Tag: COVID-19

Money – A New Normal

As we gradually move into a vaccinated post-COVID world, I wonder how many of us have discovered a new normal for our money. The lockdowns forced many of us to curtail our spending in many areas of our lives. Those lockdowns have all but disappeared in my corner of the world. However, there were some changes to my spending habits in the interim. How about you? Did you change the way you spent your money?

For my part, my social life took a beating! ZOOM calls simply don’t replace face-to-face meals in a nice restaurant. Virtual hugs aren’t the same as real ones! Where I used to share meals with friends 2-3 times a week, that was all but eliminated during the pandemic as I cooked most of my meals at home. There were those few brief months when I diligently participated in Take-Out Tuesday. It was my way of ensuring that local mom-and-pop restaurants stayed afloat. I didn’t want my post-pandemic restaurant options to consist solely of chain restaurants. The pandemic induced a second, major change in my annual spending. l stopped travelling. No more trips for work or leisure. All told, I haven’t left my home province in three years!

Believe me when I say that has never happened before. I’ve been travelling somewhere atleast once a year since the time I was 6 weeks old and my parents took me to the mountains. Travel used to be as familiar to me as brushing my teeth. I was the person who planned her next trip on the flight home from her last trip! Being grounded for the past few years hasn’t been fun. At the same time, I know it’s been a very small price to pay while living through a global pandemic. First world problem, right?

The World Health Organization declared the pandemic on March 11, 2020. Take a look at your expenses for the past two years. Where were you forced to cut back? What did you do with the money? Was it funnelled into savings? Did you pay off some debts? Perhaps you chose to simply spend more online?

The pandemic did not impact everyone in the same way. Some people lost their jobs and subsequently fell into debt & unemployment. Others transitioned to working from home, or otherwise continued to work in their essential jobs. The fortunate ones who continued to work had the opportunity to invest and pay down debt. They could do so because they were essentially stuck at home! Thousands of dollars were no longer going to sports activities, concerts, travel, eating out, gasoline, commuting, dry-cleaning, salon visits, etc… That money was now available to be spent paying down debts such as credit cards, auto loans, student loans, and other consumer debt. Alternatively, for the Debt-Free, those funds could be diverted to RRSPs, TFSAs, and non-registered investment accounts. The money could have also been used to bolster previously-anemic emergency funds!

Ask yourself if you’ve got a new normal for your money. You need not share your answer with the class. Instead, consider your spending choices during the height of the pandemic lockdowns. What were you forced to stop purchasing? And will you go back to making those same purchases now?

For my part, I look forward to socializing more with my friends and family outside of the house. Will I go back to the same frequency as before? That’s doubtful! These past two years have inspired me to try new dishes and to expand my culinary repertoire. The frequency of socializing will definitely go up, but I have a feeling that I will be doing more entertaining in my home.

As for my travel-habit, I suspect that my comfort level will not return to pre-pandemic levels for another few years yet. My annual international travels are still on hold for another year or two. Truthfully, it was an expensive habit. I wish I could say that all my travel funds have been piling up in my savings account. In reality, a lot of that money has been re-directed into my house. In 2021, I had to replace the sewer pipe that connects my house’s water to county’s water line. That particular project cost me as much as my 2016 trip to Italy!

Do you have a new normal for your money? Maybe take some time and think about whether you want to resume your pre-pandemic spending habits. If the lockdowns and restrictions forced you to curtail your spending, then maybe that’s a good thing. It’s your money and you’re the only one who can determine if you’ve found a new normal for how you manage it.

Buy and Hold Works!

As a non-expert financial person, my advice to nearly everyone is to adopt a buy and hold strategy because it works over the long-term.

When the pandemic was declared in March 2020, the stock market took a dive. And it wasn’t a sweet, gentle decrease either. It was a stomach-churning drop that saw me lose 1/3 of my portfolio’s value in the space of three weeks. At one point, I just stopped checking the value of my holdings. It was simply too painful!

Despite the drop and despite seeing years of growth wiped out in a matter of weeks, I continued to buy and hold. Every two weeks, a chuck of my paycheque went to my investment account. I stuck to my routine of buying units in my exchange-traded fund. In a world gone topsy-turvy due to a brand-new-to-humans virus, my investment schedule was the one constant that I could rely on.

