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It's Your Money  

COVID financial questions

Most of my columns over the past two months have focused on COVID-19 issues. We’ve discussed the effects on:

  • The stock markets
  • Debt management
  • Tax filing deadlines
  • Deferring mortgage payments.

Many of you have financial questions regarding this pandemic and that’s why we’ve launched our pro-bono financial advice campaign for those who need help this week – see more details at the bottom of the column.

For this week, I thought I would focus on the financial challenges that many Canadian families are facing and the two most common questions that we’re hearing over and over:

Question 1 – Should I be worried about my investments?

If you’re 10 or more years until retirement, you shouldn’t be worried at all. These kinds of downturns are normal, and your financial plan should account for them.

If you don’t have a plan, it’s time to get one though.

If you’re less than 10 years from retirement, you should still stick to your plan but should also be making sure that your financial plan has started to “take risk off the table” as you near your retirement date.

A major downturn right before your retirement date can significantly alter the length of time that your investments can support you if not properly accounted for.

If you’re already in retirement, your financial plan should provide some liquidity and short-term funds so that you aren’t required to draw down on too much of your equity holdings during this time and instead allow them to recover before being drawn on.

Regardless of the stage you are in, now is not the time to sell and lock in your losses that are only losses on paper unless you decide to sell and lock them in. If you still feel extremely unsettled, adjust your plan to ease off your risk exposure after the markets recover.

Question 2 – What should I be doing to financially survive this pandemic?

There are a few key things that you can do today in order to help get through this current situation.

To start with, take the time to review (or build) your personal budget. See what expenses you can cut out in order to be as fiscally lean as possible right now.

Next, thoroughly review all the available government response programs right now. Make sure that you are applying for everything that may be available to you. These programs are changing daily right now so make sure to stay up to speed on the changes as they come out.

Third, free up as much cash flow as you can. Ideally you’ve already put aside a six-month emergency fund and have the means necessary to weather this storm. But if you don’t, it’s not too late to free up all potential cash flow to build up a reserve.

Just be careful when deferring debt payments in order to free up cash flow as this can have serious long-term consequences.

Do you have other questions?

There is no doubt that this is a challenging and quite scary time for many of you. The safety and health of your family should be top priority but doing so in the most fiscally responsible way is important too.

Many Canadians have financial questions and they don’t know where to turn. I mentioned briefly in last week’s column that I was working on a financial advice pro-bono program and I am happy to announce that we are ready to go.

If you or anyone you know is struggling financially during this pandemic and has some questions, my team of financial planners is here to help in any way that we can.

Although we may not be able to solve all of your potential challenges, we can offer advice on how to improve your financial situation in an objective and non-judgmental way and help you

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.



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About the Author

Brett Millard is vice-president and a member of the executive leadership team at FP Canada, the national professional body for the financial planning industry. A not-for-profit organization, FP Canada works in the public interest to foster better financial health for all Canadians by leading the advancement of professional financial planning in Canada. 

He has worked in the financial advice industry for more than 15 years and is designated as a chartered investment manager (CIM) and is a certified financial planner (CFP).

He has written a weekly financial planning column since 2012 and provides his readers with easy to understand explanations of the complex financial challenges they face in every stage of life. Enhancing the financial literacy of Canadian consumers is a top priority for Brett and his ongoing efforts as a finance writer focus on that initiative. 

Please let Brett know if you have any topics you’d like him to cover in future columns ,or if you’d like a referral to a qualified CFP professional in your area, by emailing him at [email protected].

 



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The views expressed are strictly those of the author and not necessarily those of Castanet. Castanet does not warrant the contents.

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