Skip to main content
The Globe and Mail
Support Quality Journalism.
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
Just$1.99
per week
for first 24 weeks

Enjoy unlimited digital access
Enjoy Unlimited Digital Access
Get full access to globeandmail.com
Just $1.99 per week for the first 24 weeks
Just $1.99 per week for the first 24 weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(select.open)}function setPanelState(o){dom.root.classList[o?"add":"remove"](select.open),dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); } //

Question from a young investor: “I just started investing two years ago. I’m freaking out about what’s going on right now. Should I sell everything?”

Answer from Darryl Brown, an independent investment consultant and founder of You&Yours Financial in Toronto.

I know it feels like the sky is falling. And honestly, there are some pretty big cracks up there right now. But freaking out, much like hoarding toilet paper, will do nothing to help.

Story continues below advertisement

Darryl Brown, investment planner and founder of You&Yours Financial in Toronto.

Handout/Handout

Instead, let’s answer the following questions to determine if it’s time to sell:

1. Do you have an emergency fund? This is six months worth of your required living expenses. An emergency fund is essential and a best practice for everyone before they start investing. Given the current situation, I recommend increasing this amount beyond six months if possible. This money should be in a high-interest savings account or cash in a TFSA. You want it liquid and accessible. If you do not have an emergency fund, you should sell off enough investments to establish one.

2. Is your budget still the same in light of the current situation? Reduced hours and closures are affecting a lot of us, especially hourly employees and small-business owners. Working from home and having the kids out of school can also impact our spending habits (and sanity), so revisit your budget with the assumption that things will be like this for a while. If you have major changes or gaps you need to supplement with investment money, then you may need to sell enough to do so.

3. Are you investing for the long term? I see far too many young people investing to fund short-term goals, defined as goals less than five years off. I don’t recommend this at the best of times. If you need your money in the next five years, pull it out of the stock market. As a rule, investing is for long-term goals, saving is for short-term goals.

4. Is your asset allocation aligned with your age and risk tolerance? Asset-allocation is how your portfolio is split between stocks – riskier, with higher returns – and bonds – safer, with lower returns. Usually, the younger you are, the longer you are investing for and thus, the riskier you can be withstanding market fluctuations over time. Older folks approaching retirement or on a fixed income have less time to ride out fluctuations and need safer, more predictable returns.

An easy way to calculate an appropriate asset allocation is the ‘100-minus-your-age rule’. If you’re 30, it’s appropriate for your portfolio to be made up of about 70-per-cent stocks, and 30-per-cent bonds. It’s common for investors to be over-exposed in stocks, especially those looking for higher returns. If this is the case, sell some stocks and buy bonds to bring it in line with the aforementioned rule and balance your risk.

If you’ve answered no to any of the above questions, you need to sell at least some of your investments. Locking down the above points should be your top priority. If you answered yes to all the above, you do not need to make any material changes.

Story continues below advertisement

I’m like a broken record player when it comes to the importance of investing appropriately and creating an Investment Policy Statement (which is like an investing plan; click here to read more) and times like this are exactly why.

We can expect a lot of volatility in the months ahead as our economy adjusts, but if you’ve invested appropriately, this is part of the deal. We have to take the downs with the ups. Stay home, take good care of yourself and – I cannot stress this point enough – do not check your portfolio everyday.

Are you a young person with a question for our adviser? Send it to us.

You can also join the Young Money Facebook group.

Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.

Your Globe

Build your personal news feed

  1. Follow topics and authors relevant to your reading interests.
  2. Check your Following feed daily, and never miss an article. Access your Following feed from your account menu at the top right corner of every page.

Follow topics related to this article:

View more suggestions in Following Read more about following topics and authors
Coronavirus information
Coronavirus information
The Zero Canada Project provides resources to help you manage your health, your finances and your family life as Canada reopens.
Visit the hub
Report an error Editorial code of conduct
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

If you do not see your comment posted immediately, it is being reviewed by the moderation team and may appear shortly, generally within an hour.

We aim to have all comments reviewed in a timely manner.

Comments that violate our community guidelines will not be posted.

Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies