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Updated 2mo ago.
Updated 2mo ago.
A market correction is a decline of 10% to 20% in an index or market from its recent peak. It's a normal occurrence that happens on average every 1 to 2 years. Beyond 20%, it's called a bear market.
In 2022, the S&P/TSX experienced a correction of about 12% between April and July. An investor holding XIU.TO would have seen their portfolio value temporarily decline. Those who held their positions recovered their losses in the following months.
Corrections are normal and inevitable. For beginner investors, the worst mistake is panic-selling during a correction. Historically, markets have always recovered after a correction. If you invest regularly (dollar-cost averaging) in a TFSA or RRSP, corrections are actually opportunities to buy at a discount.