Exhaustion Is Not an Investment Policy

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This month’s client’s corner discussed some of the short term events we’ve lived through that have impacted the stock market and how the economy and markets healed from those events in the long-run.

One of the greatest advantages you can have as an investor is a long-term perspective. Effective financial planning absolutely needs to take into account your short and mid-term goals, but the magic really happens when you take a step back and think big. Here are 4 key things to keep in mind when structuring your long-term plan:

1. Plan On Living A Long Time.

Thanks to advancements in technology, people are living longer and healthier lives. According to Statista Research, the average life expectancy for Canadians is 80 for males and 84 for females. If you plan to retire at age 65, you need to be prepared financially for 15+ years of living off your investments. You simply can’t plan properly for a 15+ year retirement unless you spend time talking with your advisor about your long-term goals. 

2. Harness The Power Of Dividends And Compounding.

Albert Einstein famously said “Compound interest is the 8th wonder of the world. He who understands it, earns it; he who doesn’t, pays it.” Einsteins belief has stood the test of time, and years later, the core principle of making your money work for you is equally as relevant today as it was back then. 

When it comes to compounding, one of the most important factors is time. Check out our Cost of Waiting calculator to see the impact 10 years can have on your investment portfolio.

3. Stick To A Plan, Stay Invested, Try To Avoid Emotional Bias.

Having a plan and sticking with that plan is absolutely essential. It can be easy to get sucked in by scary media headlines and hot stocks that are “going to the moon”, but the reality is that most of this is just noise. It is extremely important as an investor to remain cool, calm and collected and make your investment decisions based on your long-term goals and objectives. Rash decisions based on emotions can be devastating to your overarching retirement goals. 

4. Volatility Is Normal, Don’t Let It Derail You.

Market fluctuations are a normal part of investing. The key is to remember that over time, the uptrends tend to outweigh the downtrends. Thinking long-term can keep things in perspective and prevent you from panicking during the brief downtrends. This does not need to be any more complicated than reminding yourself in times of turmoil that “this too shall pass” and time tends to heal all wounds for those who exercise patience.

We hope you enjoyed this month’s Client’s Corner. Please do not hesitate to reach out if you have any questions or feedback.

Thinking about hiring a professional to help you implement a long-term financial strategy? We would be more than happy to set up a 30-minute discovery call to get a better understanding of your unique situation.

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Nine Recessions

In this month’s client’s corner, Nick Murray discusses the eight, almost nine, economic recessions that have taken place in the United States since 1970.

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