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By Bob Lai, Tawcan
Special to Financial Independence Hub
After 25 years of investing, here are 10 important lessons I have learned:
1.) Increase the savings gap
Investing is all about saving money, investing that money, and waiting for it to grow.
To save money, one needs to commit to saving money. Living below your means or spending less than you earn is a common concept in the Financial Independence Retire Early (FIRE) movement. But I believe it’s more than just spending less than you earn. It’s about committing to continue increasing your earning power (i.e. income) while decreasing or maintaining your spending.
The difference between your income and spending is what I call the savings gap, or some people call it the savings rate. The bigger the savings gap, the more money you can save and invest toward your investment portfolio.
When you are starting on your investment journey, you really need to rely on injecting fresh capital into your investment portfolio for it to grow. The compounding effect won’t really pick up until your investment portfolio becomes sizable (say $100k or more). This is like rolling a snowball down the hill. If you start with a tiny snowball, it will take longer to increase the size and the speed of the snowball. If you start with a bigger snowball and can add more snow to the snowball as it rolls down the hill, you can increase the size and speed faster.
So increasing your savings gap will drastically propel the growth of your investment portfolio. Work hard on increasing the savings gap without depriving yourself.
2.) Learn to automate
Over the years, I have learned that the less I get myself in the way of our saving & investing journey, the better. Therefore, I focus on automating as many things as possible.
Whenever we receive a paycheque, a certain percentage is automatically moved to our financial freedom account and it is used for investing. We also automate how much money is moved to the different investment accounts each month.
On the other hand, we also automatically move different percentages of money to the different accounts like Play, Give, and Long Terms Savings for Spending.
To take advantage of the power of compounding, we enroll in both synthetic and fractional drips with our online brokers so dividends are reinvested and additional shares are purchased automatically.
Some investors I know automate the buying and rebalancing process as well. For example, they would auto-purchase ETFs or stocks every second week or every month. Some use Passiv to auto-rebalance their portfolio until the desired allocation is met (note: we don’t auto purchase or auto rebalance but it’s a worthwhile automation).
3.) Ignore the noise
Nowadays, it’s easy to find news and stock analysis on the internet. Doomsday predictions are everywhere, so it’s easy to react and sell your investment on emotion. Similarly, you can get sucked into hype and fads easily and invest a significant amount of money when you get excited about an idea.
More than ever, it’s important to ignore the noise.
Remember, the stock market is like a roller coaster. It has its ups and its downs. Please do not freak out about the recent pops or drops. We can’t control the market, so why pay attention to all the noise and react to emotion or feeling stressed out about the news? The market is cyclical, bull markets come and go, so do bear markets. There are always ups and there are always downs, too. There’s no other way around it.
The key thing to remember is that the stock market has a tendency to go up over the long term. In fact, a historical long term return is 10% without accounting for inflation.
So ignore the noise and focus on your long-term investing strategy.
4.) Keep it simple
I used to trade on technical and chart analysis. The moving averages, channel breakouts, support & resistance, seasonality, stochastic, and head and shoulders are some of the technical analysis tools I have learned and used over the years. When using these analytical tools to trade stocks, things can often get complicated and it could take time to decide whether to buy or sell. These technical analyses typically require regular monitoring of the stock market, which can be very time consuming.
Over time, I learned that it is best to keep it simple. The idea of hedging your consumption became one of the fundamental pillars of our investing strategy: invest in companies that produce products that we use daily. The harder it is to switch and replace that product, the better. Or the more we and others complain about the product, but find it nearly impossible to find an alternative, the better.
I also learned not to focus overly on the quarter-over-quarter performance. Rather than looking at the micro trends and quarterly performances, we keep it simple by focusing on the macro environment. Are people still buying new iPhones and finding it hard to switch to Android? Are more and more people using credit cards for purchasing rather than cash? Are people relying more and more on their phones and data plans for their everyday tasks?
While technical and chart analysis are still helpful, I learned it is far more important to focus on the simple things like company fundamentals, profitability and product pipelines to understand whether it makes sense to continue investing in the said stocks or not.
Another way to keep things even simpler would be investing in one of the all-in-one ETFs like XEQT or VEQT. This way, you don’t even need to do any research on the companies you own. You simply buy shares of these all-in-one ETFs regularly and dollar-cost-average over time.
5.) Having the right expectations
Unfortunately, many investors believe they can make big profits and multi-baggers in a very short term. They like excitement and if they don’t trade regularly, their hands get “itchy” from lack of action.
This is where having the right expectations is extremely important.
The reality is, investing should be as boring as it can be. There shouldn’t be any excitement at all. It takes years for a stock or an ETF to compound and provide a solid return. Therefore, it’s vital to have the right expectations. You probably aren’t going to get a +100% return every single year. Tracking the historical average, between 8-10%, is totally OK. But don’t forget that the market goes up and down, so you will have a bad year occasionally.
6.) Best investment to buy
What is the best investment to buy? Yes, I have written about the best investment in the world and the best way to invest. In reality, there’s no such thing.
Dividend investing is not the best investment strategy in the world. Dividend investing is also not the best way to invest.
Index investing is also not the best investment strategy in the world. Index investing is also not the best way to invest.
There’s no one-size-fits-all when it comes to investing. That’s why there’s no such thing as the best investment in the world or the best way to invest.
