Young Investors Beware of Risks When Going All In on Stocks

If you're a professional heavily exposed to tech stocks, whether through your investment portfolio or your compensation, now is a prudent time to review your financial strategy. With ongoing market uncertainty and equity valuations at or near record highs, making informed decisions is more important than ever.

In today’s Canadian Press article All in on stocks? Young investors should beware of the risks, experts say I share key recommendations to help you navigate this complex environment while safeguarding your goals.

What Should You Consider?

✅ 1. Understand Your Risk Tolerance

Ask yourself: Can I stay the course if the market experiences a downturn? The most effective plan is one you can stick with, both financially and emotionally.

If you anticipate needing a substantial amount of cash in the next 2-3 years (for your child’s education, a real estate purchase, or another major expense) it may be time to reassess your investment mix. Short-term needs shouldn’t be financed with assets that can fluctuate significantly in value.

✅ 2. Balance Your Portfolio

Ignoring fixed income (such as bonds or GICs) leaves your portfolio vulnerable to volatility. For most younger investors, a balanced approach like a 60% equities and 40% fixed income split provides both growth potential and protection from market swings. If you have both experience and a higher risk tolerance, an 80/20 split (80% stocks, 20% fixed income) may be suitable, but few situations warrant an all-stock portfolio.

✅ 3. Diversify Intelligently

Diversification isn’t just about owning more stocks. Including a meaningful slice of fixed income smooths returns over time. For many, asset allocation ETFs offer a simple, effective solution. These funds provide preset mixes of equities and bonds, making it easier to diversify across sectors and geographies while keeping costs low and portfolio management straightforward.

Ultimately, investing success hinges on your ability to weather ups and downs without making impulsive moves. Take time to check in with yourself: Are you prepared for periods of uncertainty? Do you know what you own, and why?

If you’re looking for a second opinion or unbiased financial planning, we’re here to help you navigate these important decisions with transparency and clarity.

Thank you Daniel Johnson for sharing my advice on your latest article.

The information above is for educational purposes and does not constitute personalized financial advice. For a customized review, please consider consulting with a fee-only financial planner.