‘Sit tight and wait’

Re­tirees keep close watch on in­vest­ment port­fo­lios

The Guardian (Charlottetown) - - BUSINESS - THE CANA­DIAN PRESS

Few in­vestors have es­caped the car­nage on the stock mar­kets this year as the bears have taken over the Toronto ex­change.

But for those clos­ing in on re­tire­ment and those al­ready there, the down­turn may be even more fright­en­ing as the value in Cana­dian in­vest­ment port­fo­lios in­vested in stocks have taken a beat­ing.

Pace Sturdevant, a re­tiree in Ottawa, says “it’s been de­press­ing.”

“They’ve lost so much value that’s ba­si­cally the only thing to do is sit tight and wait,” he said of his port­fo­lio of stocks.

Sturdevant, 67, is keep­ing a close watch for any div­i­dend cuts by com­pa­nies in his port­fo­lio of mostly div­i­dend-pay­ing stocks.

“It hasn’t hap­pened so far,” he said.

The S&P/TSX com­pos­ite is down about 20 per cent from his highs of last year, putting it in bear mar­ket ter­ri­tory.

Sturdevant knows he hope­fully has an­other cou­ple of decades of re­tire­ment to pay for, so he has time on his side.

That doesn’t make the losses any eas­ier to take, how­ever.

“I sold one stock that was a strong sell and I bought some stocks that have tanked,” he said.

The tur­moil on the mar­kets has amounted to a painful les­son for those close to re­tire­ment about the im­por­tance of bal­anc­ing risk in their port­fo­lios.

Peter Bowen, vice-pres­i­dent of tax and re­tire­ment re­search and so­lu­tions at Fi­delity In­vest­ments, says in­vestors need to start by ask­ing them­selves why they’re in­vest­ing.

“If it’s for a house, that gives you a dif­fer­ent an­swer than if it’s for re­tire­ment, and if it’s for a car, well yet again — a dif­fer­ent an­swer,” he said.

“The in­vest­ment time hori­zon is one of those key in­puts to the strat­egy, in ad­di­tion to the in­di­vid­ual’s goals and their tol­er­ance for risk.”

Bowen says bear mar­kets can serve as a lit­mus test for in­vestors and their risk tol­er­ance.

“If they aren’t sleep­ing at night be­cause of their con­cerns about their port­fo­lio, maybe they’ve over­stated that risk tol­er­ance,” he said.

Gen­er­ally, the closer you are to spend­ing your in­vest­ments, the more con­ser­va­tive your port­fo­lio should be.


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