As we enter 2019 most of us become overwhelmed by the task of making our annual contributions to our RRSP and TFSA accounts. We recognize that the contribution is critical as our retirement years are not too far off.
On a positive note you are in a great position to seek out a meaningful conversation with your financial advisor. After all do you think your advisor would say no to you knowing that you and your spouse are planning on making contributions to your RRSP accounts, TFSA accounts and in some cases your children's RESP accounts?
This month's blog is about how you can prepare for your next meeting.
Let's take a step back and review what happened to the stock market for the period of October to December. From the peak to the trough (Christmas Eve) the correction was "almost" 20%.
Let's take a moment and ask yourself the following questions? How frequently were you looking at your "online" investment statements? More importantly what emotions were you feeling at that time? The reason why I ask these questions is that when your advisor and you are establishing your investment mix (between Cash, Bonds, and Stocks) the surrounding environment is usually one of calm and rational thinking.
For example you may have completed a questionnaire that helps determine your Investment Objectives and Risk Tolerance? When you last completed the questionnaire what was the stock market like? If there were years where the stock market was rising what was your frame of mind?
One of the questions that always struck me as odd is the following: "Short-term losses are acceptable if I have confidence that the long-term returns will be good." If one were to answer this question today I believe that the answer would differ than if this question were answered 5 years ago. Having said this I believe that answering this type of questionnaire now would be beneficial. The reason is that for each of these questions you have the benefit of being able to discuss these issues with your advisor and reflect upon the recent decline in the market as a guideline for how you really feel.
As Warren Buffet said, "Investing is Simple but it is not Easy".
I would encourage you to set up a meeting and request to complete a questionnaire that will help determine what are your Investment Objectives and Tolerance to Risk?