BMO offers hard-boiled portfolio advice

By Vikram Barhat | April 5, 2012 | Last updated on April 5, 2012
2 min read

Diversification is an effective hedge against market volatility, according to BMO, which is reminding Canadians to not put all their eggs in one basket. It must be almost Easter.

To balance risk, it is important to consider a variety of investments, both conservative and aggressive, but according to a BMO study, only 59% know the types of investments they hold in their portfolio.

“In order to get the most from your money, your investments must be well-diversified and properly aligned with your financial goals,” said Serge Pépin, vice-president, investment strategy, BMO Asset Management. “In today’s unpredictable market, it is crucial to balance your portfolio by holding a variety of investments.”

Professional advice, he said, can help identify where “adjustments need to be made in your portfolio to make it less susceptible to market fluctuations and mitigate risk.”

The study noted that almost three-quarters (72%) of adult Canadians hold investments and 83% of them are confident they are managing their investments well.

With markets continuing to show volatility, it is an ideal time for Canadians to review their investments to ensure they include the right asset mix.

Talking points for clients:

  • Re-examine portfolio: Although investment portfolios should be reviewed at least once a year, a ‘spring cleaning’ is a good prompt to examine your portfolio for diversification and market exposure. Keeping your portfolio diversified with a mix of equities, bonds and cash can help protect it from fluctuating markets.
  • Invest Year-Round: Establishing a pattern of regular contributions is easier than coming up with a lump sum once a year. A pre-authorized contributions plan is an effective way to contribute and alleviates the stress of lump-sum contributions.
  • Consolidate: While your investments should be diversified, keeping your assets in one basket with a single institution makes it easier to keep track of your portfolio.
  • Read the headlines: Stay aware of the current events that may have the potential to move financial markets and impact the make-up of your portfolio.

Vikram Barhat