Besides, I had learned my lesson from earlier market crashes. Back in 2011, the stock market crashed. I made a monumentally regrettable error when I stopped my contributions.

Wrong choices.

I was scared and naive, and I didn’t understand that the market crash was the very best time to be buying into the market. I wanted to wait for the market to recover a bit before adding new money to my portfolio. In reality, I should have been shovelling money into my investment account. Making hay while the sun rises and all that jazz.

Instead, I sat on cash in the bank for six months until I realized that I was being stupid. Who was I to know when the perfect time would be to re-start my contributions? I might be many things but a stock picking expert I was not!

So I picked a day and I just started investing again. And I haven’t stopped. As my income went up, I increased my bi-weekly contributions accordingly. A big chunk of each raise went to my investment account, while a little bit stayed in my pocket to increase my lifestyle. It’s the whole balancing act behind the principle of Save-Some-Spend-Some.

Instead of tying myself into knots trying to determine the very best time to invest my money, I simply invest my money every two weeks like clockwork.

COVID-19 didn’t matter

When the pandemic hit, and one third of my portfolio was obliterated in less than a month, I didn’t worry about my investment portfolio. I won’t say that I enjoyed seeing the daily decreases in my investment balances. What I will say is that I decided not to repeat the mistakes I made in 2011.

With age, comes wisdom… or so I’ve been told. In my case, there was truth to these words. Having missed an incredible investment opportunity 10 years prior, I vowed not to make the same mistake this time around. Even though the rollercoaster that is the stock market downward on one of its biggest descents, I continued to invest my money. I told myself that the losses would be short-lived and that my portfolio would recover.

My words proved prophetic. As anticipated, my portfolio has recovered quite nicely and I’m ahead of where I was just before COVID-19 became a permanent part of our world. I’m quite confident that the Care-And-Feeding-of-Blue-Lobster-Fund will be perfectly capable of replacing my income when the time comes that my employer and I part ways.

If nothing else, the pandemic has solidified my belief that buy and hold works. It’s a simple and straightforward strategy that works because you don’t have to tamper with it too much. The investor has two main hurdles. One, she has to open an account and start contributing. Two, she must continue to contribute while ignoring the talking heads, aka: financial experts who haven’t achieved notable wealth.

The investor doesn’t have to worry about timing the market. Buy and hold works because it puts the emphasis where it should be, on time in the market. It solves the problem of which stocks to buy. Purchasing units in a broad-based equity exchange traded fund means that the investor is buying into a diversified group of stocks. Stock picking is not involved. And that’s fantastic since analysis-paralysis is one of the biggest impediments to success in investing.

It makes sense, doesn’t it? If you happen to pick the wrong stock and lose money, then the odds are good that you won’t be overly eager to invest even more money into the stock market. You might even decide that you’ll never invest in the stock market again. To each their own… but that’s not a great response to having your butt kicked in the stock market.

My Next Steps…

The next move for me will be the same one I’ve been making for the past 10 years. When my paycheque hits my account, a big chunk of it will be automatically siphoned off and sent to my investment account. And on the appointed day, I will buy more units in my chosen investment vehicle. No muss, no fuss. There will be no worry about when to invest. And I won’t spend any of my precious, precious time on trying to find the next Tesla stock.

Instead, I will stick to what has worked in the past and what promises to work in the future. They say that there are no guarantees besides death and taxes. And they may very well be right. I’m going to propose that the buy and hold strategy ought to be viewed as guaranteed-adjacent.

The Honest Truth

Roughly 20 years ago, I landed my first professional office job. It entailed monthly meetings with my manager, wherein I updated him on my current workload. He was an amiable man and most meetings were sprinkled with little nuggets of life advice.

One of the acorns of advice that has always stayed with me is the following. “Never believe that this place needs you. Always remember that you can be replaced.”

It sounds harsh, doesn’t it? As I look back on those words, I appreciate them because they are the honest truth.

