Retirement Planning in a Bull Market: How to Adjust Your Strategy

Worried about your retirement portfolio during a bull market? Here are the top steps to take, and where to continue investing.

Amy Legate-Wolfe

Author Bio Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances. Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities. She also provides investors with a daily newsletter, Canada Stock Digest, for daily market updates. Her work can also be found at Canada's National Observer, where she writes on the business side of climate action. Before joining Motley Fool Canada, Amy wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog, and travel with her husband. Social Media Follow Amy on LinkedIn and Canada Stock Digest. Favorite Investment Quote “October: This is one of the particularly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” – Mark Twain

Published June 28, 2024 8:00 pm EDT

During a bull market, investors often feel a sense of optimism due to rising asset prices and positive economic indicators. However, it’s crucial to remain strategic and disciplined with retirement planning to ensure long-term financial security.

With that in mind, today we’re going to look at strategies to help you adjust. So that you can continue to keep your investments and retirement safe, while still taking advantage of a rising market.

Silhouette of bull in front of setting sun — Source: Getty Images

How to adjust

First off, investors will want to review and rebalance their portfolio. Ensure your portfolio remains diversified and aligned with your risk tolerance and time horizon. A bull market can cause certain asset classes to become overweighted. Adjust your holdings to maintain your desired asset allocation. This might mean selling some high-performing assets and buying underperforming ones.

From there, take advantage of gains! Consider taking some profits from high-performing investments. Reinvest these gains into more stable or undervalued assets. If you have more disposable income due to increased investment values, consider increasing contributions to your retirement accounts.

Then, stay disciplined. The euphoria of a bull market can lead to overconfidence and riskier investments. Stick to your long-term plan and avoid making impulsive decisions based on short-term market movements. Focus on your long-term retirement goals rather than trying to time the market. Remember that bull markets are followed by bear markets, and market cycles are inevitable.

Finally, review your goals, and meet with your advisor. Rising portfolio values might prompt a reassessment of your retirement goals and timelines. Ensure your plans still align with your financial needs and lifestyle expectations. For those nearing or in retirement, a bull market might allow for more flexibility in withdrawal strategies, potentially enabling higher withdrawals or delaying withdrawals to allow further growth.

Stocks for protection

During a bull market, it’s important for investors to balance their portfolios to protect retirement investments while still benefiting from market gains. Here are some recommended stocks and ETFs listed on the TSX that can help provide stability and growth.

First off, investors will want to consider a strong company like Canadian National Railway (TSX: CNR). CNR stock is one of North America’s largest and most diversified railway companies. It operates a rail network that spans Canada and mid-America, linking ports on the Atlantic, Pacific, and Gulf coasts. CNR has a significant economic moat due to its extensive and strategically located rail network. The high cost of infrastructure development and regulatory barriers make it difficult for new competitors to enter the market.

Furthermore, the company serves a broad range of industries, including natural resources, manufacturing, and consumer goods. This diversification helps stabilize revenue streams as it is not overly reliant on any single sector. As well, it’s known for its efficiency and dividend growth, providing steady income for life!

Also consider an exchange-traded fund like the Vanguard FTSE Developed All Cap Ex North America Index ETF (TSX: VIU). This ETF provides exposure to a broad range of developed markets outside of North America, including Europe, the Pacific, and the Middle East. VIU offers exposure to a wide range of developed markets, reducing reliance on the North American economy and mitigating geographic-specific risks. This diversification can enhance the stability and performance of a portfolio over the long term.

Furthermore, the ETF includes large, mid, and small-cap stocks across various sectors, providing comprehensive market coverage. With a management expense ratio (MER) of around 0.22%, VIU is a cost-effective way to gain international exposure.

As well, investing in developed markets outside of North America allows investors to tap into growth potential in economies that may be at different stages of the economic cycle compared to North America. Altogether, with these two investments you can certainly protect your retirement. Even during a volatile bull market.