What about my retirement fund?

Hello:
As most of your read the newspapers this week and read about the US economy in a deep decline and wonder how this will impact the Canadian economy. Most of you are probably watching the endless news of how the stock market is in a deep decline, stocks are falling, retirement funds are decreasing, and most of us are sweating bullets right now, wondering what is happening to our investments. Most of you are wondering what is going to happen to yourself and your retirement fund.

Don’t panic. Don’t fret. Keep your cool.

Here are a couple of proven strategies that you want to keep in mind when in a recessionary period:

1. Dollar Cost Averaging – Do you have an automatic payment plan set up? If not, you should. What happens with dollar cost averaging is that you buy funds when they are low and you buy funds when they are high, so in the end, you have a weighted average of the fund price you paid.

2. Learn about the market - One of the best ways to reduce anxiety is to brush up on your financial knowledge, and understand how the stock market works. This can be a good way to "de-mystify" the information you hear from the economic experts and stock market analysts, so you can make clear, independent investment decisions in all market conditions.

3. Do your homework - In the same way, in-depth knowledge about the individual holdings within your portfolio can go a long way to alleviate investment anxiety. The more you know about why you've chosen a particular investment, how that investment works and how it fits into your overall portfolio, the better you'll be able to stomach a market downturn.

4. Focus on your goals - All too often, investors make rash financial decisions because they read a report or hear some news that the end of the financial world is coming. How do you stop this? By staying focused on your long-term investment goals. If you haven't already, write some specific, reasonable financial goals for yourself, and refer to them whenever you feel anxious about your finances. It will help you focus on your goals, rather than the current crisis. Long term investing means investing for 10, 20 or 30 years, and sticking with your plan.

5. Invest regularly - Do you have a large sum to invest? Anxious about investing right before a downturn? One way to rid yourself of the anxiety is to take the market out of the equation. By investing on a regular basis, you don't have to worry about predicting the best time to invest.

6. Everything happens in cycles – The market goes up and down. Its a given. Case in point, the Canadian market dropped 10% or more 11 times since January 1970. But between January 1970 and December 2007, the stock market has had an average annual return of 10.5% in Canada. Each time the market drops, and it will frequently and without warning, many investors stray from their plan. Yet, most market gains occur in just a few strong, but unpredictable short-term periods. To maximize your plan’s long-term performance, you have to be in the market during those periods.

7. Its a great time to invest! – Buy low, sell high, not the other way around. If you haven’t started a regular investing plan, now is a great time to start.

When it comes to investing, there will always be a reason to be anxious. The real challenge is to look past those reasons and stick to your long-term financial plan. Stay focused on your financial goals, do your homework and seek out a professional opinion before you make any decisions. That's the best way to prevent investment anxiety from wrecking your financial future.

I have attached some information if you would like to read further on investing in volatile times.

Contact me anytime should you have questions/concerns.
Best wishes,
Janea Bellay
www.janeabellay.com


More documents on investing in volatile times:
Investing in Turbulent Times: http://ficl.distributech.ca/uploads/61108103E.pdf
Putting Market Volatility Into Perspective: http://www.ci.com/orderform/pdf/tk_market_volatility_e.pdf
Dollar Cost Averaging: http://www.ci.com/orderform/pdf/tk_dollar_cost_avg_e.pdf