Mainstreet Blog

Written by: Shawn Gethke | Investment Advisor | Credential Asset Management Inc. | Goderich

Investing in the markets isn’t always the right fit for everyone when it comes to deciding how you will save and grow your money over your lifetime.

It’s important to do investment and financial planning with a trusted and qualified advisor. During your planning they will focus on ensuring you have the right product mix and diversification based on your financial goals, risk tolerance, and the amount of time you have to be invested. In the end you should have an investment plan and strategy unique to you.

When deciding whether to invest in the markets, it’s important to consider that the markets can fluctuate up and down. Your advisor will work with you to identify if there is enough time to leave the funds invested in the markets before you need to begin drawing on those savings. With time on your side, if the market takes a hit and investment values dip down, you won’t need to draw on those investments and can leave them there until the markets have recovered to the original amount you invested at or higher.

It is important to remember that a decline in market value is a temporary state, you haven’t “lost money” unless you sell your investments at a lower price than what you bought them for. If our market history has taught us anything, it’s that over time markets have always recovered.

For those with less time to save before needing the funds, or wanting savings with less potential associated risk, term deposits (including index-linked term deposits), and high-interest savings accounts are often a better fit as they guarantee a set interest rate and you won’t lose the amount you invested. These types of investments, although a lower risk, tend to offer lower growth potential because of lower interest rates, when compared to market-based investments.

For investments that are intended for the long-term, market-based funds provide a greater opportunity for growth. With time on your side, you can withstand market fluctuations. Taking more risk in the early stages of life and your investment journey, then slowly lowering risk as you approach the date of your retirement, or when you will want to begin drawing on your savings, is a wonderful strategy for investing. Also consider a drip approach for your contributions, which is the act of making regular and frequent, even if small amounts, of contributions to your investments. This ensures you are investing throughout market fluctuations, which will help to average out the risk and price you are buying into the markets.

Investment market fluctuations are inevitable and a normal part of the market cycle. The value of having an advisor you trust, whether at Mainstreet or another provider, is they can help you make strategic decisions for your investment plan, encourage you to stay the course during market dips and not sell low, help you navigate the market overall, and update your investment and financial plan as your goals, age, and risk tolerance changes.

You’re not alone in your investing endeavours, we’re here to help.  Book a meeting with an advisor today.

Shawn Gethke | Investment Advisor | Credential Asset Management Inc. | Goderich
Book a meeting with Shawn Gethke today.

Mutual funds are offered through Qtrade Asset Management (a tradename of Credential Asset Management Inc). Mutual funds and other securities are offered through Qtrade Advisor, a division of Credential Qtrade Securities Inc.

This material is for informational and educational purposes and it is not intended to provide specific advice including, without limitation, investment, financial, tax or similar matters.

“The four most dangerous words in investing are: “This time it’s different”.”- Sir John Templeton

Whether it was SARS, the housing crisis of 2008, or other world events that came before, we probably caught ourselves thinking “this time is different”– this time housing prices, the markets, whatever it may be, will plunge and not recover. Yet if history has taught us one thing it would be you would have been wrong, markets have done one thing over time- go up. So why is it every time there is a bump in the road we feel like “this time is different”?

The latest bump in the road is the impact on the investment market as a result of the fear surrounding Covid 19 (Coronavirus). The global threat of the virus spreading and how that will affect our economy continues to impact the investment market. It’s important that we look at the market changes in context, which is that over the past 10 years the S&P 500 index has more than doubled in value. Less than 2 weeks ago it was at an all-time high. This all-time high was achieved despite wars, recessions, global panics, political scandals, and any number of troubling events stretching back over dozens of years. The index has rebounded from every other event which occurred during the 20^th century and there is no reason to believe this time is any different. Sometimes it rebounds quickly, sometimes it takes a bit longer. The important thing to keep in mind is that recovery has always occurred.

The media has painted the situation with one brush, that the stock market has plummeted. A balanced, diversified and reasonable portfolio gets ignored in the hype. It is all about risk and reward- if you are heavily invested in equities you will have seen a bigger decline but during good times you likely experienced higher returns. Alternatively, a more diversified portfolio would have experienced a smaller decline with slightly lower returns when markets are performing.