My manager wasn’t being mean or obnoxious. He was being truthful. If I hadn’t been hired to do my job, then my organization would have hired someone else. And if I had chosen to walk out at that very minute, the organization would have tackled the task of finding my replacement.

That particular acorn took root.

For nearly two decades, those words have rolled around in my head. The honest truth they embodied has been one of the underlying reasons of why I save and invest. It is imperative that my money works as hard for me as I do for it. My money must insulate me to the greatest extent possible from the financial consequences should my organization decide that it’s time for me to be replaced, that it can survive without my contributions to its operations.

If you’re somewhat sentient when this post is published, then you can’t help but be aware that a great many people have lost their jobs through no fault of their own because of the COVID-19 pandemic. The news reports are rife with articles of the millions of people who have had no choice but to turn to the government for financial assistance to survive.

However, I suspect that there is a cohort of the Recently-Let-Go who haven’t had to ask for financial assistance. I’m willing to guess that this cohort is compromised of people who’ve worked for a couple of decades and who made the choice to live below their means throughout their working lives so that they could invest their money. I wouldn’t be surprised if this fortunate cohort has made the choice to stay out of debt no matter how often credit was offered to them. And I’ve assumed that this cohort is going to keep a tight, heavy lid on their status so that they can continue to live as they always have – social distancing & hand-washing as required – without drawing the ire of their family, friends, neighbours & former co-workers. Check out the comments on this article.

Continued employment isn’t guaranteed.

As a result of my manager’s words, I’ve always known that my employment was at the whim of someone else. Sure – I’d likely find another position somewhere else, but what if it took me a long time to do so? How would I pay for my life between one employer and the next? Even if I tried to become self-employed (something that has never held any appeal to me), how would I pay for my life before the money started rolling in?

Hearing the honest truth from my manager during a routine monthly meeting incentivized me to do all of the following things:

  • pay off my student loans as quickly as possible;
  • build my emergency fund through automatic transfers every payday;
  • re-pay the loan on my SUV in 6 months by making gargantuan payments every two weeks & by sacrificing a little bit of fun & frivolity;
  • invest a portion every paycheque in the stock market once the mortgage on my principle residence had been paid off;
  • move out of mutual funds and into exchange traded funds once I learned how deeply management expense ratios impacted my overall rate of return;
  • stay out of debt by paying off my credit cards every single month; and
  • pay cash for everything.

I know those last two bullet points sound contradictory, but they aren’t. If I don’t have cash, then I don’t use my credit cards. Once the cash is in my bank account, then out comes my credit card to make the purchase. This method means that I earn cash back or points towards groceries. The charge is applied to my account then I send a payment from my bank account to my credit card. Best of both worlds – I always pay cash while taking advantage of the perks of having my credit cards. If you can’t pay off your credit cards every month, then don’t do what I do. Only spend cash or use a debit card!

Motivation comes from unlikely sources.

It’s taken me a long time to see the link between words spoken nearly 20 years ago and the financial choices that I’ve made in my life. The honest truth from my manager’s lips motivated me to build as big a financial cushion as I could as fast as humanly possible. It didn’t happen overnight, and there were many mistakes made along the way. To this day, payday still means that a chunk of money is set aside for the future.

Another source of motivation for me comes from our current global pandemic. COVID-19 has me re-assessing whether my emergency fund is big enough. For record, I have made plans to increase it. It’s my firm belief that no one has ever regretted having “too much money” during an emergency.

In a similar vein, the money saved from staying home while most everything is closed has been re-directed into sinking funds. There are still big expenses on the horizon. Property taxes will still have to be paid at some point. My home and vehicle insurance premiums are still due in a few months. Birthdays and other celebrations might still require me to open my wallet, even if I can only visit with people via video and telephone. The annually recurring expenses of living will continue to come around, whether we’re still in a pandemic or not.

Do yourself a favour! Go back to my manager’s works and let them sink in. At the end of the day, your employer can always choose to replace you. Sooner or later, there is going to be a parting of the ways for reasons that may be beyond your control. Be proactive – take the steps today to ensure that you’ll be financially okay when that time comes.

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Weekly Tip: Live below your means so that you have money to invest. This is another way of saying pay yourself first. After you’ve paid yourself, then you can get down to the business of paying everyone else.

