The last few months have certainly brought about more questions than answers. As Canadians deal with uncertainty on so many levels, many of us feel uneasy about the future — from our health and finances to our workplaces and schools.
Whether you’re starting out, raising a young family or counting down to retirement, it’s natural to have questions about the state of your finances during this time. That’s why we’ve pulled together some of the most common questions our clients are asking. Consider talking through these questions with an advisor who can offer guidance and advice specific to your circumstances — along with some valuable peace of mind.
In the meantime, the answers below may help guide you through the road ahead.
My investments are down. What should I do?
The stock market naturally has its ups and downs, but when there are big swings, investors can get nervous about the state of their assets.
Before you start to really worry, you’ll want to understand how the recent fluctuations in the market are affecting your investments. Stock market headlines may not match up with your actual portfolio performance, and if you’re diversified, chances are some investments may be up while others are down.
If your portfolio is in fact down, it’s best not to panic. Getting out of the market entirely has long-term implications to your savings. What’s more, markets have historically rebounded after a downturn. Staying invested allows you to take advantage of the inevitable growth to come.
I’m not paying for daycare or travel right now. Should I invest this extra cash or keep it handy?
Having excess cash is a good problem to have. But you still want to make the most of it so that it can work hard for you when you need it most.
To understand whether to invest your cash into something long-term or keep it handy, you’ll first want to take a close look at your personal situation. Begin by asking yourself a few key questions, such as
- Is my employment situation secure?
- Do I have an emergency fund in case I need easy access to cash?
- Do I have affordable credit that can bridge a gap until I can access tied-up funds?
By knowing your options and your risks, you can make informed decisions about your money.
Money is looking tight for the next few months. What can I do to improve my cash flow?
The best way to boost your cash flow is to take a very close look at your current spending. Is there anything you can cut back on or eliminate altogether? Consider food delivery, transportation and subscription costs that you could do without right now.
Following a trim-down of expenses, take a look at what opportunities you might have to defer payments. Many financial institutions continue to offer payment deferrals on credit cards and loans, and local governments have offered deferral options on property taxes and utility payments. Keep in mind that if you’re deferring payments, you’ll have to cover these costs later.
You can also look at using credit strategically, but be wary of taking on debt you don’t have a plan to repay.
I was planning to buy a home. Is now a good time to be in the real estate market?
One of the silver linings of the current environment is that interest rates are low — and are expected to stay this way for some time — making it a favourable time to buy a home. And while the spring saw little buying and selling in Canada, the real estate market has warmed up as both supply and demand have rebounded.
Before you move forward, just consider whether COVID-19 has altered your priorities or motivations for moving, and whether you can carry a new home if your financial situation changes.
I’ve been covering expenses with my credit card, but the balance is creeping up. How can I manage my credit better?
Good credit management can be tricky at the best of times, but there are some best practices that can help you reduce your balances.
- Pay more than the minimum payment each month.
- Pay your credit card bills on time to reduce extra charges
- Consider whether your credit card fits your needs. Could a cash-back or lower interest rate card be better for you?
- Pay off the balance with the highest interest rate first. If you’re carrying a balance across different cards with the same rate, tackle the lowest balance first. You’ll feel a great sense of satisfaction when it’s paid off.
- Look into consolidating your debt into a lower interest rate loan or line of credit.
- Build an emergency fund in the meantime to cover unexpected expenses so that you’re not adding to your credit card debt
Of course, the best advice is the advice that is specific to you and your financial situation. If you have questions about your money during these uncertain times, a financial advisor can help. They can offer individual guidance to help you feel confident about your financial future.