When markets decline, whether it is 1% or 12% or more, even the most seasoned and intelligent investors can succumb to fear and panic. Panic selling leads to locking in losses, possibly never reinvesting, or making even riskier choices to try to make up lost ground. Market conditions come and go.  This is repeated time and again. There is never a sign held up indicating “troubling times are about to begin”; likewise there is never a sign held up indicating “all clear” however history has shown that no global health crisis has had an enduring impact on the market’s growth.

Your best bet is to invest on a regular basis in a thoughtful manner balancing stability, risk, and opportunity. Invest in a manner that respects your own tolerance for volatility. Sleep soundly at night by sticking with your plan and taking comfort in decades of positive market history.

If you are about to hit “sell” and jump out, call your advisor, it is times like this that their advice can help you from locking in losses and give you the confidence through the turbulent times so you can be there to reap the rewards when markets recover and once again grow.

Disclaimer:

Mutual funds are offered through Credential Asset Management Inc. Online brokerage services are offered through Qtrade Investor. Mutual funds and other securities are offered through Credential Securities. Qtrade Investor and Credential Securities are divisions of Credential Qtrade Securities Inc. Credential Securities and Qtrade are registered marks owned by Aviso Wealth Inc.

Written by: Jennifer McQueen (Investment Advisor – CFP, RRC)

You’re 28 years old. You’ve been applying to be a contestant on Survivor for 10 years now. You’ve watched the show since you were a kid waiting for your chance to compete. You haven’t given up, and you FINALLY get chosen. You quit your job, pack a small bag of clothes and leave your whole life behind to reach the goal of being the ultimate survivor and winning the $1-million cash prize. You get to the island and it is completely different than you thought. You are sleeping on a rickety bamboo platform, it has been raining constantly for 3 days and you’ve barely eaten because you can’t keep a fire going long enough to cook the small amount of rice each person has been given. How are you going to get to day 39? You think about giving up and going home but if you give up, you won’t reach your goal.

Now, picture yourself today. You’ve just entered the workforce in the career of your dreams. Instead of spending 39 days on an island, you are now planning to work for 25 – 30 years with the ultimate goal of enjoying retirement. How will you get there? What do you do? What does an enjoyable retirement look like for you? The first step is finding a Financial Planner that you trust to lead you through the process.

Financial planning is a circle, not a straight line. There is no end. Constant review and re-evaluation is key to achieving success. Setting new goals and adapting existing ones to meet your current situation is paramount to reaching the top.

Investing in mutual funds can be an up and down ride. Economic cycles change at the drop of a hat without notice. And after seeing your portfolio drop 20% in 3 months you may be thinking it’s time to call it quits. But if you give up, you won’t reach your goal and could miss out on some of the best returns trying to time the markets. For example: If you had invested $10,000 on August 1, 2002, and during the market decline of 2008/2009 you chose to change your investment to something more conservative until the volatility evened out – if you missed only the best 10 days in the Canadian market from then until December 31, 2018, you would have missed out on over $15,000 in growth – and being that much closer to your goal.

Your advisor is there to help you. They are here to give you advice and to show you how you will still be able to reach your goal within your time frame – even if it means having to change the path.

The average CPP in 2019 is $683.65 per month starting at age 65*. Relying on only programs like this may not afford you the kind of retirement you’ve always dreamed of. If you don’t have an advisor helping you understand what the future may look like, and showing you the way to get there, you could miss out on something great. And if you leave the island before the final immunity challenge, or stop applying to be on your favourite show, you won’t reach your goal.

Whatever your income level, whatever your job, whatever your age, whatever your financial status…always have a goal and a way to reach it. Financial planning is for everyone, not just the rich and famous, not just the doctors and lawyers of the world, everyone can benefit from having a plan and an advisor to help them reach those goals.

*Source – https://www.canada.ca/en/services/benefits/publicpensions/cpp/cpp-benefit/amount.html

Disclaimer:

Mutual funds and related financial planning services are offered through Credential Asset Management Inc.

Jennifer McQueen
Investment Advisor – CFP, RRC
Credential Asset Management Inc.
Chatham Region & Mount Brydges

Jennifer has been working in the investment industry since 2004. After graduating with an Honours BBA degree from Wilfrid Laurier University, Jennifer continued her education by obtaining FPSC’s Certified Financial Planner® and Registered Retirement Consultant® designations. Jennifer believes in building a holistic financial plan by reviewing a member’s full financials whether they are planning for, or already in, their retirement years. Outside of the office, Jennifer enjoys spending time with her family and friends, traveling, cooking, and watching sports.

Book a meeting with Jennifer