- You’re worried that market fluctuations will wipe out your retirement savings
One day the Toronto Stock Exchange is up; the next day down. But giving in to your emotions is the worst thing you can do, notes Jim Yih, an Edmonton financial trainer and author of a blog called Retire Happy.
“Pause, take a step back and think before you react,” he says. “If you analyze the pullbacks in the market, you will find that the market always rebounds.” First, however, regularly review your asset allocation (i.e., the portion of your portfolio invested in equities and the amount financed in fixed income securities and cash). “A balanced asset allocation will help mitigate volatility,” Yih said, noting that anyone approaching retirement should reduce their equity exposure.
How to reduce investment risk
Retirement savings calculator
- You’re worried about spending more than you earn
We all know the solution: spend less than you earn. “We can accuse stores, financial institutions, or big companies of being the source of our debts, but there comes a time when we have to take responsibility,” said Mr. Yih.
He recommends recording all of your expenses, however insignificant, and keeping all receipts. Then, you will only know where your money is going and what you are spending too much on.
Use our budget calculator to track your expenses.
In addition to reducing your expenses, you could use your imagination to earn more money. For example, rather than simply whipping out his credit card to buy himself a $1,500 barbecue grill, Mr. Yih sold some items lying around his garage to get the money needed.
