Putting your account changes in perspective in volatile markets
How to interpret changes in your investment accounts in a volatile-market context, without giving in to emotion.
Hello everyone,
I notice that several of you take the time to compare, from one month to the next, the total value of your investment accounts. That is an excellent habit, and I encourage you to stay attentive to your finances.
That said, I would like to share a few important points to help put these variations in perspective and prevent short-term volatility from becoming a source of needless worry.
Take an overall view of your financial situation
It is essential to look at the full picture of your finances, not just the value of your investment accounts. A complete exercise includes, in particular:
- the value of your real estate;
- your cash and bank accounts;
- your pension funds;
- your valuables;
- and, on the other side, the value of your debts (mortgages, loans, lines of credit, etc.).
This exercise lets you assess your net worth, which remains the most representative indicator of your overall financial situation.
The importance of budgeting, especially heading into retirement
Taking the time to truly understand your monthly spending is just as fundamental. As retirement approaches, this exercise helps identify your real needs.
In retirement, the goal is not necessarily to recreate exactly the same income as during your working years, but rather to cover all your expenses and maintain your quality of life.
On checking the markets too often
Knowing that financial markets are naturally volatile, it is fair to ask what the real impact is of making these comparisons every month. In the short term, these variations can be misleading and anxiety-inducing, without reflecting the true trajectory of your financial plan.
That is why, in my view, it is generally wiser to:
- take stock on a quarterly, semi-annual or annual basis;
- compare the change from one year to the next;
- and, with the perspective of several years, analyze the growth of your net worth, ideally as a percentage rather than in absolute value.
This approach lets you better observe the real evolution of your situation and feel reassured, even when the markets are more volatile in the short term.
Recent markets in context
You have probably noticed: the past month has been more difficult in the markets. As a rough guide, the 30-day return on your accounts generally falls in a range of roughly -2.5% to -7%, depending on the portfolio.
It is important to remember that, every year, the stock markets generally undergo a correction on the order of 5% to 10%, for varying reasons:
- in 2020: the pandemic;
- in 2022: the rapid rise in interest rates;
- in 2025: concerns tied to U.S. trade policy;
- in 2026: geopolitical tensions in the Middle East.
Financial markets often react quickly to the most negative hypothetical scenario. In the current context, concerns are mainly tied to energy prices, notably oil, and their potential impacts on inflation, transportation costs and corporate profit margins.
Historically, when these pessimistic scenarios do not materialize or ease, the markets tend to recover and rebound significantly.
The purpose of your portfolio
The purpose of a retirement portfolio is not to avoid every decline—which is impossible—but rather to:
- target a long-term average return that lets you reach your goals;
- while limiting declines as effectively as possible during more difficult periods.
Rest assured that I continue to monitor your portfolios closely and that every decision is made with respect for your goals, your investment horizon and your risk tolerance.
As always, don’t hesitate to contact me if you would like to review your situation or discuss these points in more detail.
Looking forward to talking with you,
Jean-Philippe Giroux
| Fund | Code | Stock return, last month | Average stock return, last 3 years |
|---|---|---|---|
| BMO Global Gold | ZGD | -24.65% | 55.43% |
| BMO MSCI EAFE (global markets) | ZDM | -8.23% | 14.83% |
| BMO Dow Jones (U.S. equities) | ZDJ | -7.84% | 11.55% |
| BMO S&P/TSX Composite (Canadian equities) | ZCN | -6.71% | 21.08% |
| iShares S&P/TSX Capped REIT (real estate) | XRE | -5.71% | 2.16% |
| BMO S&P 500 (U.S. equities) | ZSP | -5.71% | 18.91% |
| BMO NASDAQ 100 (U.S. equities) | ZNQ | -5.60% | 23.28% |
| BMO Aggregate Bond (bonds) | ZAG | -2.64% | 3.16% |
| Purpose High Interest Savings | PSA | 0.16% | 3.90% |
It’s all a matter of perspective…
| Amount invested | 5% decline | 8% decline |
|---|---|---|
| $5,000,000 | $250,000 | $400,000 |
| $2,500,000 | $125,000 | $200,000 |
| $1,000,000 | $50,000 | $80,000 |
| $750,000 | $37,500 | $60,000 |
| $500,000 | $25,000 | $40,000 |
| $250,000 | $12,500 | $20,000 |
| $100,000 | $5,000 | $8,000 |
| $50,000 | $2,500 | $4,000 |
The strength of a team
Since 2014, the Pérennité Gestion de Patrimoine team has supported its clients with rigour and commitment in reaching their financial goals. Drawing on our expertise in financial services, we do everything we can to offer tailored, lasting and thoughtful solutions. Excellence guides each of our actions, but above all it is passion that drives our work every day.
Questions?
Feel free to reach out to a member of our team to discuss the positioning of your portfolio.
