Your Year End Investment Statement Shows A Negative Return…

Most Canadians will have received their December 31st investment statement in the mail and noticed that their investments have not had a great run in 2018. If that’s you, what do you do next?

First, do not panic. Instead, ask yourself these 3 questions:

  1. When was the last time you met with your advisor and reviewed your investment statements?
  2. Do you know what your risk tolerance is for investing?
  3. Has there been a life-changing event in your life in the last 12 months? (married, job change, promotion, the birth of child, separation or death)

Why these 3 questions? Because each question gives you insight into your financial picture.

Regardless of when you last met with your advisor, if you are looking at your investment statement and you have questions, it is time to meet. You may also want to get a second opinion. WHY? When you hear the same advice from more than one experienced financial advisor, you can trust that you’re on the right track with your financial plan.

On the other hand, a second opinion can expose bad advice and allow you to change before it is too late. When you hear conflicting advice, it will give you the opportunity to ask more questions and educate yourself with choices. Then you are empowered to make changes.

Your ability to tolerate risk – also called your financial risk tolerance – is your ability to handle an investment loss. If your investments carry enough risk that the loss would force you to reduce your standard of living, then you may be taking on too much. It is important for you to know what kind of risk you can handle… and your risk tolerance may change over time.

It is also important to review your investments, regardless of the gains or losses, when you have had a life changing event during the last 12 months. This may impact your financial goals. The financial plan that is created for you by your financial advisor is not set in stone. It should only be a guide and it should adjust as your life plans change. A good reminder is, if something like a new career or a new baby occurs, it is time to sit down with your financial advisor. A new baby may require you to look at what insurances you have in place. A new career may allow you to pay down more debt or increase your contributions to your investments.

Angela Mercier is an independent financial advisor who does not work for any bank, financial institution or insurance company.


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