Paige Desmond
With a recession spreading across the globe, it’s only natural for individuals to be concerned about how they will be affected.
Robert McCullagh, a financial advisor serving with the Canadian association of financial advisors, Advocis, and a teacher of the certified financial planning designation at the University of Calgary and Mount Royal College in Calgary, as well as Susan Bodnarchuk, a certified financial planner at Holmlund Financial here, stress each person is different and must approach the looming economy in a manner appropriate to their situation.
“There’s certainly more bad news,” McCullagh agreed. But he noted not everyone is taking huge hits and that a media emphasis on market performance is misleading in terms of its actual effect on individual situations.
For people to see their actual statements, and realize their holdings have not been hit as hard as expected, can be a comfort for many investors.
“That can be quite relieving,” McCullagh remarked.
“It’s natural for people to wonder how they’re doing,” said Bodnarchuk, adding she has received a few phone calls from
concerned clients.
Indeed, for McCullagh, the near simultaneous recessions of so many countries is a unique situation, but he would not call the global economic turmoil either better or worse than past downturns.
“We’ve had many experiences with ‘bear’ markets,” McCullagh explained, adding the global impact and intervention of governments certainly define this current recession as special.
“It’s an interesting time,” he reiterated. “We’ve never seen this level of government intervention.”
And for every person’s loss, there is another person’s gain.
Prime Minister Stephen Harper generated a storm of criticism during last month’s election campaign for comments about how the massive sell-off of stocks also was creating excellent buying opportunities for others.
McCullagh agrees that with each sale, there is a person willing to accept the risk and buy. “There’s some excellent buying opportunities,” he said.
Bodnarchuk agrees. “Buy more,” she asserted. “Certainly consider buying.”
At the same time, McCullagh cautioned not to expect a big payoff overnight.
“It’s not just that you buy and the ride goes right up,” he warned. But over time, there likely is money to be made.
“This can dramatically change your position,” he said of buying now.
But in general, the Calgary expert gives simple advice on what everyone should do: review and reflect.
Investors should review their risk tolerance; in other words, how much volatility are they willing to weather? Next, review your time horizon (i.e., how long can you have this money invested?)
And finally, maintain a diverse portfolio to help manage risk.
Either way, both McCullagh and Bodnarchuk recommend seeking the assistance of a certified financial planner.
“Seek the advice of a professional advisor,” McCullagh stressed.
Bodnarchuk agreed that anyone feeling uncomfortable had better speak with their advisor straight away. Because economic position varies from person to person, a financial advisor can give specific advice on how to proceed.
When it comes down to it, McCullagh has confidence markets will stabilize and the recession will, of course, at some point end.
“Historically we’ve been here before,” he noted. “We’re weathering through it.”
