Who’s afraid of the big, bad bull market? — SkimNews
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- Anita Bruinsma, a Toronto-based certified financial planner at Clarity Personal Finance, writes that rising stock markets are making more of her clients anxious about an imminent correction.
- The S&P 500 has gained 63% over the past three years and the Canadian market 71%, far above historical returns of roughly 28% and 22% respectively (excluding dividends).
- Even a 20% bear market would leave three-year returns higher than the 30-year average, so Bruinsma reframes a correction as giving back gains rather than losing money.
- A $300,000 RRSP would fall to $240,000 in a 20% decline — a $60,000 hit investors should calculate now to avoid panic-selling later.
- Bruinsma recommends money needed within three years be held in cash-like investments, medium-term money (four to six years) in a stocks-and-bonds mix, and near-term retirees hold two to three years of withdrawals in safe assets like money market funds, high-interest savings ETFs, bond ETFs, or GICs.
- Stocks, per Bruinsma, should only be held with a time horizon of at least seven years; short-horizon money parked in equities is the wrong allocation.
Why it matters: Canadian investors sitting on 71% three-year gains face a behavioral risk: panic-selling into a correction would lock in the very losses a buy-and-hold strategy avoids, while those with cash needs inside three years who haven't repositioned could see forced selling at the worst moment.
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