Comments on: How to Deal With Market Volatility http://www.four-pillars.ca/2007/08/22/how-to-deal-with-market-volatility/ Investing and Personal Finance Sat, 20 Mar 2010 01:57:52 -0400 http://wordpress.org/?v=2.9.2 hourly 1 By: Emotions and Investing: 4 Tips to Keep Emotions Out of Investing | Financial Highway http://www.four-pillars.ca/2007/08/22/how-to-deal-with-market-volatility/comment-page-1/#comment-28058 Emotions and Investing: 4 Tips to Keep Emotions Out of Investing | Financial Highway Wed, 12 Aug 2009 07:03:24 +0000 http://www.four-pillars.ca/2007/08/22/how-to-deal-with-market-volatility/#comment-28058 [...] If you need more tips see Four Pillars How to Deal With Market Volatility [...] [...] If you need more tips see Four Pillars How to Deal With Market Volatility [...]

]]> By: Four Pillars › Market Timing Example http://www.four-pillars.ca/2007/08/22/how-to-deal-with-market-volatility/comment-page-1/#comment-683 Four Pillars › Market Timing Example Mon, 27 Aug 2007 00:46:30 +0000 http://www.four-pillars.ca/2007/08/22/how-to-deal-with-market-volatility/#comment-683 [...] is a “part II” for my original post called “How to Deal With Market Volatility” which I posted last week. I wanted to try to make a spreadsheet to show the effects of someone who [...] [...] is a “part II” for my original post called “How to Deal With Market Volatility” which I posted last week. I wanted to try to make a spreadsheet to show the effects of someone who [...]

]]> By: FourPillars http://www.four-pillars.ca/2007/08/22/how-to-deal-with-market-volatility/comment-page-1/#comment-656 FourPillars Thu, 23 Aug 2007 18:38:08 +0000 http://www.four-pillars.ca/2007/08/22/how-to-deal-with-market-volatility/#comment-656 Haha...I wasn't being totally serious. When you set up your Questrade account, it will give u access to margin which is pretty convenient if you want to make a quick purchase. Mike Haha…I wasn’t being totally serious.

When you set up your Questrade account, it will give u access to margin which is pretty convenient if you want to make a quick purchase.

Mike

]]> By: telly http://www.four-pillars.ca/2007/08/22/how-to-deal-with-market-volatility/comment-page-1/#comment-655 telly Thu, 23 Aug 2007 18:32:37 +0000 http://www.four-pillars.ca/2007/08/22/how-to-deal-with-market-volatility/#comment-655 Good point Mike! I have to admit though, I didn't expect that from you. Good point Mike! I have to admit though, I didn’t expect that from you.

]]> By: FourPillars http://www.four-pillars.ca/2007/08/22/how-to-deal-with-market-volatility/comment-page-1/#comment-654 FourPillars Thu, 23 Aug 2007 17:46:26 +0000 http://www.four-pillars.ca/2007/08/22/how-to-deal-with-market-volatility/#comment-654 Telly - that's what the line of credit is for! Mike Telly – that’s what the line of credit is for!

Mike

]]> By: telly http://www.four-pillars.ca/2007/08/22/how-to-deal-with-market-volatility/comment-page-1/#comment-653 telly Thu, 23 Aug 2007 17:29:42 +0000 http://www.four-pillars.ca/2007/08/22/how-to-deal-with-market-volatility/#comment-653 Mr. Cheap: I do consider our mortgage pre-payments as FI. Even at a rather low interest rate of 4.39%, there is no FI option out there that will pay better than 4.39% after tax. That's our justification for no FI anyway. We also don't keep an emergency savings fund either (have an untouched line of credit just in case). I guess it depends entirely on your situation but it seems to work for us. The only bad thing about no FI is no quick money handy to buy a cheap stock at any given moment...we'd have to wait till pay day! Mr. Cheap: I do consider our mortgage pre-payments as FI.

Even at a rather low interest rate of 4.39%, there is no FI option out there that will pay better than 4.39% after tax. That’s our justification for no FI anyway. We also don’t keep an emergency savings fund either (have an untouched line of credit just in case).

I guess it depends entirely on your situation but it seems to work for us. The only bad thing about no FI is no quick money handy to buy a cheap stock at any given moment…we’d have to wait till pay day!

