There were many mistakes made in people’s RRSPs when the market was crashing in 2008, and it is crucial that we don’t make them again now that 2016 has started of so poorly.
The stock market can be more about emotions than economics, and you can make bigger mistakes by going with your gut than with your head. Going with the herd and selling in times like this is never the right decision. A herd of buffalo is known for going over cliffs all together when a simple right turn can avoid that headache.
Below I’ve made a game plan for the two biggest demographics. Boomers need to secure their gains and Millennials need to buy more when opportunities show themselves — the complete opposite of what happened in 2008.
Many investors who were close to retirement in 2008 blew up their portfolios in overly risky stocks and then sold at the worse time. When you are getting close to your retirement, look to preserve your capital versus making even more. There are many products out there that can serve your risk profile, and being smart with your money will save you from the doom and gloom of 2008 and let you enjoy your golden years.
The market has gone up for many years now, and many investors have been reaching for yield in more risky stocks. Make sure that if you are close to the golden years you protect your goose. Look at products like:
If you are saving for retirement, make sure you have automatic savings that are going to buy stocks as they go up and back down for the long run (dollar cost averaging). Corrections like the one we are having right now are times when millennials need to buy up cheap, good quality stocks for the long run.
Buying low and then selling high is the name of the game. Buying throughout your accumulation years can start now and in time the market has always moved up. Being nervous about the market and staying out of it is the worst decision for a happy retirement.
Learn from the 2008 mistakes and treat your RRSP with more care this year.
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