Cheaper oil, weaker dollar

Increased production and drilling coupled with new efficiency measures, stockpiles of unused oil and weakening global demand have driven the cost of oil down significantly. The weakness in oil prices has also weakened the Canadian dollar because, as a significant supplier, our dollar is closely connected to the price of oil.

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With oil down and the Loonie down plus other current economic ups and downs you may be concerned about your portfolio and its performance. The question is: Are cheaper oil and a weaker dollar a threat to your portfolio or an opportunity? And the answer is: It depends on your reaction to them.

If you react by jumping in and out of the market, trying to dump losers and find winners; if you react by selling out at big losses and sitting on the cash; if you react by chasing other forms of ‘investment’ like coins and gold that are generally not considered to be sources of a stable retirement income; if you react in any of these ways, that’s the threat to your portfolio.

It’s called emotional investing and that ‘strategy’ doesn’t pay, it costs. The market does what it does – sometimes it’s up, sometimes it’s down and often it’s volatile.

That’s one face of creating investment opportunity. Two others are effective asset allocation through a carefully selected and properly diversified mix of assets and dollar cost averaging, the strategy of buying a stock or fund on a regular basis, regardless of the stock or fund price – the price of your stock or fund averages out over time and you are always participating in the market so you will never miss out on periods of strong returns.

There are many other proven ‘opportunities’ for growing your wealth and funding a comfortable retirement – and they should all be wrapped into a comprehensive financial plan tailored precisely to your unique needs. Talk to your professional advisor about best financial strategies for you.

This column, written and published by Investors Group Financial Services Inc. (in Québec – a Financial Services Firm), and Investors Group Securities Inc. (in Québec, a firm in Financial Planning) presents general information only and is not a solicitation to buy or sell any investments. Contact your own advisor for specific advice about your circumstances. For more information on this topic please contact your Investors Group Consultant.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.