Investing during volatile times

Unless you have been living under a rock these past few weeks you have noticed the major swings in the equity markets. If it isn’t the news about Greece, it was the slump in oil prices or the economic slowdown worries of China. You can list more too. There aren’t very many rays of sunshine out there right now. As an investor, what are you to do? Over my 22 years in the business here is what I have learned.

Never panic

I have yet to see someone who panicked benefit from that moment of panic. If you keep emotion out of your investing decisions you would be hard pressed to make a poor decision. It is your money so I know it is hard to keep emotions out of it but if you can, that goes a long way to making sure you don’t panic.


Don’t have all your money in Canadian Equity or Global Bonds. Have your investment fingers in    all aspects of the investment pie. Make sure you own some bonds, some Blue Chip equities, Europe, USA etc. By diversifying via geography and/or sector for example you will have money in areas that will be performing well. You will also have money in areas that won’t be performing great right at that moment but they will at some point.

Have a plan

If you have a plan on why you are investing, a purpose for your money then you will the proper vision for your money. We preach long term vision but sometimes we are investing for the short term and with that in mind we would invest our money properly. A written plan, have something down on paper that shows what you are investing for and why will also go a long way to successful investing.

Be realistic with your return assumptions

Have realistic expectations on what kind of returns you will get on your investment. If your expectations are way out of whack to what you will most likely get in return, you will always be disappointed. It will never be good enough.

Rebalance your portfolio

Don’t get greedy. Re balance your portfolio. Take some profit and move it somewhere safe. Purchase equities when they are down from a cash position. If you never re balance and the market corrects then that profit that you could have had will be gone. There is nothing wrong with taking a profit and keeping it.

Review your portfolio

Review your portfolio regularly. Review with your Advisor or review it yourself if you are a do it yourself person. Do not ignore your portfolio no matter how much money is in there. It is your money so take it serious.

These are just a few of the things that I have seen successful investors do that unsuccessful investors don’t do. They are simple yet effective. Saving is hard, spending is easy. Saving requires sacrifice for the future. Saving is discipline and discipline is hard. Stay focused, do not listen to the white noise out there. There are no experts out there when it comes to the market. If any of us were experts we wouldn’t need clients, we wouldn’t need to work and we wouldn’t give our secrets away. Put your money away, have a plan and don’t panic.

Written by Scott Wallace

Scott Wallace has been in the Insurance and Investment industry for the past 19 years. His role is to take what is important to his clients and help them make those dreams a reality. Scott is a CFP, CLU and a Qualifying and Lifetime Member of the Million Dollar Round Table.

2 Responses to Investing during volatile times

  1. Investing during volatile times


    The most important things you’ve said are, in order (my opinion):
    – have a plan; this will determine the returns you will expect, the levels of diversification and risk present in your portfolio, and the level of involvement in monitoring your portfolio
    – review your portfolio; even if most of us are not day-traders, we must be involved in the management and monitoring of our retirement capital; even when relying on advisors, we must be aware of what/where our money is invested.

    If you know enough about your portfolio, you won’t panic; you may need to act, but it won’t be erratically.

    Investing is not a static endeavour. The internet for instance has changed everything for the retail investor. Financial products and companies change all the time. ETFs did not exist when I started investing, but mutual funds did. REITs did not exist. Income trusts were dramatically chopped in October 2006, but trust units and royalty funds still exist to provide cash for shareholders. Closed-end funds are a relatively recent financial product available on the TSX.

    RRSPs are not that old and TFSAs are very recent.

    Re-balancing is part of the function of mutual and closed-end fund managers; that’s why so many of us use these investment vehicles that charge management fees.

    Personally, I diversify with TSX listed companies or funds which are involved in foreign markets; I don’t invest in foreign companies, it’s just too “foreign” and complicated to me. I also invest only in Canadian companies or funds that pay me cash; I am just not dedicated enough to monitoring my portfolio or searching for opportunities nor smart enough to know when to buy and sell for profit.

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