At any stage of your life, a well-constructed financial plan can help you enjoy today, while also preparing for tomorrow. Use these time-tested investment strategies as part of your financial plan to make the most of your investments and reach your long-term goals.
Time-tested strategy 1 Keep emotions in check, stay the course:
How do you handle market volatility? Like many Canadians, you might feel a little anxious. But reining in emotions and making decisions calmly helps your portfolio weather market turbulence. It’s easy for emotions t
- The largest equity inflows happened during the first quarter of 2000, the time
when the market peaked. This caused a trend for investors to “buy high.
- One of the largest equity outflows happened between December 2002 and February 2003, a period when the market bottomed. This caused a trend for investors to “sell low.”
- In the second half of 2008, the largest equity outflows happened just before the market reached a low in March 2009. This caused a trend for investors to “sell low.”
Time-tested strategy 2 Invest for the long term:
Market fluctuations are a normal part of investing. Investments don’t perform in a straight line—they will have periods of gains and losses. Historically, markets tend to rebound from short-term losses, offering gains from rallies when they recover and move higher. By staying fully invested, you can take advantage of all periods of positive market performance.
Resist impulses to “buy high” and “sell low”
Time-tested strategy 3 Diversify and consider asset allocation:
As an asset class, you can expect that equities will sometimes experience short-term fluctuations. However, equities can provide great growth opportunities over the long term.The saying “don’t put all your eggs in one basket” is appropriate when thinking about investing. By diversifying your investments, you benefit from periods when different asset classes are performing better than others. Also, by choosing the right asset mix for your portfolio, you can make sure your investments meet your risk tolerance, goals and investment timelines. Diversify, Historically, asset classes have performed differently from year to year. For example, the emerging market investments underperformed in 2011, 2013 and 2019 but were top performers in 2012 and 2017. The markets lost three years with Covid-19 but agin the markets jumped back across all asset classes, unfortunately we are still in the hangover from that period. As we start to see the light at the end if the tunnel and the market correcting itself diversifying across asset classes frees you from trying to invest in the right asset class, at the right time.
And Finally… Offset inflation:
Inflation is the impact of rising prices, which cuts into people’s buying power. If inflation catches up with your investments, it can significantly impact your long-term life goals.
Different asset classes from 1925 to 2023 have outpaced inflation. If you had stayed invested, particularly in equities, your assets would have grown, helping you to offset inflation. Inflation has impacted the long-term growth of non-equity assets, such as GICs and bonds, and risk-free investments, like T-bills. Ensuring an asset mix that protects against the effects of inflation is an important consideration for long-term investing success.
So what should you do – Keep Calm and Carry On! We shall see many more fluctuations in our lifetime.
@Henley Financial and Wealth Management Inc. 
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