The principles of financial planning will apply differently to each investor’s situation.
Here is an example:
It is often quoted in mainstream media that a TFSA is better than an RRSP. However, that statement is far too general to have any meaning. Whether or not that statement is true will be different for every investor. That is why you partner with me. I will present relevant information and together we will implement it into a plan that will help you achieve your long term goals,
So let’s discuss the question that is on a many investors’ minds. Will there be a recession?
The short answer is yes. There are 2 reasons why there will be a recession(a bear market). The first is that the long upwards trend of the stock market(the bull) has been going on for a longer than average time. The market has always shown its cyclicality.
The second reason is that there is a lot more uncertainty in the stock market(I will not discuss the reasons why, that’s another blog post). Uncertainty contributes to the up and down movement of the stock market which is called volatility. Volatility will not in itself contribute to a recession.
A recession will occur when 2 events happen. First when there are far more stock sellers than people who want to buy stocks. Yes stock market movement is based on sentiment. Also when corporations and individuals find it difficult to borrow money (when credit is less accessible) then liquidity(money movement) will lessen economic activity. If wage earners are afraid of losing their jobs they will not go to the bank to get preapproved for a mortgage. When corporations can’t sell their bonds to raise capital for expansion economic activity is decreased.
Back to your own situation. Do you need to worry about a recession? The answer depends on where you are in your financial journey. How old are you? How much financial responsibility do you have? How much longer can or do you want to work? How much debt do you have? When do you need your money? Can you financially take advantage of a recession by adding to your portfolio? Yes Cindy always likes to ask questions, how annoying!
By the way investment professionals are well positioned to profit on your behalf when volatility or a recession occurs. In the first 2 and last 2 months of 2018, investment managers were happily buying. For them those months were like a Boxing Day sale.
The best investment professionals also stick to their discipline and build in defences so their portfolios can withstand a market downturn.
The stock market in the last 2 months of 2018 was volatile and ended the year with lower values. As a result your year end statement reflected that. However, in January those losses were erased. So worrying about a recession or volatility may be misplaced mental energy. I am always happy to answer your questions or discuss your concerns.