One of my Biggest Money Mistakes

Tempus fungit… which is Latin for time flies. And boy does it ever!

In 2006, I was fortunate enough to pay off my house. Unfortunately, I wasn’t smart enough to immediately turn my former mortgage payments into investment contributions. Instead, I didn’t start dollar-cost-averaging into the stock market until 2011. This was on one of my biggest money mistakes.

I missed the 2008 stock crash (Yay!!!) but I also missed 2 years of the recovery between 2009 and when I started investing in 2011 (Boo!!!!).

And what did I do with my money between 2006 and 2011? I seem to recall a trip to Hawaii in 2007. I’m sure I made some renovations to my home. I financed my vehicle and paid it off in six months. The rest of the money… I haven’t a clue where it went.

Coulda…Woulda…Shoulda….

Now that it’s 2020, I really regret that I didn’t start using dollar cost averaging the very second that I no longer owed money on my mortgage. If I had, then I would be 5 years closer to my retirement goals. Sure, I’ve got 9 years of consistent investing under my belt but I could have had 14 years of investing behind me. Why did I wait so long? Partly, it was because I listened to well-intentioned friends and family who told me to relax and enjoy my money.

The choice to listen was mine, and I accept full responsibility for it. At the time, I was younger and far less money-wise than I am now. However, I just wish that I’d found blogs like this one – or any of the other super-awesome blogs out there – earlier than 2011. Right now, I follow Personal Finance Club on Instagram. He encourages his followers to “Invest early and often”. You might want to check him out, follow him for a while, learn stuff that you might not already know… or not. The choice is yours.

I love PFC’s mantra and I wish I’d found this Instagram account in 2006. As it is, I started following PFC on Instagram in 2018. By then, I was already investing regularly but I still really like the graphics on his account. In any event, his advice is great. If I’d started in 2006, then I would have had 20 years of retirement savings under my belt by the time I hit my planned retirement date. As it currently stands, I’ll only have 15 years of savings in my kitty.

Unfortunately, I learned too late than procrastination is a time-waster. Even if you love your job, save and invest for financial independence. If your budget will allow, start working towards financial independence while you’re also paying down your debt. If that’s not possible, then start saving and investing your former debt payments once the debt is gone. There’s no need to duplicate my money mistakes! Do not use your former payments for day-to-day living. Instead, turn your former debt payments into investment contributions so that your money starts working hard for you as soon as possible.

Once I finally committed to investing for my dotage, I set up automatic transfers and began building my army of money soldiers. I’m happy that I’ve been able to consistently invest month-in, month-out since 2011. Yet, I still regret that I didn’t start in 2006 so that I’d be that much closer to financial independence.

Procrastination is to be avoided…

You don’t have to in any way adopt, imitate or copy one of my biggest money mistakes. Experience is a great teacher. You can just as easily learn from someone else’s experience as your own. Why not learn from mine? You need not make all the mistakes yourself.

Take a good look at what’s happening to so many people during the COVID-19 pandemic. Far too many people have lost their employment through no fault of their own. From what I’m reading in the media, precious few of those people have enough money tucked away to survive a job loss. They do not have the luxury of not worrying about how to pay for what they need. In short, they were not financially independent when the pandemic hit.

The best reason to consistently work towards financial independence is because you don’t know when you’ll want to stop – or when you’ll be forced to stop – working for a paycheque. If you love your job and can’t wait to spring out of bed to do it, then save for financial independence anyway. Being financially independent doesn’t mean that you’re obliged to quit doing what makes you happy.

Should the unthinkable happen and you stop loving your job, being financially independent also means that you have the option to stop doing what no longer brings you joy. You can quit to do something else without wondering how to put food in your belly.

And if you find yourself unceremoniously tossed out of your job, being financially independent means you won’t be in the position of wondering how to pay for the expenses of your life.

As stated by the Physician Philosopher, financial independence is the escape hatch. His article is about burnout among medical doctors, specifically, but the principle applies to any employment situation that you may want to leave. When you aren’t concerned about financial consequences, it is so very much easier to leave your employment whenever the mood strikes. Conversely, financial independence gives you the luxury of tending to your wounded pride, without any additional financial stress, should your employer unilaterally decide to send you on your way.

