Pattie Lovett-Reid: How to protect your nest egg amid market volatility
There’s little doubt anxiety is creeping in as investors watch the biggest plunge in oil prices in nearly 30 years. This jolt in the oil markets has put more pressure on the global equity markets and stocks are falling again after extreme volatility last week that was mostly due to concerns about the economic implications of the COVID-19 outbreak. Most major markets are now in correction territory – that is, down more than 10 per cent from their recent highs.
However, as strong as the temptation may be to hit the sell button, here are a few considerations.
1. It is never a good idea to let your emotions dictate your investment decisions.
2. It’s always a good time to assess your goals and investment strategy.
3. For most investors, especially younger ones, stocks will give you the best chance of decent returns over time.
4. If you're entering retirement or in retirement, look at your time horizon and try not to make changes over short-term market swings.
5. Year-to-date, the TSX is down 5.21 per cent. But if you are diversified and well-balanced, your return could be very different.
6. Investing in dividend-paying stocks will pay you to wait out the market rout.
There will be some that capitulate, throw in the towel and lock in their losses. That can make sense if you need the money; however, markets can turn when you least expect it – not only to the downside but to the upside as well.
Our job is to know our numbers, our returns, be clear on our time horizon and apply logic and patience the best we can.