“Answers to your Questions, Do not Panic...”

The headlines about the coronavirus and reports of how it will impact the economy and potentially lead to a recession are all a cause for concern. The total impact of the extreme slowdown and virtual shutdown of many businesses is yet to be seen. These are incredibly unprecedented and unsettling times.  You and your family are likely facing a number of financial challenges related to the impact of COVID-19.  

You are not alone, we all are in this together. Here are answers to some of the pressing questions that might be on your mind.

Should I be worried about my investments? 
If you’re 20 years plus from retirement and thus needing your investments, this is a small blip. Stick to your plan. If you don’t have a plan or are feeling investment anxiety, reach out to me, but now is not the time to sell and lock in your losses. They’re only losses on paper unless you sell. Do yourself a favor and Google an Andex chart. You’ll see how devastating market downturns like this always correct. And don’t think you or your advisor can time the market.

Are we at the bottom? Who knows? When it bounces back—and it will—it will happen rapidly. It’s been said that a portfolio is like a bar of soap – the more you touch it, the smaller it gets. However, we often think we can handle more risk when markets are doing well and get a frigid awakening when times like these occur. If you feel you need to divest some of the risk exposure in your portfolio, talk to your financial pro and when the markets regain, you can ease off on your risk exposure.

If you’re 5 to 10 years from retirement, you again should stick to your plan. This time frame requires your portfolio to start to gradually reduce your risk to make liquidity for the withdrawals that you’ll need to make. This can be done automatically with target date funds (investments that gradually reduce your risk as you get closer to retirement), or, manually with annual reviews with your financial pro. Remember, you’re also not taking out every dollar when you retire. A good portion of your portfolio will still remain invested.

Very near or in retirement. This is when you need liquidity in your portfolio because you either need some of those funds to live off of or, are forced to withdraw them from your RRIF. Talk to your financial planner about how much money you should have in low-risk assets to ensure you’re not drawing from funds that have suffered a stock market blow.

How do I survive this pandemic?
Cash flow, cash flow, cash flow. This is the time to look at every possibility for increasing the flow of funds into yours and your family’s life. If you have three to six months of savings in an emergency account, you may be fine to weather the storm even if you lose your job. However, if you don’t, you need to quickly build a reserve. If you’re a homeowner, you can skip a payment on your mortgage without penalty, once a year. This could go toward cash on hand.

The six big banks have banded together to help you get through this as well. You can work with your bank to get up to six months of deferred payments on your mortgage. And, you may also have some ability to defer loan and credit card payments. It’s not forgiveness of the debt, but it could free up some cash now. The government has put a number of other measures in place, such as allowing you to defer paying any balance due for your individual income tax return until September 1st, increases in child and GST benefits, as well as expedited EI payments and emergency benefits if you don’t qualify for EI. Visit www.canada.ca for more information. 

What will I need to do after to get back on track?
It’s a challenging time. You may be in a situation financially you never thought possible.Or, you may be worrying that these short-term measures will mean that you’ll never be able to retire or set up a suitable plan for yourself or your family. Don’t despair. Once we’re on the other side of this, we will be here to help you pick up the financial pieces and adjust your plan to be stronger than ever before. We’re all in this together and will get through this together. Now is the time to focus on the safety and health of your family. We will be here when you need us – now and when you’re ready to rebuild.

With all our best wishes to you & yours...

Stay Safe & Healthy @Home