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Stock market meltdown: A B.C. financial planner offers advice
VANCOUVER -- With Canada’s main stock index falling 1.9 per cent before technical issues forced the TSX’s early closure, and U.S. markets plummeting more than four per cent amidst fears the COVID-19 coronavirus could impact the global economy, financial advisors are urging investors to stay calm – whether they’ve got big bucks tied up in the stock market or a modest RRSP nest egg.
CTV News Vancouver reporter Penny Daflos spoke with registered financial planner Peter Cishecki of Langley’s Everything Financial Group for some advice as markets appear poised for one the worst weeks since the 2008 financial crisis.
Penny Daflos, CTV News: What are you telling people who call you? "Free-fall" is a scary term when it comes to your savings.
Peter Cishecki: That's people's immediate reaction – how much money I've lost in my portfolio? But if you don't sell, you don't react, and you don't panic, you haven't lost anything. It's just the value is not as high as it was yesterday.
PD: When people feel insecure, they panic and it becomes such an emotional discussion, doesn’t it?
PC: When people make emotional decisions about their money and their finances, they always make the wrong decision. If you're not retired today, you're not spending the money, so you should do nothing at this time. If you make a reaction right now, you make those losses a reality.
PD: What about retirees?
PC: If you’re about to start taking income or you currently are taking income, look if you can to put a hold on that income for the next week or two and see if things stabilize. If you have a secured line of credit with a very low interest rate, look at using that money for your income for the next few weeks.
PD: Is this a time when we should remember the old adage, "buy low, sell high"?
PC: When the market drops like this it also creates huge opportunities. Buying during RRSP season is usually the most expensive time to buy your investment because of the hype of RRSP, people putting money in and things are artificially high.
But suddenly because of (COVID-19) around the world, you can buy your RRSPs and it's kind of like they're on sale because you can buy more shares than you could three days ago.
PD: Are you surprised there’s been this much volatility due to coronavirus concerns?
PC: Portfolio managers have been planning for a correction in the market for the last year and a half because things have been booming. Things have been way overvalued, so in a lot of cases, if you deal with portfolio managers, you're not seeing the impact of these nearly as much as other people in certain mutual funds or index products.
No one realized it would take a worldwide outbreak like this to start the correction – and it may start a correction or it may be something we look back on a month from now and it was just a hiccup. No one knows.
PD: Any final words of advice?
PC: Emotional decisions always make for poor decisions, and just worrying about what happens in one day or one week, that's not how you should be running a retirement or any financial plan.
You don't want to be selling off items while you're in a free-for-all, and now more than ever have someone managing your money.