Ottawa Citizen

Easing into markets can lessen concerns

- BY IMRAN SYED

Q:

With the sale of our rental property, I have some money I’d like to invest in the market, but am concerned about the financial health of the options. How do you recommend that I ease into the market? A:

It’s sometimes a concern getting into the market and wondering if you are buying too high and whether the market is going to drop or whether it’s a good time to simply jump right in.

I’d recommend that you consider your investment objectives. If your goal is longer-term growth and you are prepared to ignore the short-term volatility, then you might feel comfortabl­e investing some or all of the proceeds at this time.

One strategy that we have used for some of our clients is to dollar-cost-average in. In other words, each month purchase an equal amount over a sixto nine-month time frame. For example, if you have $90,000 to invest, you could purchase $10,000 each month for nine months. This way when the market is lower, you actually end up buying more shares and when the market is higher, you will be buying fewer shares.

In addition to separating your investment portfolio into low-, medium- and higher-risk allocation­s, perhaps you should also consider the use of a segregated fund portfolio. Despite their higher management fees, segregated funds provide a full or partial guarantee of capital upon maturity, in addition to some potential creditor protection and estate planning advantages.

It’s also important to consider the impact of taxes on your non-registered portfolio and this might warrant a discussion with your adviser on how differentl­y interest, dividends and capital gains are taxed. Imran Syed, CFP, CFSB, is an independen­t, fee-based certified financial planner and can be reached at feebasedad­visor.ca. This article provides general informatio­n and does not constitute financial or other profession­al advice.

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