big dramatic moves in the moment;
00:11:56
JD they're quiet, but over time they tend to be the ones that most shape where you actually end up.
00:12:03
GS And what I find interesting about all of this is it seems unremarkable in the moment, almost like non-decisions, but I guess that's exactly what makes them easy to overlook, and exactly why they matter,
00:12:15
JD Because at the end of the day, it's not the perfect moves that shape your outcome, it's a decision to stick with it over time.
00:12:23
GS Justin, thanks so much for being here today. Really enjoyed this important conversation.
00:12:27
JD Thanks for having me, Greg.
00:12:29
GS To all the listeners, thank you for investing your time in this episode of Let's Talk Investing here at Scotiabank. We are committed to supporting our clients with great advice for every future. We'll see you again next time.
00:12:41
VO This audio has been prepared by Scotia Global Asset Management and is provided for information purposes only. Views expressed regarding a particular investment economy, industry or market sector should not be considered an indication of trading intent of any of the mutual funds managed by Scotia Global Asset Management. These views are not to be relied upon as investment advice, nor should they be considered a recommendation to buy or sell. These views are subject to change at any time based upon markets and other conditions, and we disclaim any responsibility to update such views.
To the extent this audio contains information or data obtained from third party sources. It is believed to be accurate and reliable as of the date of publication, but Scotia Global Asset Management does not guarantee its accuracy or reliability. Nothing in this audio is or should be relied upon as a promise or representation as to the future. Commissions trailing commissions, management fees and expenses or may be associated with mutual fund investments. Please read the prospectus before investing. The indicated rates of return are the historical annual compound total returns, including changes in unit values and reinvestment of all distributions, does not take into account sales, redemption or option changes or income taxes payable by any security holder that would have reduced returns.
Mutual funds are not guaranteed, their values change frequently, and past performance may not be repeated. Scotia Global Asset Management is a business name used by 1832 Asset Management L.P., a limited partnership, the general partner of which is wholly owned by Scotiabank. Registered trademarks of the Bank of Nova Scotia. Used under license. Copyright. The Bank of Nova Scotia. All rights reserved.
