Investment Insights

Finally spring is approaching and we can say good riddance to winter garb, all that snow, and dark winter days!! It also means we’re getting closer to the end rather than the beginning of this terrible stock market downturn and economic malaise. It’s a matter of time before markets and the economy recover, and I have no doubt they will – I just don’t know when, nor does anyone.

It has been very difficult for all of us to see the depressed state of our financial assets and real estate holdings. Over the past several months, I’ve had numerous conversations with clients and heard many emotions expressed. Some of these include sadness, cynicism, anger, stress, anxiety, and uncertainty. It’s been difficult for me too to have these conversations. As you know, my investment approach is balanced, diversified, and conservative. To see quality investments drop the way they have has been disheartening. I’m sorry we’ve all had to experience this situation. However, markets will always go up and down and there are some lessons to take away from this current bout of market volatility:

* Have a Financial Plan that includes both short-term and long-term financial goals and stick to it. Just because market conditions change doesn’t mean that one’s long-term strategy needs to change.
* Consider what would happen if tomorrow you couldn’t work, walk, or speak or a loved one became seriously ill. Plan ahead and develop a “comprehensive” Financial Plan.
* For short-term goals (e.g., withdrawing income from a Registered account or for an upcoming purchase), protect yourself from market downturns by holding guaranteed assets (e.g., GIC, Money market) that have a maturity date that matches the date the cash is needed.
* Have emergency savings equivalent to at least three months’ gross income, more if you have job insecurity or uncertainty.
* Long-term investors need to learn to take advantage of inevitable market downturns by overcoming their fear and investing more money or arranging a regular monthly contribution to take advantage of dips. Learn to view these downturns as opportunities to buy assets “on sale”.
* The key to wealth accumulation: spend less than you earn and control debt, not just today but everyday.

Finally, all too often volatile capital markets cause us to forget about ourselves. The stress and uncertainty of the markets can take their toll on us. I encourage you to take time to maintain your personal health and well-being.