16 April, 2020 Financial Planning

How to Grow Your Portfolio During the Coronavirus Outbreak

Two men investing with laptop computers.

Written by George Van Arragon

Watching the havoc that COVID-19 is wreaking on our economy — and economies around the world — might make you feel a little powerless. The drastic shifts in the stock market can seem disastrous.

But here at Bick Advisors, we’re taking a different view of what some might see as a catastrophe. We believe this is a market “storm” that you can weather. It might be hard to see right now, but we also believe this is an opportunity for you to profit and protect in the long run. I want to help calm your fears — and reassure you that there are concrete steps you can take during this market turmoil.

Steps you can take during COVID-19

In our teams’ years of investment and planning experience with clients, we’ve seen plenty of ups and downs in the market. The downturns following September 11, 2001, and the financial crisis of 2008 come to mind.

The stock market is a place to grow your investments over time. Occasional crashes are bound to happen. But rather than make light of the current situation we’re in, here are some tangible action steps that we’ve been sharing with concerned clients since COVID-19 began.

  • Don’t move your entire portfolio to cash. — Wait out the market. During similar market downturns in the past, I’ve seen clients use a tactic that has them “timing the market.” They sell all of their equities and then buy back in once the storm has passed. Or at least, that’s what they plan to do. But every time I’ve seen clients try this, it fails — and they end up losing money in the long run.
  • Look at the risk of the businesses you’re investing in. — Behind the scenes, experienced fund managers are constantly buying and selling for your portfolio. Don’t ever feel like there’s nothing you can do to influence what’s bought and sold. Look at the risk of the businesses in your portfolio — offer input and ask questions on what they’re doing. It’s your portfolio, and the power to make decisions is still very much in your hands!
  • Remind yourself that your retirement income is low-risk. — Remember the bigger picture. Many of our clients have company pensions, Canada Pension Plan, and old-age security income — all of which aren’t going away. Along with the “cash wedge” strategy that our advisors take when building your financial plan, your portfolio is insulated against market volatility. Since you have guaranteed, low-risk income for times like these, your investment portfolio can continue to take on risk without affecting your income. There’s no need to touch your equities. 
  • Keep the true value of your investments in mind. — It can be hard not to, but we encourage some clients not to look at their statements for a while. You’re likely going to see substantial drops in your portfolio value. If you’re keeping up with the headlines and watching the news, these decreases might further distress you. But is looking at the quick fluctuations actually helping you? Or is it changing your mindset about your financial plan from optimism to pessimism? Our hunch is it’s likely the latter. Our advice is to stop looking at your statements and the headlines for a while. This is because the numbers you’re seeing don’t mean anything if you look at them with a long-term view in mind. Remember the true value of the businesses you’ve invested in. In time, your portfolio value will grow once again.
  • If you’re young, don’t stop monthly investing. — This point is especially important for any clients who aren’t close to retirement. If you have monthly pre-authorized investment payments set up to come out of your chequing account, don’t stop them. Volatile markets like the one we’re living in now allow you to buy more shares at lower price points, ultimately leading to profit in the long run. It may seem counterintuitive, but we’d even encourage you to invest slightly more than usual.

The most important step of all: Talk to your advisor

I want to remind you that your money is in the hands of trusted, experienced managers who have been through many bear market cycles. They have proven themselves with impressive results during tough times. They can handle whatever is coming their way, and they aren’t going to make any rash decisions on your behalf.

If you’d like some more reassurance, we encourage you to get in touch with your advisor to ask about the team that’s managing your money.