Do you know the investing strategy that separates the men from the boys – the women from the girls?
It’s doing the things that are “uncomfortable”!
In this case, it’s stepping up to the plate and investing in a prudent balanced fashion (as per your RRSP investment plan) when it seems that everyone around is cowering under their bed covers…
It’s that simple – yet that powerful.
Why?
Because you are employing a “telescopic view” on your financial world – not a “microscopic view”…
It’s this formula that makes for real wealth creation!
I am reminded of the short but memorable time that I got to spend with Sir John Templeton in the Bahamas over 15 years ago. I have included my recollections of that conversation at the end of this post.
While it’s always a good thing to be putting money aside into your RRSPs each year – this time – this year – it’s even better!
I realize that it may seem tempting to put off contributing to your RRSP account when you have just finished watching the evening news on television or read the morning paper.
However, with all the doom and gloom talk abounding, it’s time to look at the other side of the coin.
Remember: there are always two sides to a story…and in this case the media has been overzealous in its portrayal of the economic slowdown as being just short of the Apocalypse.
(On a side note: In a new poll, Opinion Research Corporation found that 77% of Americans feel the media are making the economic situation worse by feeding consumers a constant diet of bad news.
Survey respondents said the negative news reports are eroding consumer confidence and deterring investment. One lawyer has even suggested that the media should be exposed to legal action for its alleged role in further depressing the economy.)
Now, let’s look at the positive aspects that economic slowdowns can and do bring!
Tough economic slowdowns mean the shrinking of the economy, it can and does bring with it many benefits to the everyday person and family.
Economic slowdowns can be a good thing!
Yes, economic slowdowns offer great opportunity for those who prepared for this eventuality. However, the vast majority unfortunately never ever prepare.
This is the precise reason why the prepared few find the vast opportunities! The action takers!
Who benefits the most from a recession? The Buyers!
Why?
Because it puts fiscal responsibility back on the top of the list.
Here Are 6 Reasons Why Economic Slowdowns Can Be A Good Thing
1. Value Stocks are Plentiful – With recession comes fear in the markets. The human emotion of fear is usually a bad thing for the stock market except if you are a buyer! With strong stocks trading at historically low prices, it can be a field day for investors who have cash. And that is exactly where we are right now – cash at “RRSP season” looking for a home to be invested in!
2. Real Estate Buyers Market – If you are fortunate enough to be in the market for a home, then there is no better time to buy real estate than during a recession! With fewer buyers out there, houses are sitting on the market a little longer. This creates much stronger motivations in the seller which typically results in lower house prices.
3. Cheaper to Borrow – A slower economy typically means that the central banks jump in and lower interest rates in an attempt to encourage spending – and that’s what we are seeing right now! Lower rates means lower debt servicing payments such as mortgages and investment loans. This is another reason why it’s a great time to be a home buyer – or embark on a prudent “borrow to invest” program!
4. Retail items are cheaper – With retail sales slower due to consumers cutting their discretionary spending, retailers try to boost their sales by slashing prices. It’s a great time to buy items that you have been saving up for – at a greatly reduced prices!
5. Gas is cheaper – With a global slowdown, there is typically a lower demand for oil which in turn translates into lower oil prices. As oil and gas prices usually go hand in hand, a recession means that gasoline prices are reduced.
6. It’s Vacation Time – Lower gas prices along with less people
spending money on luxuries (like travel), makes it a perfect opportunity for a lower cost vacation. Airline tickets, hotel stays and even car rentals are all reduced in price.
Want an example?
My wife just left for 1 week vacation close to Cancun, Mexico… I stayed behind because of “RRSP season” and to service those who always wait until the last minute. (Don’t make me regret not going on vacation with her! )
When it comes to your RRSP investing this year – stick to the plan!
Most millionaires are made because they have positioned themselves for times like today. Remember, the greatest fortunes are begun in times of “greatest despair”…
It is the financially savvy who can take advantage of these opportunities when they come along – and they do with some regularity! For after every excess – there is a cooling off period before the cycle begins again…
Therefore, I truly believe economic slowdowns give the little guys an opportunity to catch up with the big guys if they play their cards right.
And that’s the message that I have always subscribed to and will continue to believe.
Why?
Because history bears this out!
Now, here’s what to do: Do not wait for a change of environment before you act – begin changing your environment by acting today!
Don’t forget that you are going to be spending the rest of your life in your future – what kind of future is it going to be?
Will it be one that feels like “hell on earth” or one that is all and more than you had imagined in your wildest dreams!
So it all comes down to this…
Will your RRSP investment actions be microscopic or telescopic?
When it comes to your RRSP investing this year – stick to the plan!
Now, “be a man” – or “woman” – step up to the plate and “do the right thing”!
My recollections of that conversation over 15 years ago with the late great Sir John Templeton…
http://www.howtobesetforlife.com/articles/the-wisdom-of-sir-john-templeton/
