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How Planning Benefits Investors

Building portfolios around your retirement goals is important for a number of reasons. For one thing it can help you to put market events and news in perspective, which may lead to better decision making. Tying your portfolio construction to your retirement savings goals allows your advisor to measure your progress towards your wealth building objectives. Measuring your progress against your investment goals lets you easily see how far you have come or warns you that you may need to reevaluate your portfolio, objectives or possibly both.

Opportunity Spotting

Times of turmoil present us with many risks and opportunities but identifying suitable opportunities takes not only an understanding of the market fundamentals underlying the current event or upset, but also history can provide real life examples of how similar events impacted investments and sectors of the economy in the past. Case studies are widely used by universities to give students hands-on experience and to illustrate possible outcomes; similarly history can be a useful guide for investors.

Let me give you an example: I was speaking to a woman recently and she was angry with herself. Emotions got the best of her and she panicked right at the market bottom and sold her holdings at a loss. On the other hand, there were many people who recognized the opportunity that was presented and produced outstanding results in their portfolios.

Had you studied history, you would be well aware that had you diversified at all – even during the worst stock market periods – you would not have permanently lost your capital. The markets have always recovered. If you panic and sell you simply lock in your losses. History would also have taught you that most market recoveries occur during times of bad news. Consider the past year, the markets are up but the majority of news is (still) bad.

Let me give you another example: When I started in the brokerage industry in the late 1990s people were calling in wanting to buy technology funds – because they were up 100% – and then what happened?

Valuation Matters

We all know it’s good to buy when things are cheap. But when are prices low? When there are more sellers than buyers.

When are there more sellers? When people are scared or when there is bad news. That’s when things are cheap!

When business slows managers are forced to reduce costs, reduce excess staff and re-evaluate their business model. Most market recoveries occur during times of bad news.

Review Objectives

The important thing is to re-assess your goals relative to the amount that you actually have accumulated today. It is important to regularly compare your wealth to where you’re supposed to be. That way you can make sure you don’t get too far off course. What does your wealth need to accomplish? What do you hope it will accomplish? Is this realistic? A professional advisor will help you.

When investing, there are certain things you can control and certain things you can’t. In the short term we cannot control returns and we cannot control inflation, but we can study history, study economics and there are certain expectations that have typically been fulfilled over the long run.

As you build wealth, it is important to consider how much you make on your portfolios net of taxes and net of inflation. No one can control the markets, but we can limit or at least influence our taxes.

The end game isn’t to get a better return. It is to make sure that you have enough money to meet your needs and hopefully provide enough income to lead the lifestyle you desire.

April M. Dorey, B.Comm, FMA, FCSI
T: 250.405.2429 or 1.877.405.2400
april.dorey@raymondjames.ca
www.aprildorey.com

*Please note, changes in tax laws may occur at any time and could have a substantial impact upon each person’s situation. You should discuss any tax or legal matters with the appropriate professional. Written by April Dorey and expresses the opinions of the author and not necessarily those of Raymond James Ltd. Statistics and factual data and other information in this newsletter are from sources RJL believes to be reliable but their accuracy cannot be guaranteed. Securities-related products and services are offered through Raymond James Ltd., member CIPF. Financial planning and insurance products and services are offered through Raymond James Financial Planning Ltd., which is not a member CIPF. In accordance with privacy legislation, the individuals you are referring must consent to their information being provided to me.

© April Dorey. Articles, statistics and other data referred to or cited are intended to provide readers with potentially useful information for their own personal use and are not intended to replace direct consultation from a qualified Investment Advisor or related certified/licensed professional. All comments and opinions, unless otherwise noted, are by April Dorey and express the opinions of the author and not necessarily those of Raymond James. Reproduction without permission is permitted with due acknowledgement.

For more information please contact:

April Dorey, B.Comm, FMA, FCSI
Financial Advisor
Raymond James
10th Floor, 1175 Douglas Street
Victoria, BC.
Tel. 250-405-2429
www.aprildorey.com

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