Balancing long-term goals and short-term factors

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Keep calm, stick to your plan and work closely with your investment adviser.

That's the advice Duane Green, managing director of Canada for Franklin Templeton Investments, has for investors who are worried about the current volatility in global stock markets.

Franklin Templeton Investments manages more than $40-billion on behalf of Canadian individuals and institutions.

"We know that this is not an easy time for investors, particularly those who are nearing retirement or who have already retired," says Mr. Green. "During volatility, there's a natural tendency for investors to focus on risk avoidance, just as it may be easier for them to focus on maximizing returns in rising market conditions. But now is not the time to be making hasty decisions to get out of the market."

While 2016 has had a rocky start amid ongoing concerns over a slowdown in China, weak commodity prices and a depreciating Canadian dollar, the situation has also created investment opportunities in Canada and globally.

"Diversification is key to dealing with periods of market volatility," says Mr. Green. "This includes having an appropriate asset allocation that is invested in line with a plan and as a result of the value received from seeking professional advice."

He notes that investors who have neither a plan nor an adviser may be at a disadvantage as they try to navigate through what seems to be increasing market turbulence. However, it's never too late to get help.

"We believe investors should work with an adviser – or find a suitable adviser if they don't have one – to develop a plan that keeps both risk exposure and return potential in mind, as well as income needs and capital growth, regardless of what the markets are doing. This requires honest and open conversations and is underscored by the value of advice." says Mr. Green.

Investors should keep their goals in mind even though they may seem threatened by current events.

"In down markets, investors may be more focused on making the journey as smooth as possible by limiting downside risk," he says. "Being completely risk-averse could put long-term goals out of reach, so a careful balance is needed – one which takes into account both short-term and long-term factors."

That's where having a plan comes in, adds Mr. Green. "Without a plan, investors tend to be more susceptible to making emotions-based – and potentially damaging – decisions about their portfolios. It's far less likely that this will happen if they have a plan and are committed to seeing it through with the support of a qualified adviser."

This content was produced by Randall Anthony Communications, in partnership with The Globe and Mail's advertising department. The Globe's editorial department was not involved in its creation.