Stay Calm and Invest on

 

In stormy markets, keeping a sense of perspective can help you stay on track to reaching your long-term goals, like retirement or a legacy for your family’s future.  When the markets are particularly volatile, there’s a natural tendency for investors to move into safer investments, hoping to avoid further losses, and wait until the markets recover.  But unfortunately it’s nearly impossible to predict when the markets will recover.  As a result, investors may miss out on the eventual recovery, which can negatively affect their long-term investment goals.  As the chart below shows, the investor who stays invested tends to do better than the investor who bails out and misses even some of the recovery.

 

 

Avoid market timing

 

Some investors try to improve their returns attempting to “time” the market – selling right before the markets go down, then buying right before they go up again. In theory, this sounds great. But in practice, it rarely works, simply because it’s so difficult to predict when the markets will go up or down. Unfortunately, that doesn't’ stop investors from trying, which is why the “average investor” tends to under perform virtually every asset class.

 

Maintain your sense of perspective

 

Unquestionably, stock market downturns can be painful, especially when you’re in the middle of one. It’s not always easy, but it’s important to remember that downturns have happened before – and will happen again. Historically, the markets have always recovered and reached new highs, as the table below shows.

 

Reassess your comfort level with risk

 

It’s one thing to say you are comfortable with a higher level of risk when the markets are only going up, and another thing when the markets are volatile. If you are finding it difficult to sleep at night because of market volatility, then it might be time to consider how much risk you are truly comfortable taking with your investments. Contact me today at 604 981 2306 for a portfolio review.