How you can protect your money and wealth during a financial crisis

During times of uncertainty, we naturally wonder what will happen next and what we should do to prepare — especially when it comes to our finances. If you’re wondering how to protect your hard-earned money, wealth and investments during a financial crisis, you’re not alone.

Fortunately, there are ways to protect your money and weather any economic storm, whether you’re a new saver, growing family, seasoned investor or retiree. Getting a little extra professional guidance in the process will also provide reassurance that you’re making the right decisions.

Below are some immediate options for maintaining your cash flow, improving your investment portfolio and feeling more confident with your financial future — including how an ACU financial advisor can lend a helping hand.

Make a plan.

If you’re like most Manitobans, your first instinct during a financial crisis is probably to try and protect your family’s money and wealth. One of the best ways to do that is with a solid financial plan. Naturally, it’s best to have this in place prior to any downturn happening, but even if you start planning after the fact, it can be an important step forward.

Adam Richard, ACU Wealth Advisor

According to Adam Richard, Wealth Advisor with ACU and Aviso Wealth, that planning should be step one. “Having a plan puts you in a more stable position. The earlier you put a plan in place, the more appropriately you’ll be invested. There is a purpose for investing in each fund, so planning out your goals and the length of time you can wait to see returns will allow you to keep on course with more confidence,” he explains.

Stay the course.

The timing of your investment is an important part of that plan. For those considering retirement further into the future, you may have time to wait it out. “If you invest your money for your retirement, which is 15 years away, for example, it’s best to stay the course regardless of what’s going on in the markets today,” Adam continues.

But if you’re planning on using that money for a car purchase in two years from now, hopefully it’s sitting in cash and you’re in an okay position not having to worry about fluctuations in the value.” For short-term goals such as this one, you’ll want to be cautious about exactly when to withdraw your funds, and speak to your ACU financial advisor to make the right move.

Lower your costs.

“When it comes to your expenses in a financial downturn, it’s prudent to reduce your costs as much as possible,” Adam advises. For those looking to protect their cash flow during a financial crisis or recession, you’ll want to limit how much is leaving your bank account right now. That means spending less on discretionary expenses, such as that new car purchase. In normal times, this may also mean cutting back on dining out, or changing plans to a less costly vacation.

Be budget-friendly.

Also, if you don’t already have a budget, now would be the time to create one. According to Adam, “having a budget could be 90 per cent of your success.” Even a simple budget will help you see how much money you have available and what expenses to prioritize. “If there are gaps, you’ll also be able to tell if you’ll need to borrow from your line of credit or ask your financial advisor about deferring your mortgage payments,” Adam recommends.

Related: Budgeting 101 — How much should I actually be saving?

Don’t make too many changes.

For families, Adam recommends that you keep doing what you’re doing. “If you have a savings program, maintain it. If there were RESPs you were contributing to on a regular basis, continue to do that. If you have an RRSP plan through work, keep contributing,” he says. “Ultimately, it’s good to try not to change your savings pattern at this time.”

Read: COVID-19: What emergency funds are available for you and your family?

Find your balance.

If you do own fixed income and equity investments or mutual funds in your portfolio, now would be a good time to consider rebalancing. Professional portfolio managers are already doing this and will continue to keep an eye on the right strategies based on market changes. And if the weighting of your investment portfolio is out of whack, you should consider rebalancing back to your target investment weighting at some point.

Protect your finances: Balanced portfolio

Don’t change your risk level.

If you’re looking for some immediate options for improving your cash flow and being more confident with your investment portfolio, Adam offers some handy advice. “Don’t make any dramatic changes without professional support. This is the most fundamental piece of advice. If you were a conservative investor, continue to be a conservative investor. If you were a balanced investor, continue to be a balanced investor. If you’re a growth investor, continue to be a growth investor. If you have a plan in place, stick with it,” says Adam.

There’s no perfect time.

When it comes to your investments, playing the short-term game could be full of pitfalls. “Don’t try to time the market. The best thing you can do is stay the course. We can’t make decisions based on the belief that we can invest and cash out at perfect times.” However, you may still want to consider getting in when the market is low. “Now is a great time to keep buying more investments while they’re on sale,” Adam explains.

Retired? Slow down the withdrawals.

For Manitoba retirees, a big part of protecting your finances during an economic collapse can come down to how much you withdraw. “If you can slow down what you’re taking out of your accounts, especially during uncertain times, that’s an advisable strategy,” Adam explains.

Reduce the RRIF.

Seniors should also consider reducing RRIF drawdowns. By doing this, over both the short and long- term, you’ll have more in your investment portfolio to benefit from on the recovery side. “If seniors can deplete their assets a little slower, they will come through the other side of this a little better. It will help ensure your money lasts us as long as needed,” says Adam. In addition, the Government of Canada has taken measures to reduce the minimum amount that must be withdrawn from your RRIF by 25%, in an effort to provide flexibility for seniors.

Start saving — It’s never too late!

Finally, if you aren’t regularly saving money, start to do so now. This is a good time to put extra money aside since any economic collapse or recession should be relatively short-term, especially compared to the grand scheme of our lifetime. Save any amount you can and you’ll be better off in the future. (Here are some easy saving tips to get started.)

How an advisor can be helpful during challenging times — and into the future

When in the midst of a financial downturn, try not to be too hard on yourself. Yes, the situation is full of challenges, but in some cases, it’s very hard to foresee those bumps in the road.

If you already have an ACU financial advisor, reach out to set up a conversation. If you don’t yet have an advisor, now is a good time to set up that first meeting to review your current financials and create a plan you’re comfortable with for the longer term.

It can be an enormous benefit to have a trusted financial advisor on your side during these times, as Adam describes. “It’s behavioural coaching to an extent. It’s the ability to look back and say it’s not the first time we’ve been in a situation like this, and that we can envision the other side. We will get there together.”

That reassuring voice can be quite calming, and a financial advisor can help you navigate the uncertainty with regards to cash flow and your savings.

Sometimes, doing nothing is the best thing to do because you’re actually doing something. It’s not that we need to move things around in accounts to make ourselves feel better. From a psychological standpoint, it’s having a professional that’s saying we’re going to be okay if we continue to do what we’re going. And it’s providing some of that reassurance,” Adam explains of his role. “While I don’t know the direct route, I know we’re pointed in the right direction and we will get there.

Mutual funds and other securities are offered through Aviso Wealth, a division of Aviso Financial Inc.

Mutual funds and other securities are offered through Aviso Wealth, a division of Aviso Financial Inc. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Unless otherwise stated, mutual fund securities and cash balances are not insured nor guaranteed, their values change frequently and past performance may not be repeated.

The information contained in this article was obtained from sources believed to be reliable; however, we cannot guarantee that it is accurate or complete. This material is for informational and educational purposes and it is not intended to provide specific advice including, without limitation, investment, financial, tax or similar matters.

About Sean Cooper

Sean Cooper is the bestselling author of the book, Burn Your Mortgage. He bought his first house when he was only 27 in Toronto and paid off his mortgage in just 3 years by age 30. An in-demand Personal Finance Journalist, Money Coach and Speaker, his articles and blogs have been featured in publications such as the Toronto Star, Globe and Mail, Financial Post and MoneySense. Connect with Sean on LinkedIn, Twitter, Facebook and Instagram.

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