To Clients: Buy low (An RRSP marketing letter)

In the aftermath of 2008 market returns, your clients might be a bit shell-shocked, and not at all aware that an excellent buying opportunity exists right now — just in time to open a TFSA or make their year-end RRSP contributions.

Depressed equity prices allow clients to buy more shares with each dollar. You know this, but buying opportunities are not something the average person thinks about on a regular basis.

A letter explaining this might not inspire a huge amount of new-found optimism but it might be the psychological salve needed to get clients back into the game of long-term planning.

Dear [Client’s name],

The end of 2008 was no doubt a trying time for anyone paying attention to market fluctuations. Some of my clients who only look at their quarterly statements are especially shocked by the drop in portfolio values they’ve seen.

Please remember this: Even though this time is difficult, our plans were built to last through market corrections like this. Moreover, because we have a plan, situations like this are actually an excellent opportunity to build your resources for the future.

Let me explain: When markets are riding high, each dollar you invest buys fewer mutual fund units or company shares, because each unit costs more. When the market falls, it takes unit prices with it — the cumulative effect of this is unfortunate and it’s a shock for some, but markets do in fact recover, given enough time. The shares you are holding today, hopefully, will eventually recover some, if not all, of their value as markets recover.

In the meantime, shares are cheap, making this an excellent opportunity to buy and invest more for your future. Those of you who invest automatically every month are already taking advantage of this opportunity: Dollar cost averaging is a strategy that allows us to acquire more shares while prices are low. It also means that we invest when prices are high, but the regular habit or automatic deduction guarantees that we don’t miss buying opportunities like this one.

Whether you’d like to make a year-end contribution to your RRSP, take advantage of the new tax-free savings accounts to shelter your future gains or even use some leverage to invest (interest rates are low right now), the conditions today are good.

Of course, all of these options need to be considered within the context of your overall financial plan. Please call my office and set up an appointment so that we can discuss things, update your risk tolerance information and any other personal information that might have changed since we last met, and review your plans for the future.

Yours in service,

[Your signature]

[Your name]

(01/14/09)