Another bit of reflexion !A homework assignment for do-it-yourself investors: Get your portfolio up on your screen and ask yourself how well it would hang together if stocks crashed.
The next crash is out there somewhere – timing and cause to be determined later. What we know for sure right now is that do-it-yourself investors using online brokers have portfolios that in aggregate seem unready for this kind of a setback.
Close to 80 per cent exposure to stocks is too much for investors who are close to or in retirement, unless they have more wealth than they need and can afford to weather a sharp drop in stock prices. Stocks quickly rebounded from the crash of March, 2020; the next downturn might not reverse that quickly.
However, the allocation to pure fixed income is less than half of what it was five years ago, while stock holdings are up by a few percentage points. It may be time for a rebalancing in your DIY portfolio to adjust your mix of stocks, bonds and cash. Find out now, before things get ugly.
Please d'ont hate me !
From Rob Carrick, personal finance columnist in the Globe and Mail