How to recover deflated investments and plan for a greener future.

Many Canadians have been sideswiped by stock and real estate market declines over the past year. Families concerned about their investment portfolio often approach me for advice in search of a magic formula that will quickly grow their portfolio back to its original value. They often seem trapped like a deer in the headlights, unsure of what to do next. Should they sell? Should they buy? Are stocks going up or down?  How about real estate?

Unfortunately, I don’t have a crystal ball, or the ability to predict the future (I wish I could, it would make my job much easier). There are however, some basic steps that all families can take to improve their financial lives during difficult economic times. The first step is to assess your situation by asking yourself some basic questions. What is your family’s current position? What is important to you? Where do you want to be in the next 5-10 years? After you have answered these basic questions, the next step is to develop a financial plan.

Have a Plan

Once you have a basic idea of where you are and where you want to be, you can begin to develop the outlines of a basic financial plan. In many cases, it is important to sit down with a professional financial advisor to draft and implement this plan. Working with a professional financial advisor will help you arrange the technical details, tax opportunities, and investment strategies that will make up the body of your big-picture strategy.

Having a plan in place will enable you to respond proactively to changes in your personal life, your employment situation, and the overall economic environment. Plans should be reviewed at least once per year, and changes to your situation should be incorporated annually.

Assess Risks

In today’s economic environment, there are potential risks that families should consider in their financial plan including job loss, death or disability, and financial risks such as inflation and poor investment returns. Develop your plan to assess the major risks that your family faces, and then outline strategies to manage those risks.

For example, your investment portfolio should manage the risk of inflation by holding a diversified basket of assets including stocks, fixed income (bonds and GICs), real estate, and insurance investments. If inflation is a major concern for you, it might also make sense to include a small proportion of alternative asset classes such as commodities and gold in your portfolio. Owning your home will help protect your family from inflation, but if your family carries a mortgage, life and disability insurance should be purchased to protect your children from the financial risk of your death or disability.


It’s always important to live within your means. For young families, a financial plan should usually incorporate a regular savings strategy. In most cases this means making regular contributions to your RRSP, RESP, and TFSA accounts. The mix of investments that you hold will depend on your overall asset mix. Keeping your plan on track will require discipline and the support of a professional advisor who should act as your coach.

If you are unsure about your financial situation, it’s best to get a second opinion. Ask your friends and family if they can recommend a financial advisor. And remember, the best way to get ahead, is to plan ahead.

By James Dunne CIM, DMS

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