The past twenty months has certainly provided investors with the financial roller coaster ride of their lives. Markets fell sharply in the fall of 2008 and continued to quickly lose value until finally, in March 2009, they hit bottom and started to climb back upwards. No matter where you were invested, values were impacted. No region, investing style or type of investment product was immune. Almost every investment type lost value.
History tells us that markets always go up after they go down – and visa versa. But the dizzying speed and depth of the decline had many investors rattled – and in fact, many investors continue today to be anxious about investing their money in stocks and bonds.
But for the long-term investor, it is crucial to keep emotions in check. In fact, last March 2 – the last day to make a contribution into your Registered Retirement Savings Plan for the 2008 tax year – was pretty close to the best day ever to invest for the long term. Canadian markets were up over 30% in 2009.
If investors had continued the disciplined strategy of making an annual RRSP investment, that contribution would be worth a lot more today than a year ago.
If investors had continued the disciplined strategy of investing in their RRSP on a regular basis throughout the year, they would have bought more investments at historic lows and then watched them grow in value - reducing the impact of the down turn.
If they are retirees taking income and had been practicing the disciplined strategy of having two to three years worth of income in guaranteed investments, their income - and therefore, lifestyle – would not have been impacted.
But when things look like they are declining, the media is in a panic, and everyone is running for the hills, it is very difficult to maintain a disciplined investing strategy. That's where the advice and guidance of a professional financial advisor is absolutely crucial to investors.
A financial advisor would have helped clients stay on track through the downturn educating and reassuring them that their long term strategy was sound.
Investors need to get off the fence this RRSP season and speak to their financial advisor about where the investing opportunities are this year. Hiding money in a sock drawer or under a mattress won't get anyone closer to their retirement dreams.
Content on this site is provided for information purposes only and is not guaranteed to be current, accurate or complete. Information herein is subject to change without notice and 1832 Asset Management L.P. is not responsible to update this information, nor does it accept any responsibility for any loss or damage that results from any information contained on this site or accessed through other sites to which this site is linked.