With stock markets falling again on Wednesday, there’s no doubt, panic and confusion are starting to set in.
Buy the dip?
Cash out because this is turning into a meltdown?
Oh, and your line of credit and mortgage are going to cost you an extra $500/mo after the Bank of Canada increased interest rates?
While not pleasant, if you’re near or in retirement, you might be getting the cold check you need without facing a full-on market melt-down. And the check is this; there’s probably too much risk in your portfolio. If you weren’t cutting back your stock market exposure throughout this 10-year Bull run in stocks, your portfolio could be totally out of whack. Time to do some trimming?
In your 40s or 50s with a more balanced portfolio and longer time horizon? These ups and downs are a reminder that markets don't always go up in a straight line, although the last 10 years might have you thinking otherwise. If it's too much to tolerate the volatility of the stock market, then perhaps your portfolio needs some adjusting, too. Also, be thankful you’re still in your higher earning years and have plenty of time to contribute to your portfolio before you ditch your day job.
And for younger investors who are just getting started in the investing game, watching this volatility with less money on the table is an incredible lesson on how unpredictable the markets can be. Keep this in mind throughout your investing years. Once your childcare bills fall away and you’ve got extra money to throw an RRSP or TFSA, you’ll want to figure out what kind of investor you are to keep you on some sort of investing path.
Oh and if you’re not sure how to piece this all together, then I might as well plug my Portfolio Second Opinion service.
This is where I figure out who you are, what your investments are currently in, what hidden fees are lurking about, lay out ALL your options and tell you what should be invested in. I don’t sell things, earn a commission or get kick-backs. I definitely won’t recommend high-fee mutual funds or investments with hidden charges like you know who…
On top of that, you’ll have a professional resource to help answer the nagging questions you’re too embarrassed to ask. Like:
How do ETF’s work? (like mutual funds, but usually better)
Do people get rich playing the stock market? (yes)
Is the Big Short a fair depiction of the investing world? (sure is)
Is my financial advisor actually free? (not a chance)
Most people have an impossible time navigating financial advice from friends, family, the financial media and then figuring out how it relates to their own situation. It’s a legit mess out there. On top of that, everything is sensationalized, nothing makes sense and for the most part, you can only trust banks to look out for themselves.