Feeling Smug, think again.

I have several friends who are very happy that they did not invest in the stock market. They tell me that they sleep very well at night, knowing their money is safe and protected in their saving accounts in the bank. Yes, the stock market can be volatile, and if you pay attention to the market in times of volatility you may not sleep well. I know that I am guilty of that. My investment advisor told me to not check the market every day. She said to trust the research that lead me to invest in the companies I invested in and to trust her to watch the market and alert me if I need to make any changes. 

High volatility rates characterize the stock market. Market volatility is the tendency of the market to either rise or fall sharply when responding to several variables in the market. The higher the volatility, the riskier is the market. 

However, as I have been told, doing nothing is often the best course of action when it comes to a volatile stock market. Having said that it is a good idea to have a backup plan just in case the market takes a downturn by taking advantage of favourable fluctuations. For example, you can consider selling some of your stocks if they rise sharply before they bounce back down. You can make some profits in this period of uncertainty, and your broker should be able to offer you solid advice. 

Financial inertia can cost us in other ways.  I have friends who could not save $50 a month to save for retirement, yet they were willing to pay $15 a month or more in bank fees. They also were not willing to give up their Tim Horton's or Starbuck habit of $5.00 to $10.00 a day. They would not drive half-a-block to save money on gas or groceries and don’t bother returning items of clothing that don’t fit. There are good excuses for this behaviour and they justify their actions very well.

Other examples of this type of action or complacency are when people don’t take advantage of their employer matching RRSP program. Or when their mortgage comes due, they don’t shop around for a better rate or they continue to pay high fees on their investments. 

They are approaching retirement and are worried that they won't have any extra income when they retire, and they blame the system for not providing opportunities to invest.

Sometimes a wake-up call is needed. For some, it may be a major life event before they start taking their finances seriously. If we can see how much complacency is costing us that’s usually enough to motivate a person into taking action. If not they will end up not having enough retirement income to continue with their current lifestyle.