The hardest thing to do in investing

Normally, you might be quite comfortable making regular contributions to your investment program. But then an extraordinary market event takes place — like the U.S. stock market’s remarkable bull run from 2009 and into 2018, when the S&P 500 Index climbed almost 200%. Even a disciplined investor may wonder if unusual times call for unusual measures.

The battle of fear and greed

There are two ways investors typically react to unexpected events. The first is all about greed: Invest even more money in the outperforming market to try to make greater profit.

Trouble is, investors ramp up contributions when shares or fund units are now expensive. Those contributions could provide greater long-term growth by purchasing securities with better prices and upside potential.

The second reaction is motivated by fear. These investors want to sell off holdings in the outperforming market because they’re worried the bull run will collapse.

But this move also comes with a downside. They might miss out on continued gains and regret their reaction.

Conquer both evils

Fear and greed are strong emotions. To win out against them, you need to do something that many investors find extremely difficult: nothing. That’s right — just continue to make regular contributions and maintain your target asset mix.

No one, not even the experts, knows when a market will peak or bottom out. By purchasing on a regular basis, you won’t overinvest when prices are higher or miss out on opportunities when prices are lower.

Maintaining your target asset mix means rebalancing regularly. This allows you to take profits from outperforming assets and re-invest them in assets offering good value.

If a booming market — or a downturn — ever tempts you to change the way you invest, please talk to us. A reassuring voice can help you keep your regular investment program on track.

This material was prepared for and published on behalf of the representative named herein and is intended only for clients resident in the jurisdiction(s) where their representative is registered. This material is provided solely for informational and educational purposes and is not to be construed as an offer or solicitation for the sale or purchase of any securities or as providing individual investment, tax or legal advice. Consult your professional advisor(s) prior to acting on the basis of this material. Insurance products are available through advisors registered with applicable insurance regulators. Individual equities are available only through representatives of Assante Capital Management Ltd. In considering any particular investment, please remember that past performance is no guarantee of future performance. Although this material has been compiled from sources believed to be reliable, we cannot guarantee its accuracy or completeness. All opinions expressed and data provided herein are subject to change without notice. Neither Assante Financial Management Ltd. or Assante Capital Management Ltd. nor their affiliates or their respective officers, directors, employees or advisors are responsible in any way for any damages or losses of any kind whatsoever in respect of the use of this material. Certain names, logos or graphics herein may constitute trade names, trademarks or service marks (“Trademarks”) of CI Investments Inc. and/or its affiliates or of third parties. The display of Trademarks herein does not imply any licence has been granted to any third party. Assante Capital Management Ltd. is a Member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada. Copyright © 2019 Assante Wealth Management (Canada) Ltd. All rights reserved.