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How to prepare for economic ebbs

The advice and opinions of Roman Rybar, a financial advisor at Edward Jones about the economic uncertainty we face.

The Elk Valley has felt the pinch in the economy due the lower commodity prices and the devaluation of the Canadian dollar. The effects have been felt with companies downsizing their operations in the Elk Valley, including companies such as Finning and Teck.

The Free Press spoke to Roman Rybar, a financial advisor at Edward Jones in Fernie, to ask him for his opinions and advice at times of economic uncertainty.

Economies tend to be cyclical, ebbing and flowing at varying times. Is it normal for a country’s economy to go through small recessions like this?

This is a normal part of the economic cycle. While the economists debate whether we are in a recession; it is important to remember that recessions are temporary and are always followed by economic expansion.  The average bull market [increasing] is 50 months long while the average bear [decreasing] market is nine months in length. We should not let the short term distract us from our long-term financial goals.

What are some tips for people to survive harsh economic times?

If you don’t already have one, start working on building an emergency fund that covers your expenses from three to six months. Try to contribute something each month to a liquid low risk account.

The impact of the economy on personal savings will vary from individual to individual. It’s important to look at what is important to you. Someone that is retired that does not have a mortgage will have different goals than someone with a family that does.

When working with my clients I follow a five-step process. First, find out your current financial situation. Second, where would you like to be? Third, how you can obtain that goal?  The fourth step is evaluating whether you can achieve that goal. Is it feasible? Finally, put a plan in place and review it regularly. Working with a financial professional can help you along with this process.

The economic uncertainty has created more volatility in the stock markets.

When it comes to investing, it’s important to have a diversified and well-balanced portfolio. If you’ve built a quality portfolio, it’s easier to feel secure about staying invested and looking for investment opportunities. As far as a bear market and stock prices going lower, the thinking by the great wealth manager Warren Buffet is “Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down.”

Canadian economists have agreed that the future of our economy doesn’t look to improve in the near future. Are there any optimistic undertones to this outlook? Anything that Canadians and residents of the Valley can look forward to?

The economic story out there can certainly be unnerving, but there are bright spots worth mentioning. The US, which is the largest economy in the world is growing, their housing and job market is improving.  This can have positive spillover affects for our economy.

The low Canadian dollar also creates opportunities. It has also helped our international exports increase.  Currently, the majority of our exports go to the US.  The low dollar can be positive for our tourism industry as well.

It’s important to keep a long-term perspective in mind, economies go up and down, but historically, economic expansions are much longer than recessions.

One of the main culprits behind the sagging Canadian economy is the low price of oil, which has been in decline for over a year. Coal is a huge employer in the Elk Valley, so can we expect the lower economic times to hit harder here than other places?

Commodity prices such as coal and oil have fluctuated and cycled in the past bringing periods of tough times and good times. The people of the Elk Valley are resilient and it is important to not get discouraged.  While I don’t have a crystal ball, I can say that my family is not a stranger to the economy in the Elk Valley. My father began his employment as a mechanic with Kaiser in the early seventies. He worked over 40 years for the mines before retiring with Teck Resources.  If an individual’s income is dependent on one industry that may not do well in certain markets, it important to have a financial strategy in place.