When you experience financial uncertainty, it can be difficult to hold tight and ride out the storm.
If you’re a regular contributor to mutual funds, tax-free savings accounts or other financial vehicles, drawdowns in the markets actually provide opportunities to adjust your approach to saving for, or enjoying your retirement.
Stu Tunheim, a consultant with IG Wealth Management in Courtenay, engages in such conversations daily, especially with the COVID-19 pandemic affecting consumer confidence. He has a similar message for most clients:
“I think it’s important for people to stick to their plan,” he says. “At the same time, people’s concerns about their investments are very real and there may be a need to make some adjustments or tweaks here and there. That’s why there couldn’t be a better time than right now to review your plan.”
Markets historically bounce back
While no one can predict the future, the markets rebounded from the past two market drawdowns – the tech bubble burst in 2000 and the 2008 recession. The concept of dollar-cost averaging – continuing to invest regardless of price – offers the advantage of your dollars going further when prices are low, which can give you higher overall gains when the market comes back up, Stu says.
“Staying in the markets can be a big part of that,” he says, adding that pulling money out of one financial product and missing out on its best few days of growth in a year can significantly affect your growth by the end.
It’s all how you look at it
Stu references billionaire investor Warren Buffett, who has always been a fan of digging in when times get tough. In 2008, during the peak of the sub-prime mortgage crisis, he wrote a letter to the New York Times.
“A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful … most major companies will be setting new profit records 5, 10 and 20 years from now … In short, bad news is an investor’s best friend. It lets you buy a slice of America’s future at a marked-down price,” Buffett wrote.
Diversification always a good idea
Whether you’re retired and drawing income from your savings, or still building your retirement nest egg, diversifying is a good way to prepare for future downturns, Stu says. While not everyone is able to invest more right now, if you have cash sitting on the sidelines, “now is a really good time to invest it,” he says. “We’re investing for your long term.”
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Courtenay’s IG Wealth Management team is working remotely, but you can reach Stu on his cell at
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Trademarks, including IG Wealth Management, are owned by IGM Financial Inc. and licensed to its subsidiary corporations. This is a general source of information only. It is not intended to provide personalized tax, legal or investment advice, and is not intended as a solicitation to purchase securities. Stu Tunheim is solely responsible for its content. For more information on this topic or any other financial matter, please contact an IG Wealth Management Consultant.