Teti Wealth Management at BMO Nesbitt Burns offers helpful investing tips during COVID-19
5 Tips for Investing in Volatile Markets during COVID-19
May 07, 2020
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Frank Teti, Senior Vice-President and Portfolio Manager for Teti Wealth Management at BMO Nesbitt Burns, shares five quick tips for investing during the current economic downtown. He is also a member of Providence Healthcare Foundation’s Planned Giving Committee.
During volatile markets, investing can be a scary and confusing prospect. Right now, during unprecedented times, these 5 easy tips will help you keep your costs low and your returns high:
- Stay Invested
Investing requires patience and a long-term horizon. Investing in equity and balanced portfolio solutions has proven to be the best way for an investor to reach their long-term goals. Over the last 20 years, from 1998 - 2018, staying invested in the S&P/TSX Composite Total Return Index, would have generated 270.2% total return.*
You should diversify among stocks, funds and ETFs to mitigate risk – don’t put all your eggs in one basket! Ensure you are taking advantage of markets in different regions and industries as well. Diversification is key.
In times like these, it’s important to ensure a large portion of your investments are in high quality, “blue-chip” companies and stock (or ETFs and Mutual Funds that invest in blue-chip products). These companies are more likely to pull through and do well as we eventually come out of the recession. Typically, these are companies with good cash flow, dividends, and large market shares in their respective industry, prepared to weather the current storm.
- Dollar Cost Average
Invest in tranches – meaning you should not invest all your long-term cash right away. Invest in chunks, spread out over time, to take advantage of the volatility that will likely last for many months and quarters. With this approach, you’ll save costs over time and take advantage of any future drops in the market, while maintaining a long-term focus.
It is important to observe your portfolio, rebalance and make adjustments as new facts and opportunities present themselves! This can include profit taking, or switching funds/ETFs into new investments with better prospects.
At the end of the day, making sure that you’re not changing your long-term financial goals and plans to fit within the current markets will be your most important path to success!
Good luck, and stay healthy.
*Source: Bloomberg, 2018
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