Market Volatility

COVID-19 has proven to be a challenge on two fronts. As a health emergency, it is a global threat that doesn’t discriminate and can spread rapidly. Prevention of this spread, through social distancing practices, leads to a second effect, a significant slowing of the economy. There was no choice, it simply happened, and it has had a major impact on the investment portfolios of most Canadians.

Even before COVID-19, Government of Canada research revealed employees who are dealing with financial stress are five times more likely to be distracted at work and 46% spend three hours or more per week dealing with financial issues. Financial stress over time can turn into physical health problems such as heart disease, high blood pressure and depression and anxiety. 

Current market conditions are most definitely a source of concern for everyone, from the high stakes rollers in the investment world, to the average person stashing RRSPs away for their retirement. Here are some important things about investing to remember during these difficult times.

In the financial markets, there is no escaping volatility

Volatility is an integral part of financial markets. It’s what makes them tick. Market declines follow the onset of many major events: World wars, oil shortages, collapse of the housing market, terrorist attacks and, yes, pandemic health events. Historically, the market comes back every time and grows steadily. Sometimes the recovery is not as fast as we’d like, but markets are built to continue growing.

Buy low, sell high – this is when it matters

If an investor sells everything in response to a deep market decline, they end up selling their investments at a time when prices are unusually low. Historically, markets rebound, and as they do, the shrewd marketers, those who have invested while others were selling low, will enjoy the benefits when prices bounce back. Unless you’re a qualified market analyst with a specific investment strategy, patience is generally the best virtue.

Focus on your long-term goals and not the short-term market fluctuations

Think about why you’re investing. Maybe you’re saving up for a house, your children’s education or for your retirement. Stick to your plan. Remember the “buy low, sell high” rule? Well, this is the low! Your regular investment schedule will likely result in you getting more units for every dollar, so when the market does rebound, you gain even more. Stay the course. If history is any guide, things will turn out well in the long-run.

Ask a professional

These are the most basic strategies of investment and your personal circumstances must be taken into account. Call your investment advisor to discuss your goals and your portfolio. If you don’t have one, call around and speak to a few, get references from your friends, but find one. It’s money well spent.

COVID-19 has had an impact on financial markets that few would have predicted in January. Some days it may seem like the sky is falling. Investors can take a loss, hold steady, or find opportunity in these situations. Speak to a financial advisor to find the path that’s best for you.

Chambers Plan

Chambers Plan

Chambers of Commerce Group Insurance Plan is Canada’s #1 employee benefits plan for small business. Chambers Plan has been protecting Canadian firms for over 40 years. As a not-for-profit, any surpluses are reinvested to the Plan to support industry-leading stability. That's why more than 30,000 small to midsize businesses trust Chambers Plan to protect their employees.