Market swings can rattle even seasoned investors, especially with memories of 2020’s 37% TSX Composite plunge still fresh. Whether you’re saving for retirement or just starting out, volatility doesn’t have to derail your goals. Here are five practical steps to safeguard your wealth and thrive through a potential crash:
- Revisit Your Financial Plan: A solid plan is your anchor. If you’ve got one, check it; if not, build one. Long-term investors can scoop up bargains during dips, while retirees should secure three to five years of cash or safe assets to avoid selling low. Professional advice can fine-tune your strategy.
- Gauge Your Risk Comfort: Can’t sleep when markets drop? Your portfolio might be too stock-heavy. Reflect on past reactions—did you panic?—and tweak your mix with bonds or cash for peace of mind. Align your investments with both goals and gut.
- Match Your Timeline: Long-term goals mean you can ride out storms—markets historically rebound. But if cash is needed soon (e.g., for a house or retirement), shift some funds to low-risk options like GICs or short-term bonds to dodge forced sales at a loss.
- Spread Your Bets: Diversification softens the blow. Blend stocks, bonds, real estate, and global markets to balance risk. When stocks tank, bonds often hold steady, cushioning your portfolio without drastic moves.
- Keep Cool, Don’t Sell: Panic selling locks in losses. Markets dip but recover—jumping out and back in rarely works. Stick to your plan if it’s diversified and goal-focused; short-term drops aren’t permanent unless you act on them.
Crashes are part of the game, but preparation beats prediction. A tailored plan and calm head position you to weather downturns and emerge stronger.