Financial literacy month 2021: 3 stock tips to stay ahead of the curve

Highlights 

• Financial Literacy Month is a concept introduced in the country by the Financial Consumer Agency of Canada (FCAC).
• It is targeted at raising awareness regarding financial knowledge among individuals and families.
• Financial Literacy Month began in Canada in 2010, making this year’s event its 11th launch.

There is always something new you can learn about the financial world, including the stock market. And the month of November may just be the best time to do it, thanks to the concept of Financial Literacy Month.

Before we sink ourselves into the merriment of the holiday season, let’s surf through some tips that can help strengthen our financial wisdom.

But first of all, let us understand what exactly Financial Literacy Month is.

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What is Financial Literacy Month?

Financial Literacy Month, a concept introduced in the country by the Financial Consumer Agency of Canada (FCAC), is targeted at raising awareness regarding financial knowledge among individuals and families.

While the US saw the introduction of ‘National Financial Literacy Month’ in April 2004, Canada got its own version in 2010, making this year’s event its 11^th launch.

Every year, throughout November, the FCAC is known to engage with organizations across private, public and non-profit sectors and conduct seminars intended to help Canadians understand their investments and finances better.

Image description: What is Financial Literacy Month?

3 stock market tips to remember this Financial Literacy Month

Keeping the COVID-19 impact and digital revolution in mind, this year’s Financial Literacy Month has been dedicated to raising awareness about how one can strengthen their financial resilience in the face of changing times.

So, with that in mind, let us a discuss a few tips about the stock market.

1. Stock markets are volatile, but sturdy research can really help

Volatility is a familiar visitor at the stock markets. However, what can help one aim for profits is a thorough and in-depth research of the stocks they are interest in.

While stock markets, at the end of the day, are indeed unpredictable, it is generally seen that the correlation between a company’s stock performance and its earnings can say a lot about its growth potential.

Hence, investors can always dig deep into a company’s earnings and fundamental profile to make the best decision possible.

Also read: 5 Canadian bank stocks to buy now as dividend hikes return

2. Even the best of the stocks come with some risk

It is easy to get impressed by a stock’s rising numbers or an established company’s glorious track record. But experts often warn about how a bad event can impact even the strongest of the stocks.

Think of the COVID-19 outbreak, for instance. Even companies with a sturdy balance sheet and robust reputation suffered financially and, in turn, stock-wise at the hands of the pandemic.

Hence, before parking their funds, investors should bear in mind that the general risks factors are applicable to the best of stocks as well.

3. Dividends are not permanent

Many investors bank on dividend-paying stocks for passive income, and sometimes, even for their source of earning during retirement. But while dividends are an added bonus, they may not always stick around.

A company’s management has the power to reduce or completely cut its dividend payout, something that many firms were seen doing amid the pandemic.

Bottom line

Financial literacy can come in handy for every individual, be it for enhancing one’s investment-related knowledge or simply to get a better understanding of savings options and income strategies.

So, spend this Financial Literacy Month becoming smarter with your money!