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Learn MoreInvesting is a great way to grow your savings for longer-term goals like retirement, buying a house, or helping your kids with education.
Investments are products you purchase to save for your future. These include mutual funds, stocks, bonds, and exchange-traded funds (ETFs). You can hold investment products in a registered savings account (like a Registered Retirement Savings Plan, Tax-Free Savings Account, or First Home Savings Account) to save on taxes.
When you invest, it’s important to have a plan and stick to it, despite what you may see in the news about the market. We met with Jessica Rivera, Financial Advisor at Cambrian and Aviso Wealth, to learn about why it’s important to stay invested, even in uncertain times.
Market volatility measures price fluctuations in the stock market. Fluctuations are normal and are to be expected when dealing with investments. They can even be advantageous.
Example: When the COVID-19 pandemic started in March 2020, there was a major drop in the stock market and lots of people sold their investments in a panic. Others saw the opportunity to buy stocks at lower prices. Over the next couple of years, as the market recovered, these investments increased in value, so it paid off for those who saw their chance.
You might be tempted to look for results quickly, but remember, the long-term nature of investing is key. That’s why when markets get uncertain, it’s important not to panic and withdraw your investments, like many people did at the beginning of the pandemic.
“Pulling out during volatility might feel like a relief, but it often locks in losses and causes you to miss the rebound,” says Jessica.
Markets have gone through wars, recessions, pandemics, and more, and they’ve still recovered and grown. Jessica says she uses long-term historical data to show members that volatility isn’t new.
Staying invested means you’re still in when the markets recover and historically, those recoveries are where much of the growth happens. The ebb and flow of the market make up the natural cycle.
If you just look at investments short-term, you’ll miss out on some benefits. If you wait and stick to the plan, it should pay off in the long run.
“We can’t control the market, but we can control your plan and how we respond when there is market volatility,” says Jessica, noting it’s important to understand your long-term investment goals and your personal risk tolerance.
Risk tolerance is the level at which a member is comfortable with volatility in the market. It is important that your portfolio reflects your goals as well as your risk tolerance.
“If someone tells me they are not comfortable with a lot of risk, we don’t try to force something aggressive,” says Jessica, “we build a plan that makes sense for them."
If someone has a lower risk tolerance, we concentrate on more conservative investments in their plan. We strive for balance in having peace of mind without sacrificing progress.
“It’s not just avoiding risk,” says Jessica, “it’s about building confidence.”
When you create an investment plan with a financial advisor, you would have already planned for the ups and downs in your portfolio.
“My advice is always to trust the plan we have made, concentrate on your goals and objectives and remember you are not going through this alone,” says Jessica. “We’re here to walk through it with you.”
Creating an investment plan is a great way to work toward your financial goals, and we can help. Book a meeting with a financial advisor today!
Disclaimer
Mutual funds and other securities are offered through Aviso Wealth, a division of Aviso Financial Inc.
We would be happy to discuss your unique situation with you.
Our goal is to make complex topics like this one, simple.
