COVID-19: 5 tips for investing during a crisis
Article revised on 9 June 2020
Whether you’re 20, 40, or 60, the latest stock market upheavals have probably made you uneasy. Here are 5 things to keep in mind to help you stay grounded in the middle of the storm.
1. Look to better days
It’s never easy to see the value of your investments crash. But if no one wants to buy, it’s definitely not the time to sell! Keep your titles and continue to trust in the work done with your trusted financial security advisor beforehand. It’s best not to try to time the market: this strategy is usually bound to fail in the long-term.
Finally, keep in mind that a loss on paper is just that… on paper! It’s only a loss if you sell the stock concerned. Once an effective treatment or vaccine against COVID-19 is found, the market may very well bounce back. Then, you’ll be glad to have waited patiently.
2. Minimize the panic associated with market volatility
Investing is not very complicated… keeping your emotions in check, however, is another thing! Implement strategies that will keep you from acting impulsively.
For instance, if checking stock prices daily stresses you out, then stop doing it! Space out the times when you check your investment portfolio. You’re investing for the long-term, after all!
3. Respect your investor profile
The questionnaire aiming to define your investor profile is the starting point in devising your investment strategy. And during this time of crisis, it may be wise to revise it. Don’t hesitate to contact your financial security advisor now to discuss this.
It is recommended that you update your profile every two years or in exceptional situations. The goal is to optimize the distribution of assets based on your actual risk tolerance. And last but not least, good diversification is the key to successful investments.
4. Spend on low-priced stock
A down market is the perfect opportunity to buy stocks at great prices or to reinforce certain quality investments. And who doesn’t love a good sale, right?
So if your tolerance to risk allows it and your investments are spread over several years, use this opportunity to occasionally invest small amounts in titles you’ve been eyeing. Periodic investments, which consist of investing a fixed amount at regular intervals, is a solution worth considering. It reduces the risk of buying too early or too late, all while weighting your average buying cost.
5. Plan for your impending retirement
If you’re retired or semi-retired, you should proceed with caution. It’s time to have a videoconference with your financial security advisor, who will assess your investment portfolio based on your retirement goals.
Changes could be made to your asset distribution if you’re planning to retire in the near future. But be careful! There’s no need to keep excess liquidity in order to meet your needs in the coming years. You’ll only get minimal interest on those. What if making smaller, more frequent withdrawals made it easier to manage your cash flow when you retire?
Need financial advice?
Contact one of our financial security advisor!