Financial Fitness - January 2019

We are experiencing market volatility that may have some ready to panic. It may be easier said than done, but firstly, don’t panic.

You do not need all of your funds tomorrow and knee jerk reactions to short term volatility is usually detrimental to your long term goals. Key points to remember: volatility is normal. Market declines of 10% or greater are common. Historically, neither volatility nor market corrections have hindered medium to long-term performance. Despite recent losses, investors who have remained in stocks over the past few years are still up. Even with the recent bouts of market declines, all benchmarks have provided positive returns over three, five and ten-year periods of measure. Although the most recent quarter has seen significant losses, these declines over the long term become irrelevant. Here are interesting statistics we often lose sight of during periods such as the current quarter – Market corrections Jan 1, 1928 to October 31, 2018 – Declines of 5% or more happen about 4 times a year (last Nov 2018), declines of 10% or more occur about every 7 months (last Feb 2018), 15% or more about every 1.5 years (last Aug 2011) and declines of 20% or more about every 2.5 years (last March 2009). Selling during a crisis is easy, the hard part is investing back into the markets. Crystallizing losses for no reason can be very difficult to recover. A review of your current portfolio can help you to better weather the volatility – review your time horizon, do you hold more medium to high risk or high risk investments than you are actually comfortable with. On the way up you can usually expect greater than average returns, but the same goes for losses on the way down. Your advisor can ensure that your investments are weathering the volatility at least same as their peers, hopefully better.

Make 2019 the year you take charge of your financial future! Get a second opinion, talk to an advisor today!