Please don’t be a procrastinator! Start working towards financial independence today.

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Weekly Tip: Pay the lowest management expense ratios (MERs) as possible while still meeting your investment goals. When two products are essentially the same yet priced differently, it makes no sense to pay more than necessary to acquire what you need. Use this calculator from the British Columbia Securities Commission to see the impact that MERs have over long periods of time. The lower your MER, the higher your final investment amount.

Stay Home – Save Money!

The entire world is facing the COVID19 pandemic right now. There is nowhere to hide, and there is currently no vaccine from this disease. However, each of us has the power to slow its spread. We should all do what we can to stay home!!!

It’s very simple: stay inside your own home.

The coronavirus that causes COVID19 is a respiratory virus. It is spread through droplets in the air when people are around each other. To slow its spread, each of us must stay home. And if we must go out for essentials, then we should practice social distancing by remaining atleast 6 feet away from others.

If you stay home and if you practice social distancing when not at home, you will be doing your part to limit the spread of COVID19.

Tackle your to-do list!

Stay home! Use the time to do those things that you always say you’re going to do but don’t actually do. For example, is there a closet that needs to be cleaned out? Have you sorted that catch-all drawer that drives you crazy each time you open it? Weren’t you thinking of writing a book or starting a blog?

If you’re not good at it, learn to cook. The internet has countless websites that will teach you the long-forgotten art of cooking for yourself. Start at the All Recipes website and work your way around the world wide web. Since you’re staying home anyway, you have the time to simmer and braise and boil and bake and sauté and dice and julienne and all those other magnificent things that cooks do in the kitchen. Feeding yourself is one of the easiest things to do in cutting down on your expenses.

Since the pandemic was declared, I’ve spent a lot of time in my kitchen. I’ve made lasagna, meatballs, spaghetti sauce, and chicken. I’ve baked a cake and a batch of cookies. My freezer is filled with pre-portioned packages of chicken marinating in lovely sauces that I made myself. Thankfully, I’m back to hitting my daily target of 10,000 steps per day! This weekend, the plan is to make a delightful dish called Chicken, Sausage, Peppers & Potatoes. It’s simple and tasty, and it also creates absolutely delicious leftovers.

If you’re still employed, be grateful.

The economy is very volatile right now. Millions of people have applied for employment insurance because their jobs have disappeared for an indeterminate amount of time. They don’t know if they’ll have jobs to go back to when this is over. Through no fault of their own, their economic lifeline has been cut and they’re working through the process of figuring out how to pay for their lives.

There are other millions of people who haven’t lost their jobs. If you can count yourself among those who are still employed, then it’s time to start trimming the fat from your budget. The emergency fund needs some love right now. Right now, the focus of your money needs to be on food, shelter and transportation. Everything else can wait. Books can come from the library – you can get the Libby or Overdrive app for your device if your physical branch is closed.

Find other ways to save money right now. I’m not an economist, nor am I a financial planner. It’s just my gut that is telling me that the macro economic situation is going to be challenging for the vast majority of us for a while yet. If you have a paycheque coming in, then you should strive to make it last as long as possible. Stop living paycheque-to-paycheque! Put a portion into your emergency fund. Pay your bill on time, yet ensure that you have as few bills as possible. Do not take on any new debt right now. If you can’t pay for it in full (whether cash or debit), then you can’t afford it right now. Save up your money and buy it later.

COVID19 is not going to last forever. This pandemic is definitely a huge challenge and it will continue to cause grief until such time as vaccine is found. The good news is that as each day passes, we are that much closer to finding one.

Stay healthy – stay safe – stay home!

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Weekly tip: Track all of your expenses so you know where you spend every dollar.

I am not an Economist

First and foremost, I am not an economist. I write this article as someone old enough to remember H1N1, SARS, the Great Financial Crisis, and the DotCom crash. I’m quite certain that there were other economic challenges earlier in my life but I was young enough, or naive enough, to take no notice of their impact on my life.

