Take time to revisit your investment objectives
Many clients tend to view the New Year as a new beginning, so it is a great time to revisit your investment objectives, especially as portfolio values start to hover near or above their pre-economic crisis levels.
It is also a good time to review your risk tolerance, especially if you went to cash during the downturn and are still in cash or low paying accounts. If you remained in equities or riskier assets you have probably recouped much of your losses, it is important to now decide how much risk you wish to take moving forward.
If you ‘sat out’ a portion of the decline and the recovery we have since experienced, it is important to decide how to move forward while minimizing your risk level. Dollar cost averaging into the markets is one way of protection; you invest a set amount at set intervals into the market. That way, if the market declines, you have cash to purchase more investment units, if the market rises, some of your portfolio will be taking advantage of those gains.
Portfolio rebalancing should be an annual occurrence at minimum, and possibly on a semi-annual basis due to the market volatility that we are currently experiencing.
We have seen firsthand how drastic the market movements can be, and it is essential for clients to have portfolios that can adapt. Buy and hold can no longer be a financial mantra. If an asset class increases 10 or 20 per cent in a quarter, the risk of a pullback dramatically increases.
Another new beginning for the new year could be taking a proactive approach to understand your investments. If your spouse handles all of the finances, you should discuss the investments together, meet with your advisor together and understand how your investments are chosen, what risk level you are assuming and what fees you are paying.
Get a second opinion of your portfolio. An advisor has the obligation to keep in regular contact with clients in order to monitor and make change recommendations as necessary.
It is a new year, you can help make it a prosperous one for you!
For further information, Carol Plaisier, CFP®, Investment Advisor with Dundee Securities Corporation, can be reached at the DundeeWealth office in Parksville (250) 248-2399, or by e-mail: firstname.lastname@example.org. Web: www.carolplaisier.-com.
This article was prepared by Carol Plaisier, CFP®, FMA, AMP (Accredited Mortgage Professional) who is an Investment Advisor with Dundee Securities Corporation, a DundeeWealth Inc. Company. This is not an official publication of Dundee Securities Corporation and the author is not a Dundee Securities analyst. The views (including any recommendations) expressed in this article are those of the author alone, and they have not been approved by, and are not necessarily those of Dundee Securities Corporation.
Dundee Securities Corporation, Member-Canadian Investor Protection Fund, is a DundeeWealth Inc. Company.