But even as the trade war between Canada and the U.S. brings a heaping spoonful of additional volatility, experts say in the grand scheme of things, it could just be a blip in young investors’ portfolios—if they stick it out.
“The first step is you’re not going to do anything,” said Sara McCullough, a Certified Financial Planner and owner of WD Development. “You’re not panicking, you’re not selling anything, you’re not going to buy anything.”
For those concerned about their investments, McCullough said to take stock of their portfolio, review their risk tolerance and look at why they’re invested.
If your portfolio is meant to help you buy a house in the next three years, that money shouldn’t have been in the market in the first place, she said.
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Invest with your risk tolerance in mind
Investing for the long term is crucial for young investors, which is why they should be able to sail through the current market volatility.
However, if they realize they truly can’t stand to see big fluctuations in their portfolio, it might be time to make some changes.
That means lowering the risk level of the portfolio by reducing the stock exposure and diversifying, Paul Shelestowsky, senior investment adviser at Meridian Credit Union and Aviso Wealth. “Maybe we need to add more bonds to the portfolio and less stocks to give peace of mind,” he said.
Bonds experience fewer fluctuations and grow over time at a steadier rate compared with stocks. Shelestowsky said people can also move to guaranteed investment certificates (GICs), which have a fixed rate of return and guarantees your original investment will be safe. The trade-off is the returns on GICs are typically low, especially after factoring out the rate of inflation, and the money is typically locked in for a set period of time.
