The last few columns have focused on COVID-19 issues. We’ve discussed a few different topics like, stock markets, debt management, and deferring mortgage payments.
Many of you have financial questions regarding this pandemic and that’s why last time I announced a pro-bono financial advice campaign for those who need help – see more details at the bottom of the column.
For this week, I thought I would focus on the financial challenges that many Canadian families are facing and the two most common questions that I’m hearing over and over:
Question 1 – Should I be worried about my investments?
If you’re 10 or more years until retirement, you shouldn’t be worried at all. These kinds of downturns are normal, and your financial plan should account for them. If you don’t have a plan, it’s time to get one though.
If you’re less than 10 years from retirement, you should still stick to your plan but should also be making sure that your financial plan has started to “take risk off the table” as you near your retirement date. A major downturn right before your retirement date can significantly alter the length of time that your investments can support you if not properly accounted for.
If you’re already in retirement, your financial plan should provide some liquidity and short-term funds so that you aren’t required to draw down on too much of your equity holdings during this time and instead allow them to recover before being drawn on.
Regardless of what stage you are in, now is not the time to sell and lock in your losses which are only losses on paper unless you decide to sell and lock them in. If you still feel extremely unsettled, adjust your plan to ease off your risk exposure AFTER the markets recover.
Question 2 – What should I be doing to financially to survive this pandemic?
There are a couple of key things that you can do today in order to help get through this current situation. To start with, take the time to review (or build) your personal budget. See what expenses you can cut out in order to be as fiscally lean as possible right now.
Next, thoroughly review all the available government response programs right now. Make sure that you are applying for everything that may be available to you. These programs are changing daily right now so make sure to stay up to speed on the changes as they come out.
Third, free up as much cash flow as you can. Ideally, you’ve already put aside a six-month emergency fund and have the means necessary to weather this storm. But if you don’t, it’s not too late to free up all potential cash flow to build up a reserve. Just be careful when deferring debt payments in order to free up cash flow as this can have serious long-term consequences.
Do you have other questions?
There is no doubt that this is a challenging and quite scary time for many of us. The safety and health of your family should be top priority but doing so in the most fiscally responsible way is important too. Many Canadians have financial questions and they don’t know where to turn.
I mentioned in last column that I would be offering financial advice on a pro-bono basis. If you or anyone you know is struggling to make the best financial decisions during this pandemic or simply has some questions, I am available to help in any way that I can.
Although I may not be able to solve all your potential challenges, I can offer advice on how to improve your financial situation in an objective and non-judgmental way and help you make the best possible decisions. If you’d like to participate in a free 30-minute personal financial consultation via phone or video conference, please contact me.
Stay healthy, stay safe and take care!
This column is written by – Michelle Weisheit CFP, IG Wealth Management and presents general information only and is not a solicitation to buy or sell any investments.
Please contact your own advisor for specific advice about your situation.