Anyone who pays attention such things knows that the stock market is experiencing a great deal of volatility right now. Most people are scared of contracting COVID19. Businesses are shuttered. Some people are losing their jobs. Other people are trying to hoard essential products. Pictures of empty grocery shelves are everywhere.

It’s easy to be afraid right now.

Again, I am not an economist. However, you should have faith that the stock market will recover. When? No one knows. Yet, I am 99.999% certain that this is not the end of capitalism. The supply chains are still running. Grocery shelves are still being stocked. Prescriptions are still being filled.

Very smart people all over the planet are working on a vaccine for COVID19. They will find one.

What I think you should do

Do not panic with your investments! If you can avoid it, then do not sell anything in your portfolio right now. The only way to lock in a loss is to sell when the price falls.

The stock market will recover from this dip. No one knows how whether the recovery will happen by the end of 2020, or whether it will recover in 2 years. However, the impact of COVID19 will become an item in the rearview mirror when the stock market starts to go up again. Just like H1N1, SARS, the Great Financial Crisis, the DotCom crash, and all the other economic shocks that have preceded this virus.

Should you be one of the fortunate ones who has stable employment right now, then I urge you to stick to your current investing schedule. This suggestion is based on the assumption that you have a fully-funded emergency fund of atleast 6 months of expenses. If your emergency fund isn’t this full, then cut out non-essential spending until it’s nice and fat. You’ll never regret having an emergency fund when you need one!

Keep your investing schedule in place. I invest monthly. I plan to continue investing unless circumstances drastically change. A long time ago, I decided that timing the market would only drive me nuts so I’ve never attempted to market-time my investments. Instead, I opted to making regular investments into the stock market every month. Money goes in – dividends get paid & re-invested – money goes in – dividends get paid & re-invested… ad infinitum…

If you have an investing schedule, then stick to it. Right now, investors have the ability to buy equities when prices are low. Again, I’m going to state the obvious – the stock market is low right now. No one – and I mean NO ONE – knows if we’ve hit the bottom of whether the stock market will continue to fall over the next few weeks. Yet, those who invest in a broadband index funds (or exchange-traded fund or mutual fund) and who stay invested for the long-term will see positive returns.

Note that I’m only referring to buying broad-based index funds and similar products during this downturn in the market. If you’re the sort who engages in stock picking, then I wish you all the best. Stock analysis is not something that I would suggest. I have no way of knowing which stocks will recover to unseen heights and which ones will crash when the underlying business fails.

Learn from my mistake

Full disclosure: I am a self-taught buy-and-hold investor who believes in dollar-cost averaging. This means that I skim money from each paycheque to invest in the stock market on a regular monthly schedule. I invest in exchange-traded funds, and I’ve done well.

However, I haven’t always made the smartest decisions with my money. I’ve made significant errors with my own investments. One of the worst decisions I made was back in 2008 when the stock market plunged. The value of the stock market was falling and I made a HUGE mistake. I stopped investing money on the way down!!! My fear took hold and I decided to wait until the “market got better”. Thankfully, I was smart enough not to sell but I wasn’t smart enough to stick to my strategy to dollar-cost average into the market.

Had I stuck to my strategy of investing money every month, I would have been buying during the market crash. This is known as “buying low“, and it’s an exceptionally good thing when you plan to hold onto investments for a very long time.

If I hadn’t erred, I would have taken full advantage of the recovery that started in 2009 and that ran up until a few weeks ago. My portfolio might have been big enough to let me retire a few years earlier than planned had I not made this monumental error.

Though I can’t remember exactly when, I did re-start my investing schedule and I’ve stuck to it ever since. COVID19 is not going to prevent me from counting to save-invest-learn-repeat. I will still move money from my paycheque to my investing account. Every month, I’ll continue to buy units in my exchange-traded funds. I will not stop regular investing this time around.

And if my income isn’t stable?

If your income is variable, or in doubt, then your focus needs to be on eliminating all non-essential spending from your life so you can squirrel away your cash. Right now, your priority has to be survival – rent/mortgage, food & prescription medicines. Everything else has to go on the back-burner until you get a handle on how you’re going to continue to receive an income.

