It’s dark. You’ve woken up in the middle of the night to either use the bathroom, grab a midnight snack, or answer to your crying child.
The path to your objective is clear. You know where the doorframe is. You know roughly how many steps it will take to get to your destination. But like the iceberg that sunk the Titanic, you smack your toe on something.
The feeling of pain is immediate. You probably do a few things: cry out in pain. Then curse. Then maybe curse a bit more. Grab your toe. Question if it’s broken. Believe in this very moment that you are a failure and that no matter how adult you feel, you can’t even get this simple task right of walking unimpeded to your destination.
Then with time, that feeling of pain and self-doubt starts to go away. You get feeling back in your toe. Maybe you did break it. Maybe it’s just going to be a horrible bruise. In either case: you’ll live.
The COVID-19 pandemic recession reminds of me that universal experience of sharp, sudden, and unexpected pain. There I was in March, working in my employer’s office never once thinking that the strange virus from Wuhan would make its way over to Canada, and not even imagining it would wreak the economic havoc it was wrought.
First the offices closed. Then mass gatherings. Then all the businesses of my city.
No matter how much I had psyched myself up to be ready for the next recession, I realized I had never truly lived through one. Between 2007-2009 I was an oblivious theatre student. Money – what money? Job security – what job? My sheltered existence gave me the benefit of pretending I had the wisdom to manage a recession when really, I had never truly experienced what it was like to live through one.
This COVID-19 recession created what felt like a solid week of stubbed toe pain. Every morning was a roughy 8% drop in my index fund portfolio. Each day $10,000 of gains from the past decade or so were being erased. I questioned my investment strategy. I questioned if I would ever achieve my life goals. And I even questioned if the world would ever the be same again (full disclosure – I think the world will return to normal one day. It’s just going to take a while to get there).
With the obscene day-to-day volatility, I knew I had to stay the course, but I also knew I couldn’t continue to accept apathy at the situation.
#1: I re-evaluated my savings and investment strategy.
With a wedding coming up (yes, I’m getting married!) and the prospect of home ownership on the horizon, I realized that investing all of my saved income was probably no longer the best thing to do, regardless of a bull or bear market. Instead, I started to allocate a greater percentage of my funds into my EQ Bank savings account (this is a referral link that also offers you a $20 bonus if you sign up) which offers 2% interest to build the down payment fund. I had being doing these activities already, but the timeline between now and home ownership felt more immediate considering that a housing correction could provide me with my first real chance of owning something.
#2: I changed how I dollar-cost averaged into the market.
Typically, I would invest in each of my index funds on the 15th of every month. I changed my investment tactics by splitting my one-time monthly investment across each week and investing a smaller amount every Monday. This is because with the increasing volatility, I wanted to increase my changes of buying the true average. I also leverage the TD e-series funds to avoid trading commissions.
#3: I realized I need to help my neighbours.
Buying food at smaller businesses. Giving back to COVID-19 relief related charities. I’m no hero here, but when sudden events like these happen, I felt I needed to do more for those who have no choice but to remain open and working.
So what’s happened since then?
By largely sticking to my investment strategy, my portfolio has almost recovered to pre-COVID levels. I acknowledge I’ve had the good fortune of being able to keep my job, stay healthy, and work from home.
If you’re feeling a version of economic shock yourself, like many of my friends are, there is nothing I can say that will provide you assurance that recovery is on the way. Just know that your pain is real. You are not alone. It will subside. You will heal. And the wisdom you gain from this will serve you well in the future.