COLUMN: Ask the Money Lady – Retirement strategies for volatile markets

Readers continually ask me to suggest ways to help them deal with stock market swings. While we have had somewhat of a difficult year, it is believed that the markets will be moving more positively into 2025. When we look at the markets overall, third quarter earnings were up and our economy continues to grow. Large cap stock still trends to be the favourite but with anticipated easing interest rates next year, we will most likely see mid-cap and small-cap stocks outperforming again. So, for now, I thought I would give you five steps that you can keep in mind when your investment portfolio dips in random volatile market conditions.

1. If you are five to 10 years from retirement – you still have time on your side. You can still benefit from future stock market returns, price appreciations and dividends. Continue saving as much as you can to build out your portfolio.

2. Since for most, retirement will be long term – your investment focus should also be long term. Stay invested in a diversified portfolio when you enter retirement. Do not try and time the market or take on risky investments. Staying invested will ensure you avoid the risk of knowing when to get back into the market if you decided to bail out when the markets go down. Ensure your advisor rebalances your portfolio on a continuous basis to maintain a strategic target asset allocation. This will guarantee your portfolio is realigned properly to your risk tolerance, age, and future goals.

3. Most advisors will tell you to keep maximizing your RRSPs until you retire. While this is okay advice, I am not a big believer in having all your investments in registered retirement savings plans. Of course, they do have their place for tax savings, I still believe everyone should also be maxing-up their TFSAs and work on lowering consumer debt. If you can, try to put a lumpsum down on your mortgage or lower your amortization to pay it off sooner.

4. For millennial investors, why not consider investing in deferred variable annuities. This can be done with your RRSP contributions and will offer a compounded return to provide a guaranteed income at retirement. Annuities are not popular in Canada because they are transactional and remove the need for the traditional advisor who monitors a stock portfolio, but they are worth a second look. Economists unanimously agree they are still the best product to provide a guaranteed lifelong income in retirement.

5. Once in retirement, many will go through the “Honeymoon Stage” which is usually a time when new retirees, who are still young and vibrant spend too much during the first 1-2 years. Try and delay portfolio withdrawals for as long as possible to allow a recovery to equity prices and portfolio values if the market is volatile. Also curb major purchases in the first year of retirement. Use your portfolio to generate income from interest and dividends rather than selling securities that have declined in value.

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Christine Ibbotson is a Canadian finance writer, radio host & YouTuber. For more advice check out her YouTube channel: ASK THE MONEY LADY – Your Canadian Finance Coach.