]]> By: FourPillars http://www.four-pillars.ca/2007/08/22/how-to-deal-with-market-volatility/comment-page-1/#comment-652 FourPillars Thu, 23 Aug 2007 17:09:16 +0000 http://www.four-pillars.ca/2007/08/22/how-to-deal-with-market-volatility/#comment-652 We actually have some GICs in our rrsp. I haven't researched it too much but it seems that the high interest savings accounts are generally not offered for rrsps. I'll have to look into that again. Mike We actually have some GICs in our rrsp.

I haven’t researched it too much but it seems that the high interest savings accounts are generally not offered for rrsps. I’ll have to look into that again.

Mike

]]> By: Mr. Cheap http://www.four-pillars.ca/2007/08/22/how-to-deal-with-market-volatility/comment-page-1/#comment-651 Mr. Cheap Thu, 23 Aug 2007 15:39:32 +0000 http://www.four-pillars.ca/2007/08/22/how-to-deal-with-market-volatility/#comment-651 Man, we all seem to like chatting it up in market volatility threads! ;-) Man, we all seem to like chatting it up in market volatility threads! ;-)

]]> By: Mr. Cheap http://www.four-pillars.ca/2007/08/22/how-to-deal-with-market-volatility/comment-page-1/#comment-650 Mr. Cheap Thu, 23 Aug 2007 15:39:11 +0000 http://www.four-pillars.ca/2007/08/22/how-to-deal-with-market-volatility/#comment-650 Telly: I think I'd lean towards viewing your pre-payments as the FI portion of your portfolio. You're totally right that buying GICs while you have a mortgage isn't the best idea (although, if interest rates had gone up and your mortgage was fixed at a lower rate, VERY conservative investors might be able to justify it). Truth be told, these days I find it pretty hard to think of *ANYONE* who should be buying GICs (if you need security and liquidity, put your money in a high yield savings account, otherwise go for something with a better return). Maybe retired people (my dad bought a 5% GIC recently...). You pay such a premium for the "total safety"... Psychologically you should reward yourself for pre-paying. If you're feeling like it "doesn't count" you might be less likely to do it. Telly: I think I’d lean towards viewing your pre-payments as the FI portion of your portfolio.

You’re totally right that buying GICs while you have a mortgage isn’t the best idea (although, if interest rates had gone up and your mortgage was fixed at a lower rate, VERY conservative investors might be able to justify it).

Truth be told, these days I find it pretty hard to think of *ANYONE* who should be buying GICs (if you need security and liquidity, put your money in a high yield savings account, otherwise go for something with a better return).

Maybe retired people (my dad bought a 5% GIC recently…). You pay such a premium for the “total safety”…

Psychologically you should reward yourself for pre-paying. If you’re feeling like it “doesn’t count” you might be less likely to do it.

]]> By: FourPillars http://www.four-pillars.ca/2007/08/22/how-to-deal-with-market-volatility/comment-page-1/#comment-649 FourPillars Thu, 23 Aug 2007 15:17:16 +0000 http://www.four-pillars.ca/2007/08/22/how-to-deal-with-market-volatility/#comment-649 Telly - that's the argument I've heard as well. I don't have any clever answer for you - I'll try to think about this some more. I don't consider mortgage pre-payments as investments - more like savings. A debt is an obligation that you want to eliminate, an investment is a "thing" that will provide you with future income some day. To me, the fact that I owe money is a completely unrelated to the fact that someone might owe me money in my investment portfolio (ie fixed income). One other point - I have fixed income in my rrsp only so it's tax sheltered. For investments in taxable accounts I would have a hard time justifying any FI unless I needed the money sometime soon. Mike Telly – that’s the argument I’ve heard as well.

I don’t have any clever answer for you – I’ll try to think about this some more.

I don’t consider mortgage pre-payments as investments – more like savings. A debt is an obligation that you want to eliminate, an investment is a “thing” that will provide you with future income some day. To me, the fact that I owe money is a completely unrelated to the fact that someone might owe me money in my investment portfolio (ie fixed income).

One other point – I have fixed income in my rrsp only so it’s tax sheltered. For investments in taxable accounts I would have a hard time justifying any FI unless I needed the money sometime soon.

Mike

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