Canadian Dividend Investors
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Have an Investing Policy
...the importance of articulating and implementing a thoughtful investment policy cannot be overstated
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Jan Squires
Jan Squires is a Chartered Financial Analyst (CFA), who, for 25 years, was a Professor of Finance and General Business at Missouri State University. He is best known for his leadership roles at the CFA Institute, where he served as Managing Director of Strategic Products and Technology and previously oversaw Asia-Pacific operations and CFA exam development.
As Squires points out, it is important that you develop and follow a well-defined investing policy to guide your investing decisions. You should refer to your policy whenever you are considering removing a company from your portfolio or adding a new one.
As an example, my investing policy includes the following guidelines, which I use to manage and qualify companies for inclusion in my portfolio:
1) Investments should be concentrated in about ten companies.
2) Minimize trading costs and management fees.
3) Each holding should pay a significant and growing dividend.
4) Each holding should be a financially stable Canadian company whose operations with which I am familiar.
5) Each holding should operate in a stable industry and dominate its industry peers.
6) Each holding should have excellent prospects for long-term financial success.
The foregoing list provides a reasonable starting point for most investors, but you may need to modify these guidelines to reflect your unique financial situation. The important point is that you have a clear policy that is written down and which you can refer to from time to time. You should review your investing policy every year and make changes, if necessary, to accommodate any changes in your financial circumstances.
1. Squires, J.R., 1994. Investing Policy: An Overview. in Seminar Proceedings, Investment Policy, Tokyo, Japan, April, 1994. p.1