What does the Middle East conflict mean for your savings?

Global events can impact your retirement savings and you might be seeing your investments go up and down. Even though that may make you uneasy, it doesn’t mean you need to make a sudden change to your retirement investments. See how the Middle East conflict is really affecting the market—and what action you can take.

You may be getting updates and photos from the recent Middle East conflict in the news and on social media, and it’s normal to be concerned about its impact on you and your wallet. You see gas prices rising and the stock market bouncing up and down. It’s completely understandable if you're worried about your investments and feel an urge to sell, especially if you see a dip in value. But when it comes to retirement investments in particular, it’s important to look at the big picture and not make a hasty move now that could lead to regrets later.

Although global markets dropped immediately following the initial strikes on Iran, things at home have been a bit calmer. North American equities (like stocks of Canadian or American companies) weren’t really been affected in the first few days after the conflict. Likewise, safe-haven assets (those are investments meant to maintain or even increase in value during periods of volatility) like gold, silver, and the U.S. dollar all rose. Depending on your retirement portfolio holdings, you may see movement in either direction. The S&P/TSX Composite Index, Canada’s main stock market index, actually climbed slightly on the first business day after the conflict began, and U.S. markets dipped just a little bit.

It’s easy to get spooked, but savvy retirement savers know how to look at the big picture. The past decade brought significant market volatility, including the COVID-19 pandemic, the Russia-Ukraine war, and even the period leading up to the most recent U.S. presidential election. What do they all have in common? Their negative impact on the market didn’t last. In fact, significant dips in the market can be followed by big rises. It’s impossible to predict, but when you’re saving for retirement, you have one big luxury: time. Unless you’re planning to retire in the next few years, your investments will likely have time to recover and grow before you need to start using the cash. And if your investments are spread among different types of assets, you might not be as affected by some of the drops in value.

It’s difficult to separate emotion from investing, especially when you’re saving for something as important and as personal as retirement. When unexpected events cause stock market values to fluctuate, it can be hard to ignore the impact on your retirement account balance. So, remember that with long-term investments like retirement savings, it makes sense to ignore the short-term noise and give the economy and stock market time to settle down.