As I write this blog post, the world is in a trade war. No one knows what’s going to happen next, nor when it will end. Certainly no one knows just how deeply the financial pain will be felt by the Not-A-Billionaires. In my very humble opinion, those who are already billionaires should be just fine. Everyone else needs to be a little more prepared for the financial pain that is headed our way.
The only thing that can be said with any kind of assurance is that this situation will not last forever and the market will recover…eventually. For you, it’s investing time.
How long that recovery will take is anyone’s guess. I urge you not to put too, too much faith into the words of the Talking Heads in the media and online. No one knows what will happen, nor precisely when the recovery will start!!!
If you haven’t started investing in broadly diversified, equity-based exchange traded funds (ETFs), then today is an exceptionally good day to start. The market is down, which means everything in the stock market is on sale. Buying while the market is down means that you’re “buying low”. This is a good thing. Open an investment account and start buying equity-based ETFs to be held for the long-term. In case it needs to be said, always keep your long-term investments separate and apart from your emergency fund. They’re two pots of money for two very different purposes, and they should not be co-mingled.
If you have started investing, then continue to do so. When you get paid, take a portion of your paycheque and invest it. The current volatility in the market need not be a reason for you to stop investing. If anything, consider increasing your investment contributions. The market is down, which means everything in the stock market is on sale. Buying while the market is down means that you’re “buying low”. This is a good thing.
Do not stop investing right now! You’ve heard me speak before about learning from other people’s mistakes, right? Well, this is your opportunity to learn from mine. Back in 2011, there was another recession. It was a small one, so not very well-known. It was nowhere near as big as the Great Recession of 2008. Here comes the part where I made my big mistake. I blame it on the fact that I was much younger and far less wiser in 2011 than I am today.
When the market started falling, I stopped contributing to my investments for 6 months!
This meant that I did not buy at the bottom. I waited until the sale was over to re-start my bi-weekly contributions. Prior to that little recession, I had been contributing a portion of my bi-weekly paycheque to my investments through a method called dollar-cost averaging. My system was automatic and I barely ever thought about it. However, when the market started dropping, I panicked and halted my automatic contributions. Doing so was one of the worst investing mistakes that I’ve ever made.
There’s no need for you to repeat my mistake in 2025.
If you’re already on an investing schedule, stick to it. So long as you still have a paycheque, continue to live below your means so there’s money to invest. The stock market is on sale right now. You’re currently living through a great time to buy equity-based ETFs and index funds. When the market recovers, as it will eventually, the value of the investments you make today will increase.
It bears repeating. Keep your investments separate and apart from your emergency fund. Your emergency fund has to be in place in case you and your paycheque part ways. You should never invest your emergency fund in the stock market. Instead, keep that fund in a high interest savings account like EQ Bank or Tangerine. Do not put your emergency fund in your Tax Free Savings Account (TFSA). The TFSA is the perfect account for your investments since they can compound over the long-term without being ravaged by taxes. You don’t want to have to withdraw money from this account during an emergency. Doing so means that you’ll be thwarting the growth of your investments.
If you’re feeling particularly nervous or panicked about the current economic volatility, then I suggest that you find ways to trim the fat from your spending. Whatever amount you find should be divided in two. Send one half to your emergency fund, and use the other half to increase your contributions to your investments. This is the best of both worlds.
The market is going to recover and volatility should be accepted as normal. Continue your contributions to your investments. Bulk up your emergency funds a little bit at a time. Turn off the news for a day or two. Control that which is in your power to control: your spending, the amount you contribute, and your choice to continue investing in your future.
Time will do the rest.