Directing the Investment Focus

A month ago, I had $5000 to invest. I decided to buy stock through my tax free savings account (TFSA). The beauty of this is that any gains I make are TAX FREE!!!

My strategy for investing combines personal preference, current events, and research.

My personal preference is the financial sector. Canadian banks managed to weather the storm of the economic crisis for a number of reasons, but the fact that they stayed afloat makes them a gem in the financial rough.

Current events tell me that other countries are looking to Canada as an example of a successful financial model in a greedy, changing and turbulent world. The G7 finance ministers met in Iqaluit, Nunavut, Canada to talk business. Toronto is developing and marketing themselves as a global financial hub.....and the list goes on. By the way, this is information that I learned from watching BNN, National news, and reading newspapers.

Now I want to narrow my focus by doing research. The first step: I want to find the five largest banks in Canada (remember, the larger the company, the lower the risk). A simple Google search of “5 largest banks in Canada” brings up (surprise Wikipedia): http://en.wikipedia.org/wiki/Big_Five_(banks)

Here I find that the five largest banks in Canada are:
1.) Royal Bank of Canada
2.) Toronto-Dominion Bank
3.) Bank of Nova Scotia
4.) Bank of Montreal
5.) Canadian Imperial Bank of Commerce

There, the hardest part is over. Choosing an industry and narrowing it down to the top 5 leaders. The point I want to make here is that there are a million companies to choose from, and this is where it's easy to get overwhelmed with information. There's so much of it out there. I use the simple steps above to direct my focus.