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 and 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 what stage you are in, now is not the time to sell and lock in your losses which 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 couple of 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 of 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 make the best decisions possible. If you’d like to participate in a free 30-minute personal financial consultation via phone or video conference, please send me an email at brett.millard@ig.ca and I will connect you with a planner on the pro-bono team that we’ve assembled.

Stay healthy, stay safe and take care!