Set a course for success – Face the future with confidence

January 4, 2016

A strong investment plan helps you face the future with confidence.

Imagine that you have worked with a travel agent to plan a big vacation and then, months before your departure date, you hear from a neighbour that the hotel you’ve booked is undergoing massive, noisy renovations. You panic, thinking that you may not be able to change your hotel reservation or, if you can, how much it will cost you. This could ruin the vacation you’ve been looking forward to.

You talk to other people and go online, but no information is available. Then you call your travel agent, desperate to change hotels. However, your agent knew about these renovations and assures you they’ll be complete long before you arrive. Everything is under control and you’re relieved that you can stick to your original plan.

Similarly, many of us meet with our financial advisor when we want to put a plan in place for our financial future. Your advisor reviews your current financial situation, risk tolerance, time horizon and short- and long-term goals. They work with you to create a financial plan designed for your specific investor profile and financial needs.

With a plan in place, you are ready to face any financial challenges and reach your goals.

But then life happens

Sure, you’ve created a plan. But what happens when financial markets become more volatile than expected or decline over an extended period of time? It’s natural at those times to want to reconsider the financial plan you’ve put in place with your advisor. No one likes to see the value of their investments fall too far. Historically, however, the best course of action during these times is to stay put.

Why? Because, as the following chart shows, markets are always rising and falling. Sometimes, the risk of not being invested can be greater than the risk of investing at the wrong time. By trying to time the markets, you run the risk of missing periods of exceptional returns, which may be as short as a few days.

$1,000 investment in the S&P/TSX Composite Total Return Index for the 20 years ended December 31, 2015

A volatile market can be disconcerting for many investors, when it appears their savings may be in jeopardy. The typical reaction by many investors has been to pull their money out. While it may seem prudent to exit the market while it is falling, it can be more detrimental to your portfolio's returns than staying put.

Most of us know that we should "buy low and sell high," but this is not how the average investor typically behaves. By exiting a declining market and re-entering a recovering market, they are doing the opposite. Often, stocks are purchased at a higher price than what they were previously sold at, eroding returns over time.

What you can do to succeed

It’s never easy to stick to a plan given market uncertainty and all the changes that can occur in a person’s life – like getting married, having a child, losing a job, experiencing an unexpected health issue, etc. But sticking to your plan doesn’t mean you can never adjust that plan to reflect your current financial and other circumstances. These adjustments, however, should be made with your advisor to ensure that, no matter what, you’re positioned for a strong financial future.

To put a financial plan in place to help you meet all of your current and future needs, please speak with your financial advisor or visit

The contents of this Web site are provided for informational and educational purposes, and are not intended to provide specific individual advice including, without limitation, investment, financial, legal, accounting or tax. Please consult with your own professional advisor on your particular circumstances.

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