How Best To Proceed?

Feb 11th, 2009 – Comment

Hey Lou, I’m an avid listener of AM640, and enjoy listening to your business views on general topics that are brought forth by the hosts.  I always hope to hear some daily tips, so you can be the driving force helping people spend some more money in our economy. I’m approaching 30, have already invested […]


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Lou Schizas is an equities analyst, investor, entrepreneur, professor and television and radio personality – and a true believer in the happiness-inspiring powers of capitalism.


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Lots Of Noise

Lots Of Noise

Hey Lou,

I’m an avid listener of AM640, and enjoy listening to your business views on general topics that are brought forth by the hosts.  I always hope to hear some daily tips, so you can be the driving force helping people spend some more money in our economy.

I’m approaching 30, have already invested in a place to live, and need to repay my HBP back slowly. I guess an optimistic person like myself can say, it’s a great time to re-invest the money into my RSP’s, since the funds are soo low right now, I’ll be able to earn a decent return.

The risk taking side of me wants to know, as the American markets try to recapture their losses, what types of funds will most likely (based on trends after a recession) provide me with an above average positive return. Equity? Dividend? Latin American Growth? Resource? Precious Metals? I’M LOST HERE LOU! PLEASE HELP ME OUT!!

Christian


Hi Christian,

There is always the question of how to proceed in uncertain times. Given that you have to put money back into your RRSP from the Home Buyers Plan withdrawal you made you should take a conservative approach.

Make the contribution into a money market fund and spend the next while researching which area you are most comfortable with. I also advise just contributing cash during the RRSP season when people are shoveling their money into funds without thinking. Once you have a sector or two that you are comfortable with then you can begin allocating money to them.

Take an averaging approach. A monthly contribution to the selected areas allows you to make 12 purchases over time which provides some balance. If the market is moving in an uptrend you can accelerate the buys. If they are in a downtrend you can slow down the purchases.

I think that current market conditions suggest that capital preservation would be a better objective than chasing a return. Yes markets are low but there is still a ton of risk out there that has to be dealt with. There were comments out today suggesting that there could be a second wave of the credit crisis if the stimulus package isn’t big enough.

Positive Signals In The Chart

Positive Signals In The Chart

Having said all that if I had to pick a sector at this point in economic history it would be precious metals. The US is about to rack up trillions in spending to try and dig its way out of this mess and that will put pressure on the green back.

The chart for gold shows a golden cross about to occur which is a bullish pattern and a sign of upward momentum.

Happy Capitalism!

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