Navigating market volatility with a solid financial plan

In times of heightened market volatility — like right now — it’s not uncommon for investors to feel anxious about the value of their portfolios fluctuating. Having a well-structured financial plan, however, can serve as a powerful tool to navigate through turbulent times and provide reassurance that your long-term financial goals remain intact.

Here are some important insights to keep in mind during periods of market volatility:

  1. Keep a long-term perspective: Market turbulence can be unsettling but remember: this is usually temporary. A comprehensive financial plan helps you keep your focus on the bigger picture. And it’ll reassure you that despite short-term market fluctuations, your sources of cash flow and net worth will remain stable over the long run.
  2. Identify stable sources of cash flow: If you’re a retiree, or approaching retirement, a financial plan can help you better assess your sources of cash flow, like pensions, CPP and OAS, which remain stable and unaffected by market volatility. But financial plans aren’t only for retirees. Even if you’re an individual or couple in your 30s or 40s, by understanding the stability of your cash flow sources, you can make informed decisions about your investments and allocate them accordingly.
  3. Investment planning: Your financial plan also serves as a guide for your investment decisions. During market volatility, it’s a good time to meet with your advisor to evaluate your portfolio and consider how to make your sources of cash flow more stable. This might involve allocating funds to less volatile assets or ensuring that you have enough cash reserves to cover your immediate needs. Ideally, you want to strike a balance between growing your wealth and maintaining financial stability through challenging times.
  4. Emotional management: We’re all human, of course. And market volatility can often trigger emotional responses, leading to impulsive decisions. A financial plan provides a blueprint to your financial future, emphasizing that temporary market downturns shouldn’t derail your long-term financial security. It can also be a valuable teaching tool to help you understand the importance of maintaining discipline during market fluctuations.

One bit of good news is that if you already have a well-structured financial plan in place, typically the need for significant changes during volatile periods is rare. Instead, it can be a great time to lean on your advisor and focus on addressing fears and concerns and reinforcing your plan’s strength. Your financial advisor is there to provide guidance and ensure you stay on track to achieve your long-term financial goals.

By adhering to a plan, you’ll be able to navigate through turbulent times with confidence, knowing that your financial future remains secure.

Do you have questions about your current plan or concerns that you don’t have one? Reach out to us anytime — we’re always happy to help.