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Get Back to Basics with Your Investments
For new, or even experienced, investors — a rocky, volatile market can be daunting. If you’re wondering where to start or where to go from here, we’ve compiled a few tips for continuing to build your investment portfolio during difficult times.
- Don’t stop saving! The most important thing you can do is continue to put money into savings and investments. When times are tough, it can be tempting to reduce the amount you usually put into savings to have more liquidity, but being stingy now can affect your future plans and goals big time. The worst thing you can do? Get spooked. Remember, market volatility is inevitable.
- The age-old question, TFSA or RRSP? If you’re in a higher tax bracket now than you will be when you withdraw your money, you may want an RRSP. If you expect your tax bracket to go up later, a TFSA might be the best plan!
- Keep it guaranteed. If you’re concerned about volatility, you can opt for a guaranteed investment certificate, treasury bill or money market fund. Be aware that although your money will be secure, the growth will be negligible.
- Know your risk tolerance. If you’d like to consider other ways to invest, your options will depend on your goals, risk tolerance and time horizon. Find a knowledgeable advisor who can help you make your choice but, ultimately, it will be a personal decision. Remember: volatility and risk are two different things, and volatility not only carries a greater risk — but greater potential for growth.
- It’s the long game. If you believe that the market will go up long term, your best bet is to invest what you can from day one. Don’t split the total amount you have to invest and do it over time; invest your money upfront and trust in the long-term growth of your portfolio.
- A little at a time. When you don’t have a lump sum to invest, you can instead save systematically. Arrange to have a specific sum withdrawn from your chequing account (to coincide with payday, for example) and transferred to your investments. This is a great option if you’re unable to invest a large sum upfront.
- Review annually. Every year you should review your investment portfolio to ensure it still aligns with your goals. As you get closer to retirement, for example, your risk tolerance may change.
Source: Investing in a Volatile Market
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