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Navigating Uncertain Markets

When markets shift, particularly when they drop quickly, it can be hard not to react. But history shows you will more likely achieve your long-term investment goals if you have a plan and stick to it through all types of market conditions. This may sound easy, but investors have been put to the test in recent times. Veering off course from a carefully thought-out plan can have long reaching consequences. It can turn a temporary loss of confidence into a realized loss on an investment portfolio.

 

Here are five strategies that can help you reduce the impact of these changes – and feel more confident about reaching your long-term goals.

 

  1. Maintain discipline

Making dramatic portfolio changes, like moving in and out of the markets, can have a negative impact on achieving your long-term investment goals.

 

  1. Diversify your portfolio

Diversification, where you hold a mix of different kinds of investments, has long been considered the golden rule of investing. It remains key to reducing portfolio volatility and risk.

 

  1. Regularly rebalance

Market swings – even smaller ones – can often cause a shift in the mix of investments you hold in your portfolio (also known as portfolio drift). This can lead to a very different investment experience than you originally intended.

 

  1. Use time to your advantage

One of the keys to successful investing is to start as early as possible because time is one of the most powerful elements in your investment plan.

 

  1. Invest regularly

Invest a fixed amount on a regular basis to keep your investment plan on track through all types of market conditions.

 

If markets have you worried, please get advice before you act. Unless you’ve seen major changes in your life, it’s rarely a good idea to change your investment plan. Talk to your advisor to find out if you need to revisit your long-term plan.

 

Jennifer Taylor, CFP®, PFP, Financial Planner, RBC Royal Bank

 

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