COLUMN: Ask the Money Lady – Tabletop investors

Dear Money Lady: My husband started day trading this year and it turned into a disaster. He is retired and took a course on investing – but that didn’t seem to matter, we have lost over $200,000. I am so upset! Marissa P.

Oh dear, Marissa. I feel your pain. Many retirees have done the same thing. The economic market right now is shaky – we all know that. Our neighbours to the south have forever changed the landscape of how we view the United States. But with this backdrop, I must caution those that are entering retirement or already in it, about managing their investments and ultimately impacting their long-term plans.

Please remember, you cannot predict the market and you do not know how long you will live. This has always been the constant elephant in the room situation that many retirees tend to forget. You should never base your financial decisions on stock market performance or your own lifespan, yet I get many emails like this one, that do just that.

Longevity is real. Canadians are living longer. Currently we have 1.5 million Canadians over 85 today, and it is projected that in the next 25 years we will have 4.3 million. So, believing that you are unlikely to live past 80 with a plan to take larger withdrawals from your savings, obviously is not a good idea. The reality is many retirees plan to invest on their own, since they have the time to learn how to do it efficiently and they no longer want to pay an advisor for what they think they can do themselves. While I agree in theory, I also must caution those retirees that plan to do this. The gravity of managing investments during retirement can become overwhelming. There is no runway for mistakes in this new arena and errors will have long lasting repercussions since a loss can not be replaced with working income.

Here are the three killers of every would-be investor, young or old: market timing, panic selling and chasing returns. Let’s face it, everyone does these things when investing, but doing this with your retirement savings could lead to dire consequences. Panic selling is fueled by fear and greed, the two emotions that never leave even the most experienced traders. Market timing is the buying or selling in the market based on predictions of future market movements, and chasing returns is buying based on past performances. All pitfalls that can result in poor choices and fundamental errors when investing.

Paper trading to learn the basics is imperative when you begin investing on your own. Please do not jump in, thinking you can learn as you go. Creating a formal financial plan is also important. This is a written financial plan that outlines where you are today and what you will need monetarily as you age. Without having this written frame work, you will be a wandering generalist, not knowing how to invest wisely and not planning for specific life events that only you will know about. Remember, that revenue streams are your key to ensuring a retirement with money. Economists unanimously agree that you must have a minimum of five revenue streams in retirement to ensure you do not outlive your money. So, think creatively, like a banker. Use your investment assets to create viable, low risk revenue streams and consider other alternatives to create income. It is up to you to ensure you retire with dignity and monetary certainty.

Why not come out to one of my Vibrant Living Events that I offer free across the country – remember, knowledge is power and everyone should have the opportunity to age with confidence and purpose – no matter how many birthdays you’ve had.

Christine Ibbotson is an author, finance writer and syndicated money coach on BNN Bloomberg. She is also part of the everyday lineup on CTV Your Morning in every province. Follow Christine on Instagram @askthemoneylady, or on Facebook (Christine Ibbotson) and join her at her vibrant living speakers events.