Keep calm and invest wisely
Canada Life - Apr 25, 2023
From the lingering economic effects of the pandemic, to the ongoing war in Ukraine among other events, we’ve seen many ups and downs in the market. You might worry how this volatility will impact your financial plans.
Understanding market volatility and market cycles in geopolitical situations can help you make rational decisions about your investments.
Market volatility
Uncertainty of what the future will hold can be nerve-racking. But as history shows, market pressure will be temporary. During these times, it’s important to stay invested to help take advantage of market recoveries. History teaches us that stock market rebounds can happen quite quickly too.
Historical events
To illustrate how quickly the markets could recover, let’s travel back in time. Historically, major events haven’t had long-lasting impacts on the global economy or financial markets. For instance, the terrorist attacks on September 11, 2001, and North Korea’s ballistic missile test in 2017 both rattled global markets. Fortunately, in both cases the markets regained those losses within a few months.
Understanding the market’s natural cycle
Markets will always fluctuate. Luckily, long-term trends show us stock prices continue to rise despite dips in the market. As well, when markets fall, it could be a good time to invest. After a fall, factors like increased spending and fewer layoffs can help markets rise. Or you can choose to hold steady and wait to make decisions until after the situation settles. .
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Ask an advisor: Market volatility – Canada Life
Learn about market volatility, how it impacts your investments, and how you can manage it.
View video script
Description: This animated video introduces a character named Tim and his advisor with illustrated graphics to show how market volatility can impact your imvestments and how to manage it.
Text: Ask an advisor” appears. The camera zooms out as the text lands in an outlined square. “How does market volatility affect my investments?” fades in below. An illustration of a bar graph draws on the right side of the frame.
Tim: There seems to be lots of ups and downs in the markets these days. What’s that mean for my investments?
Description: Tim and his advisor stand on a bridge in front of a body of water and hold coffee cups. The illustration zooms in on Tim, then on the advisor.
Advisor: Some market volatility is the sign of a normal, healthy market.
Description: A graphic titled Historical Returns appears on screen and draws the S&P/TSX composite total return index between 2004 and 2008.
Advisor: I know big declines in the market can make you question your investment plan.
Description: The graph expands to a falling market around 2009, then an improvement in the market until 2014.
Advisor: But, history has shown that when the market does fall, it eventually comes back even stronger.
Description: The graph flips over a smaller graph titled Retirement. It shows growth between 1% and 3% over a period of time.
Advisor: And that can be good for your investments in the long run.
Description: Screen transitions to a shot of Tim talking.
Tim: Are there things I can do to prepare for volatility?
Description: Screen transitions to a shot of the advisor talking and showing Tim the screen of her phone.
Advisor: There are – some you’re already doing.
Description: The rectangles appear on screen one on top of the other with the text, Investment plan, Long-term goals and Investment risk.
Advisor: Like having an investment plan. Staying focused on your long-term goals. And understanding your tolerance for investment risk.
Description: Screen returns to Tim and the Advisor standing on the bridge.
Advisor: Let’s talk about other strategies to help you manage market volatility.
Text “Let’s talk. Contact me today.” appears onscreen with the Canada Life logo and legal line: “Canada Life and design are trademarks of The Canada Life Assurance Company. canadalife.com 1-888-252-1847.”
The information provided is based on current laws, regulations and other rules applicable to Canadian residents. It is accurate to the best of our knowledge as of the date of publication. Rules and their interpretation may change, affecting the accuracy of the information. The information provided is general in nature, and should not be relied upon as a substitute for advice in any specific situation. For specific situations, advice should be obtained from the appropriate legal, accounting, tax or other professional advisors.
Canada Life and design are trademarks of The Canada Life Assurance Company.