Managing Your Investments During Uncertain Times

Like many of us, Tosan is an immigrant. She moved to Canada in the fall of 2019 with her family. She has big dreams and aspirations but top on her list is the desire to be financially free, especially in this beautiful country she now calls home. 

As she adapts and integrates fully into her new environment, she gets a job with a decent income. She loves making money from her skills and expertise but even more, she loves having her money work for her. Tosan understands that the earlier she started investing, the better. She wants to start investing but doesn’t know how. 

Tosan goes online to learn about investing in Canada, but is overwhelmed by all she has to learn. She decides to consult a financial advisor for help. She meets with an advisor who helps her to invest based on her financial goals. With time, her investments starts booming, her portfolio continues to rise in value and she is happy and confident about her financial future. It seems like nothing could ever go wrong. 

Until February 2022, one winter morning, Tosan casually checks one of her investment accounts. She is shocked by what she sees. The money in her account had dropped so low, it was unbelievable. She could have sworn someone hacked into her accounts to withdraw her funds. She’s familiar with the market fluctuations from time to time but it had never been this bad. She panics, with alarms going off in her head, she calls her financial advisor and here’s what she learns. 

Why Tosan’s investment account values are low 

Many factors currently influence the volatility experienced in the markets. The causes are complex but can be summed up in three points. 

Inflation

Inflation has been on the rise for several months now. In Canada, it jumped to 4.8% in December, a level not seen in 30 years. To contain it, the central bank decided to increase interest rates. This will make borrowing less worthwhile, which should slow down the economy. 

Current events

Fluctuations in global markets are among the many consequences of the Russian-Ukrainian conflict. How long will the invasion last? To what extent will it go? These are unanswered questions that fuel this market instability. 

Drop in optimism levels 

Stock prices surpassed all-time highs in 2021. The current climate of uncertainty, however, has shaken investors’ high expectations, which has caused optimism to fade and allowed fear to set in. 

What Tosan can do about it 

Market volatility and major downturns can be very challenging, but a rational investor must accept market fluctuation as part of the investment journey. Hence, Tosan needs to: 

Have a long-term perspective

Time and time again, market downtimes have always been followed by recoveries that exceeded previous highs. Sticking to the plan and staying invested in the long term is always the favourable strategy. 

Continue contributing

Simply making regular contributions into her investment account will help to reduce the risk associated with market fluctuations and maximize her returns in the long run. 

Be emotionally detached

Following emotions when it comes to investment would only put the investment plan at risk. Emotional investing involves making short-term decisions, whereas following an investment plan is about making long-term decisions. Stay the course and let emotions (not money) stay on the sideline. 

Tosan feels much better now, she doesn’t know how long the volatile markets will last but she is certain that market downtimes don’t last forever, and this too shall pass.