The stock market is the only place where things go on sale and buyers run for the door. Volatility may be an unwelcomed guest, but it’s historically been a frequent visitor. Though negative market performance is enough to make even the most seasoned investor panic, it’s not always a sign to abandon ship.
In fact, the past has shown us that the majority of serious events
resulting in more than a 10% dip have had a significant rise in
markets follow suite.
We came up with these five tips to keep in mind to help ride out the uncertainty ahead.
Data shows that market timing is not a great investment strategy: it can even lead to the depreciation of your capital. We recommend saving over the long term with sporadic readjustments. By investing early on, your investments have more opportunities to grow and you’ll have more time to recover from any potential losses you may incur.
Easier said than done, we know. But do what you can to set your emotions aside. If you’re having trouble sleeping at night, speak with your advisor. They’re there to help guide you through a whole range of emotions that we’re all feeling. Your repertoire of street smarts serves you well in a day-to-day context, but in a financial arena, emotional biases stem from impulsive reactions or gut feelings not founded in actual fact.
Now’s a great time to talk about periodic savings initiatives. Investing a fixed amount at regular intervals increases your chances of buying more units when the market falls, and less so when they rise again. Your capital is continuously growing and your purchasing power climbs steadily over the years.
Radically changing your investment strategy when the markets go down could result in regret down the line. It’s important to reassess what your risk tolerance is (how much risk you’re willing to take on your investments) and your investment horizon (the point at which you’re going to need to cash in that money) and stay loyal to those beliefs.
Asset classes are sensitive to market fluctuations, and it’s outside of our control to know which ones will be affected next. Ask your advisor if your assets are adequately allocated rather than withdrawing from the market entirely. It could allow your money to grow in other sectors or securities that are more promising. Rebalancing can be a profitable strategy if you eventually benefit from a rebound in the market or gain value by dipping into different asset classes.
Sure, the ride feels bumpy right now, but it won’t be that way forever. Favour the long term; short-term anxieties may tempt you to part ways with your assets when, historically, volatility occurs for a far shorter period than a rise in the market does.
The information and the data supplied in the present document, including those supplied by third parties, are considered accurate at the time of their publishing and were obtained from sources which we considered reliable. We reserve the right to modify them without advance notice. This information and data are supplied as informative content only. No representation or guarantee, explicit or implicit, is made as for the exactness, the quality and the complete character of this information and these data. The opinions expressed are not to be construed as solicitation or offer to buy or sell shares mentioned herein and should not be considered as recommendations.
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