As with many retirement savers, it took two major stock market events (Global Financial Crisis, Global Pandemic) to convince Adam and Sonya that trying to ‘time the market’ or pick specific sectors was a costly exercise in futility. But, with the value of their RRSPs nearly halved in the 2009 Financial Crisis, they also recognized that they could not afford to avoid equities if they were going to have any chance of meeting their retirement goals. That’s when they adopted the time-tested, academically-based principle of diversification in their investment strategy.

Fortunately for Adam and Sonya, their time horizon is still long enough to rebuild their capital and benefit from steady long-term returns. This time, their focus will be on managing the risks, which are more certain rather than performance which is much more difficult to control. With a properly diversified portfolio, they have a much better opportunity to capture returns wherever they occur while mitigating the risk of any one particular investment.