Conventional wisdom about investment—diversify your portfolio, invest early in dividend-paying stocks, and protect your immediate financial stability—is sound. It’s great advice. But what if your introduction to investing comes later in life? What if, in your mid-30s, 40s, or even 50s, you’re just realizing the missed opportunities of the past 15 years? Perhaps you’re grappling with the could-have-beens of investing in blue-chip stocks that, by now, would have been lining your pockets with substantial dividends.

For many, including myself, a lack of financial education paired with disinterest in savings hindered early investment. I found myself a little too comfortable spending just a bit more than I made, cushioned by the option to skip a mortgage payment each December—a seemingly small choice that quietly compounded interest and debt over the years.

As I matured alongside my financial obligations, I came to understand my approach was all wrong. I should have been striving to earn that extra $100 a month rather than looking for ways to defer payments. There was no machine to take me back to my twenties, no way to start scooping up valuable stocks from the past.

So, I faced the present with an adjusted perspective. Interest rates were historically low before COVID-19, and conventional investments like Guaranteed Investment Certificates or regular bank stocks weren’t going to catch me up. Penny stocks became my classroom; here, losses were frequent, but the lessons were invaluable. I learned not just about markets but about investor behavior—insights that could only be gleaned through experience, not textbooks.

This painful yet enlightening phase taught me to discern value in unexpected places. Gradually, I recognized potential in small-cap stocks—companies on the brink of profitability yet overlooked by most. Investing in these required boldness. It wasn’t gambling; it was a deliberate strategy of concentration over diversification. While traditional advice shuns putting all your eggs in one basket, I found that focusing all my efforts on one promising stock at a time offered control and, potentially, greater rewards.

I’ve taken significant risks, but these were calculated and based on thorough research, not whims. As a result, I’ve reached milestones that once seemed out of reach, proving that even unconventional strategies can lead to financial security. This strategy of going all-in, risky as it may seem, has been my only path to catching up financially and preparing for a secure retirement.

Warren Buffett once advised, “When it rains gold, put out the bucket, not the thimble.” In investing, as in life, sometimes the conservative path offers too little to those of us starting late. Is there another way to achieve substantial financial gains without focusing intensely on a single undervalued stock? So far, I haven’t found one.

The Globe and Mail has been instrumental in shaping my financial education. Despite its cost, I prioritize this resource above luxury items and even some utilities, given its insights on investing, economic conditions, and personal finance management. While the paper continues to advocate for long-term investing—a difficult feat for many of us nearing middle age—the necessity for taking perceived big risks to achieve significant financial gains in today’s economy is evident.

This isn’t mere advice; it’s a reflection of my journey through the financial markets as an average person who had to learn everything the hard way. I’m not suggesting you speculate recklessly but encourage you to assess all market opportunities. When you spot a real deal, don’t hesitate to invest heavily. After all, the best investments are those where the risk is mitigated by thorough research and a clear understanding of the market.

In conclusion, consider the criteria I use to identify promising investments, which go beyond simple profitability and low forward P/E ratios. My approach includes a comprehensive checklist to ensure that every investment has robust growth potential and isn’t just a fleeting opportunity:

1. Profitability: The company must consistently demonstrate net profit, showing it can convert sales into actual profits effectively.
2. Low Forward P/E Ratios: This metric helps me gauge if the stock is undervalued compared to its earnings projections. A low ratio suggests the stock is relatively cheap based on its future earnings potential.
3. Growth Potential: I look for companies with a clear path to growth, either through innovative technologies, market expansion, or unique business models that are scalable.
4. Well-Covered Dividend: The dividend should not only exist but be well-covered by earnings to ensure sustainability and indicate financial health.
5. Canadian Stock: Focusing on Canadian stocks helps manage foreign exchange risk and aligns with specific tax advantages like those offered by a TFSA.
6. Small or Micro Cap: These stocks often present higher growth potential than large-cap stocks due to their lesser-known status.
7. Investment in a TFSA: Utilizing a Tax-Free Savings Account ensures that gains are not eroded by taxes, maximizing the return on investment.
8. Recent Increase in Dividend: A history of at least a few quarters of dividend increases can signal a company’s growth and financial stability.
9. Limited Analyst Coverage: Stocks followed by few analysts are less likely to be overvalued due to excessive market attention.
10. Not Widely Covered Online: Avoid stocks that are the current darlings of popular financial platforms like Motley Fool, as their upside might already be fully recognized by the market.
11. Annual Growth: Look for companies with a track record of at least 30% annual growth, not due to anomalies but sustainable business activities.
12. Established Industry with AI Integration: Companies that not only operate in established sectors but also integrate innovative technologies like AI are positioned for modern challenges and opportunities.

By adhering to these criteria, I ensure that I’m not just catching any wave but riding a powerful swell that’s less likely to crash prematurely. It’s about digging deep and finding those gems that others might have overlooked but hold significant potential for robust growth. This careful, criteria-driven approach minimizes risk and maximizes the chances of significant financial gains, essential for anyone playing financial catch-up in today’s economic environment.

I encourage you to develop your own set of rigorous criteria based on your financial goals and risk tolerance. Remember, the more checkboxes you tick, the lower your risk and the greater your potential for success. Let’s continue to navigate these challenging financial waters together, armed with knowledge and a strategic approach to investing.

Disclaimer: This blog post is based on my personal experiences and insights into financial investment. I am not a financial advisor or analyst. The information provided here is for educational and informational purposes only and should not be construed as financial advice. All financial decisions should be made based on your own research and in consultation with a financial advisor. Investing involves risks, including the potential loss of principal. I encourage you to approach investing with caution and due diligence.