Is coronavirus chaos ruining retirement?

Investors have many reasons to worry, but panic selling isn’t going to save nest eggs

Is coronavirus chaos ruining retirement?

At this point, it might feel like coronavirus has effectively cancelled 2020.

After the World Health Organization officially declared a pandemic on Wednesday, the National Basketball Association suspended its current season. The National Hockey League followed suit, and organizers of much-anticipated shows like the Juno Awards have chosen not to go on.

Things are looking similarly bleak for retirees and soon-to-be retirees as they see their investment portfolios ravaged by wild moves, including a record nosedive in Canada’s main stock index on Thursday morning. There’s an understandable temptation to sell out of the market — a move worth weighing as more trouble is in the offing.

“You don't want to be making your situation worse than it is,” Rona Birenbaum, a financial planner at Toronto-based Caring for Clients, told CBC News.

Birenbaum isn’t totally pessimistic. While she expects another 20% to 25% stock plunge as the outbreak sends North America’s “whole economic engine … from sixth gear into first gear,” she estimates a recovery could come in one to two years. Those whose investment horizons cover that window, she suggested, should consider rebalancing their portfolios more toward strong companies with balance sheets healthy enough to get them through the current storm.

“You want to make sure that your portfolio is comprised of the strongest, most dominant companies,” she said, warning that smaller and weaker firms face greater risks of bankruptcy, being swallowed by their more powerful rivals, or just barely getting by for a few years.

That view was echoed by financial planner Robyn Thompson, who told CTV News that investors with no significant reason other than short-term market volatility should hold onto their positions. “You don’t want to be moving in and out of positions trying to time the market,” she said.

The pain has been undoubtedly sharp for those with most of their eggs in the S&P 500 basket. But those with more diversified portfolios are getting off easier; in an interview with the news outlet, Paul Shelestowsky said that his most well-diversified clients saw just a one per cent drop in their investments at the start of last week.

Others might even view the crisis as a buying opportunity, although that depends on how long one can afford to wait for an economic revival. As noted by Alberta-based investment advisor Robb Engen, the strategy could work for young investors, but not for near-retirees.

“What if things don't work out the way I planned? Now we'll have to be selling stocks at a loss just to fund my retirement,” Engen said in an interview with CBC News.


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