This is similar to the fact that there’s no “best food” in the world. Everyone has their own preference. Even if you like Italian, you might want to enjoy something else occasionally. Thus, I believe that the best investment in the world and the best way to invest is a strategy that allows you to stay in the market throughout all the ups and downs.
On paper, investing is all about math and how to get the highest return for your money.
But investing is way more than just math. I’d say 90% of investing is about psychology and emotion. Can you stay invested over the long term? Can you prevent yourself from making emotional and knee-jerk decisions that could potentially wreck your investment?
The key is to find an investment strategy that will allow you to stay invested long term so you can achieve your financial goals.
Everyone will have different financial goals; that’s why personal finance is personal!
Some might want to have enough money for a down payment; some might want to have enough money to retire at 65; some might want to have enough money to retire in their early 40s; some might want to have enough money to pass down to future generations; some might want to have enough money to pay for yearly vacations.
Knowing your financial goals will allow you to align your investment strategy and stick with it long-term.
7.) Take advantage of the economic downturn
When I entered the workforce after graduating from university in 2006, life was good. I was making more money than I ever had before. Since I had money left over each month, I decided to start investing money in the stock market by purchasing mutual funds.
Then the financial crisis hit and the stock market stumbled. Since I had some spare cash lying around, I thought I’d take advantage of the down market by buying some top Canadian dividend stocks. One of the stocks I purchased was Royal Bank (RY.TO).
I purchased Royal Bank at a heavily discounted price. My original plan was that I’d wait for the market to recover.
In case you’re wondering, I bought 100 shares of Royal Bank at $26.92 on Feb 26, 2009. I thought I purchased at an all-time low.
The stock recovered a bit in early March but then the market started dropping again. Panicked, I decided to sell all 100 shares on March 3 at $29.05 to take in a small profit. I thought I was a genius.
Little did I know that the stock price would continue to climb after my sale.
At the time of writing, Royal Bank stock is more than 7.5 times my purchase price of $26.92 (and more than 7 times my selling price of $29.05). Did I wish that we had kept these 100 shares and collected those juicy dividends since 2009? Absolutely!
Talk about losing a golden opportunity!
Looking back, I wish I had more knowledge during the financial crisis and purchased a lot of Canadian bank shares. But hindsight is always 20-20 and it’s easy to say “buy” after the fact.
What I learned during the financial crisis is that if a company has strong fundamentals, it is worthwhile to take advantage of the economic downturn and purchase these companies when their stocks are trading at a deep discount.
This is why we purchased a lot of stocks and ETFs during the COVID-caused-market-melt-down in 2020. We also purchased a lot during the midst of the uncertain tariff scares (not really a market downturn).
8.) Core ETFs + satellite stocks vs stocks + a few ETFs
Indexing vs. dividend growth investing: that’s an ongoing heated debate on the internet. In fact, Nelson and I discussed this topic in depth on Episode 4 of the DIY Wealth Canada Podcast.
But let’s move beyond the heated debate and all the academic studies and consider this: your investment goals and what’s more important to you.
If index ETFs make sense for you, stick with what’s working for you. If you want to stick with index ETFs but want to invest in a handful of individual stocks, that’s totally fine too. That’s where the core ETFs + satellite stocks strategy comes in.
Now, if you’re like us, who started with individual dividend stocks (or simple individual stocks) but want to have more diversification by utilizing a few index ETFs, that’s totally fine too. A selection of stocks + a few index ETFs can work wonderfully for many investors.
What I have learned, and the point I’m trying to make, is that there’s really no one way to invest (see Point #6 above). Build an investment strategy based on what makes sense for you and your investment goals.
9.) Be open to new ideas but be careful of online information
Despite 25 years of DIY investing experience under me, I am nowhere near an investing expert. I learned that I need to be open to new ideas and be willing to learn. When cryptocurrency and NFTs (Non-Fungible Tokens) came out, I was open to investing in them. But after doing my research about them, I decided they are not for me. Similarly, when high-yield ETFs like YieldMax and Hamilton ETFs came out, I was interested but after doing my own research, I decided they do not align with our investment goals and decided not to invest in these ETFs.
With so much information available online, you also need to be very careful about what you read, hear, and watch. For example, just because I said Stock A is a solid company to buy, don’t take my word on it. Always do your own research and make your buying and selling decisions on your own.
10.) You’re never done learning
The final thing I have learned after more than 20 years of investing is that I am never done learning.
I have realized that there is always something else to learn. I am not an expert investor and I will never claim to be one. I can learn by talking to like-minded people, I can learn by picking up a book, I can learn by reading personal finance blogs, I can learn by listening to podcasts or watching informative YouTube videos, I can learn by teaching my kids about investing, etc.
I can even learn from re-reading books I have already read.
Be open to learning new things, even from the least possible sources.
Happy investing!
Hi there, I’m Bob from Vancouver, Canada. My wife & I started dividend investing in 2011 with the dream of living off dividends in our 40’s. Today our portfolio generates over $5,000 in dividends per month. We originally dreamed to become financial independent and live off dividends by 2025. Although we could live off dividends by supplementing it with a part time income in 2025, we aren’t in a rush to cross so called “finish line.” Therefore, we are taking it easy and we plan to realize the dream of living off dividends before 2030. This blog originally appeared on Tawcan on Jan. 5, 2026 and is republished on Findependence Hub with the permission of Bob Lai. 