Focus on beefing up your emergency fund. That money that used to go to drive-through coffees? Stick it in your emergency fund. Your monthly massage? Social distancing means massages are out for a while. This is a really good time to cut subscriptions to things that no longer bring you joy. Find the fat in your budget and trim it away so that you have money to live on if your income goes away.

Keep your money liquid in a high interest savings account. Allow me to state the obvious: you will need cash to get you through the hard times in case you lose your job. This is not the time to be making extra payments to your debts, nor is it the time to start investing in the stock market. Gather your money in a safe place so it will be there when you need it.

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Weekly Tip: Stop non-essential spending for the next few weeks. Top up your emergency fund. Stay indoors. Wash your hands. Stay healthy!

Some People Always Make Money

As I write this post, the world is facing the pandemic known as COVID-19. I’m not a scientist, nor am I a doctor. This post is going to be about how some people always make money, no matter what is going on in the world.

This pandemic is a prime example. Unless you’ve been living under a rock, you cannot help but have heard that the global stock markets have been a wee bit volatile as of late. Investors are losing money as the value of the equities in their portfolio drop in tune with the stock market drops.

Yet, some people will be making money right now. Why?

It’s simple, Gentle Reader. The stock market is on sale right now. Much like buying clothing in the off-season, or winter boots at the start of spring, people with money are buying stocks while the stock market is down. Stocks are on sale. This is the time to buy.

Stock Market is Drastically Down

If you have the money, then buy now. One of my favourite exchange traded funds – XDV by BlackRock – was down to $19.93/unit when I checked it at the time of writing this post. It had been near $30/unit a mere two weeks before this article was posted. The portion of my portfolio invested in XDV has dropped significantly, but guess what?

I’m a long-term investor who believes that the market will recover. Now is the time to buy more XDV shares because they’re on sale. Over time, this ETF’s value will go back up and, if I buy now, I will benefit from having bought additional shares when the price was lower than normal due to market turmoil. Do I like seeing the value of my portfolio go down? NO!!! Do I like buying dividend-paying investments when they’re on sale? YES!!!

Do you own research. Check out MorningStar. Visit the Motley Fool website and other websites that teach investors how to invest. Figure out which industries are hurting right now due to the pandemic, and determine if you believe that they will recover once a vaccine is found for COVID-19. When the panic has passed and life gets back to normal, which companies and industries will have the most ground to regain?

Keep Your Powder Dry

In the personal finance world, this phrase means having savings set aside for stock market circumstances like the ones we’re currently facing. It means having money available to invest when the stock market dips. This money is separate and apart from your emergency fund and the money you spend on the necessities of life. The reason you’ve set this money aside is so that you can take advantage of those times when the stock market goes on sale.

Full disclosure – I’m a buy-and-hold investor who believes in dollar-cost averaging. Money is skimmed off my paycheque and into my investment account so that I can buy units in my exchange-traded funds every month. I am not one of the people who has buckets of cash sitting around and waiting for buying opportunities like the ones that are on offer right now.

The people who are deploying their powder right now are, very likely, setting themselves up for some phenomenal returns over the next few years. They’re buying low because the stock market is down. So long as they hang on to their purchases through the recovery, they then have the option of selling high in a few years from now.

Successful Investors Do Not Panic

This is not the time to sell your investments! Even though they may be down, the stock market will not go to zero. The stock market will recover.

Selling now means locking in your losses. You will foreclose your ability to participate in the recovery, since your crystal ball will not tell you exactly when to buy back in.

Turn off your stock market notifications. Don’t look at your portfolio every day. Trust that the stock market will recover. The pandemic is going to cause turmoil, but the stock market has survived turmoil before. This time is not any different – the stock market will recover. You will want to be part of that recovery.

Buy low (which is right now) – hang on during the recovery (which could take a few years) – sell high (which is a few years from now).

Again, some people always make money. They do so because they invest in equities. They don’t panic when things turn volatile. They keep their powder dry. They’re around to participate in the recovery because they never sell. Be like those people.

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Weekly Tip: Wash your hands. Don’t hoard toilet paper and wipes. Stay informed and don’t panic. Don’t sell your portfolio.