The year just ended demonstrates how different investors can react to the same market conditions. Starting in early 2021 and well into the summer months, stock markets surged overall. Some people wondered if they should boost their investment amounts to capitalize on the booming markets. But others worried about buying into the market at all when prices are high.
Investors can also react in opposite ways when markets are in the midst of a severe or prolonged downturn. Some people want to increase their investment amounts, buying in the dip, to profit when markets recover. Others wonder about halting their contributions or even selling some investments.
A TRIED-AND-TRUE METHOD
Most long-term investors are best off by sticking to a schedule of investing regularly, regardless of market conditions. This practice ensures that you won’t overinvest when prices are higher, and you’ll take advantage of buying opportunities when prices are lower.
You also benefit in several other ways. Psychologically, you won’t worry about how you’re supposed to react to the market cycle and volatility. You avoid the temptation of trying to time the market – guessing the right time to buy or sell. Also, it matches up nicely with your paycheques or other regular income.
THEORY VERSUS REALITY
In theory, investing when prices are low offers more chance to profit the most. But the reality is that attempting to buy low presents a couple challenges. When prices fall, you never know if you should wait another day, week, month or longer. In a bear market, you could get caught waiting on the sidelines – and it’s time in the market that matters in the long run. That’s why investing the same amount regularly works in practice. You do buy low, and you benefit from time in the market.
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.