Time for spring cleaning: BMO

Your closet or garage isn’t the only thing that may need a cleaning this spring. The Bank of Montreal is suggesting that market fluctuations stemming from recent global events make this a good time to dust off your financial plan and re-evaluate your choices. They suggest four nuts and bolts steps to getting on track:

• Don’t put all your eggs in one basket. In other words, make sure you are well diversified. Consider both conservative and aggressive investments in order to balance risk. It will make your portfolio less susceptible to market fluctuations.
• Invest Year-Round. Establishing a pattern of regular contributions is easier than coming up with a lump sum once a year. Consider pre-authorized contributions for an easy and effective way to contribute as well as to alleviate the stress of those last-minute contributions.
• Consolidate your assets. Keeping your assets in one place or in one institution makes it easier to keep track of things.
• Talk to a financial advisor. Sitting down with a financial advisor can help you save money and time by providing you with options that you did not know were available.

Serge Pépin, head of investments, BMO Investments Inc., explains that this is “really about going back to basics. What the shock of 2008 showed us, especially after two or three years of a huge run up in the markets, is that people tend to follow the crowd, and in the process they can lose sight of their financial goals and aspirations.”

Investors need to take stock of how their portfolios are diversified, and whether they are properly diversified, Pépin says. “Do I have exposure to the main asset classes? What kind of risk am I taking in not being in a certain asset class?”

Pépin stresses the importance of year-round investment: “The one thing people lose sight of is they should really treat themselves as a debt: you owe yourself something and should set aside as much as you can. Pay yourself throughout the year, in the same way you pay an electricity bill on a monthly basis,” he explains.

On consolidation, Pépin notes that having all your assets under one roof will give you a clear and easily accessible look at your entire financial profile, which helps in the process of assessing whether your financial plan is well suited to your goals and aspirations. When assets are divided between different financial institutions, Pépin explains, there is a tendency to look at them in isolation, rather than as parts of a larger financial picture.

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.