Many long-term investors wonder if they should take action when markets suffer a downturn or become volatile. Should you sell equities and turn to the safety of cash? Should you stop making regular investments? Such thoughts are understandable, but these actions can decrease portfolio value over the long term.

Patience pays off

During a market downturn, investors who sell equities in favour of low-interest investments (or securities) can lose out in two ways – they lock in the loss when selling at lower values, and they reinvest at more expensive prices when markets rebound. Plus, putting a stop to regular contributions can result in missed opportunities. By continuing to invest regularly, you purchase equities when stock prices are lower, which can lead to solid gains once markets recover.

Safety matters as goals draw near

A time you should move a portion of your portfolio to lower-risk investments is when you’re approaching a major investment goal. Make education savings more conservative when your child is a few years from secondary school graduation. Safeguard your retirement savings when you’re about five or more years from retirement. This way, you help protect your investments against potential market declines at a crucial time.

When it takes resolve

Some people approaching a financial goal worry about missing out on profits if they reduce equity holdings during a strong market. But say these investors began safeguarding their portfolios in January of this year. What if they held off because in 2019 almost every major stock market around the world posted double-digit returns? They would’ve been in for a scare one month later when the coronavirus pandemic rocked the markets. Chasing gains is risky when your future is at stake.

Let us know if you have any questions or concerns about investing in volatile markets or when to safeguard your portfolio as an investment goal nears.

This material was prepared for and published on behalf of your financial advisor 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 CI Assante Wealth Management or its dealer subsidiaries Assante Capital Management Ltd. and Assante Financial 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. CI Assante Wealth Management is a registered business name of Assante Wealth Management (Canada) Ltd. Assante Capital Management Ltd. is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada. Assante Financial Management Ltd. is a member of the Mutual Fund Dealers Association of Canada and the MFDA Investor Protection Corporation (excluding Quebec). © 2022 CI Assante Wealth Management. All rights reserved.