It’s okay to acknowledge that you might be feeling negative emotions like fear and apprehension


As a researcher who works almost exclusively in the financial services industry, my work focuses heavily on investors – how they approach investing, how they change their behaviour over time, what they typically get right and what they sometimes get wrong. Over the years, this work has revealed some interesting differences between investors who are resilient, and those who struggle, panic or even admit to making poor decisions under stress that have hurt their investment outcomes. Given the current situation with the COVID-19 pandemic and resulting market volatility, I wanted to share my take on some of these differences.


In particular, let’s focus on the five things that investors should prioritize right now:

1. Take stock of your emotions

When it comes to investing, your emotions are important. It’s okay to acknowledge that you might be feeling negative emotions like fear and apprehension.

If you’re feeling anxious right now, you’re certainly not alone. In recent a recent survey conducted during the pandemic, fully two-thirds of Canadians tell us that they are either extremely (33%) or very (34%) concerned about the pandemic, while one-quarter (27%) say it’s negatively impacting their sense of well-being. This stress is frequently financial in nature, with a fifth (21%) saying they have lost their job or faced significantly reduced hours; and a third (32%) saying they have cut back financially in anticipation of how the pandemic will impact their finances.

Seasoned investors frequently tell us that a solid financial plan is key to helping them weather this type of uncertainty. In this context, a solid plan is one that includes not only investment goals and plans, but also anticipates volatility and incorporates an examination of your ability to tolerate it – the positive and negative market events that occur over time – without it negatively impacting your well-being.

An appropriate plan helps keep you on track by putting you and your needs front and centre. This allows you to not only put your own health and well-being first, but also guards your investment returns while you do it. The key is that it’s the investor’s emotions, risk tolerance and needs that are central to good planning – and it’s important that they avoid buying or selling under stress.

2. Reassess your finances

With roughly one in five Canadians facing layoffs or reduced hours due to the pandemic, it may well be necessary to look at the impact or potential impact of the downturn on your overall financial position. When facing strong emotions such as fear or panic, or while struggling to keep a job during uncertain times, many Canadians find it hard to stop and take stock. However, it’s important to develop a certain amount of discipline in the face of these challenges, and to revisit your overall position.

Some of the questions you may want to ask include:

  • If I am working now, is there a chance that a prolonged downturn or slow recovery may impact my job or pay?
  • If this has directly impacted my work situation, how can I leverage my savings to get me through?
  • Is my budget or spending under control or appropriate given that this type of event should reasonably be expected every 5-10 years?
  • Even if I haven’t been directly impacted, would it be a good idea to increase savings to ensure that I’m not left exposed if another downturn were to occur?
  • Am I on track for a reasonably comfortable retirement – even if another downturn were to occur within 5-10 years of my retirement date?
  • Am I managing debt well and, specifically, can I reduce or consolidate debt to save on interest right now?
  • Does it make sense to defer mortgage payments, or would I be further ahead by keeping on schedule?
  • Even if I don’t have one now, should I explore my eligibility for a home equity loan or other credit, in case my personal situation worsens?

Prior to the pandemic, Canadians’ top financial struggles were typically some combination of too much debt and an inability to save. As a result, Canadians are now more likely to need to make defensive moves such as developing better budgeting, controlling debt or giving up purchases. For most of us, this is likely a very good thing. It’s always better to take stock of financial realities than to ignore them; and for most Canadians, while uncomfortable, disruption will be temporary – and properly evaluating the changes and challenges faced will allow them to deal with the issues and recover sooner.

3. Revisit your plan (or make one)

Unsurprisingly, our research among investors has repeatedly shown that having a financial plan helps. Among the key benefits are:

  • Lower stress in the face of negative market events or volatility, since plans typically include the possibility of events like this.
  • Greater focus on the big picture, rather than on things like trying to time the markets or select individual securities – areas where investors frequently see more losses than gains.
  • Better long-term outcomes – as investors with plans typically feel more prepared and on track for retirement.

It’s very common for seasoned investors with a strong plan to credit that plan for helping them to stay on track and make the steady gains that have helped them to achieve long-term investment success.

Unfortunately, we are also frequently surprised at how many investors tell us that they have a partial plan or no plan at all. As a result, we would strongly recommend that investors use the current downturn as a good opportunity to develop a plan that works for them, or update their current plan. This plan should include a comprehensive view of the investor’s current economic realities, from the present day to how and when they want to retire, including issues such as debt, tax planning, risk management and estate planning. It should be customized for their risk tolerance, financial position and goals.

4. Get good advice

Just as you should have a financial plan, you should also have access to good advice on a regular basis. Similar to investors who have thorough plans, investors who get advice are typically calmer and see better outcomes. For most Canadians, this takes the form of a financial advisor that helps them to think about their retirement needs and then map out how to get there. Closely related to this topic, we recently took a look at how do-it-yourself investors are reacting. You can find it here.

We are increasingly seeing advisors offering more comprehensive services, including some variation of financial coaching – helping clients with tasks such as budgeting, saving and generally staying on track financially. In circumstances like these, this type of support can be extremely valuable for many investors.

It’s worth pointing out that a wide range of models and approaches for advice exists, and we’re seeing new ways to receive advice offered all the time, including some online options. However, now is a really good time to also ask questions like, “Do I have someone I can talk to who can listen to my concerns, help to keep me on track, discuss ideas that I might have or offer high-quality advice and context to help me make good decisions?” If the answer to any of this is no, now is likely a very good time to look for someone who offers this kind of service and advice.

5. Avoid aggressive moves or trying to ‘time’ the markets

Do you have some extra cash lying around right now that you’re thinking of investing? Or perhaps you feel like you’ve had enough and simply want to move your investments into GICs or cash to ride out the storm? Most experts would typically say that if you have cash, you should invest it when you can, rather than try to time the markets. From the research we conduct among investors, we would tend to agree.

We often hear stories from seasoned investors about how they started out trying to time markets or make speculative decisions. Often the stories include dramatic tales of missing out on market timing or investing on intuition that ended up being very wrong. Some stories are sad. Some investors get to the point that they look back on their misses with a sense of humour. However, most eventually come to a point where they recognize that a more long-term approach that focuses on a plan is better suited to making steady gains over time.


The reality is that some investors will get through this situation better than others from both the perspective of financial recovery and weathering personal stress or anxiety. The key learning from this should be that investing is a discipline – one of planning, thinking, planning some more and making long-term changes. Where investors find and embrace this discipline, long-term financial success is more likely to follow.

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