If you're afraid the trade war will crash stocks, you've failed financial planning

The Globe and Mail's Personal Finance section offers news, in-depth analysis and expert tips on how to make money and save more money in all aspects of your life. moment for the stock market was almost a year and a half ago, but it's worth remembering that it was triggered by the The trade war has intensified in the past month, but stocks have sailed on serenely. The year-to-date total return for the S&P/TSX Composite Index for the year to Aug. 31 was 16 per cent, a nice follow-through to returns of 31.7 per cent in 2025, 21.7 per cent in 2024 and 11.8 per cent in 2023.might trigger a downturn for stocks, or maybe the AI boom enters the inevitable phase where hype bows to a more subdued reality. The cause of the next downturn doesn't matter. What does is your preparation, particularly if you're a retiree. The U.S. decision to apply tariffs on imports from Canada and other countries hit the stock market hard in March-April, 2025, with shares down around 10 per cent in the first eight days of April alone. At the time, several retirees asked me by e-mail if it was likely that the federal government would ease the requirement to make an annual withdrawal from registered retirement income funds, or RRIFs. The worry: Needing to sell hard-hit stocks or funds to cover the withdrawal. The government has offered a token partial break on RRIF withdrawals in past crises, but it didn't this time. A hard truth of retirement: Needing and expecting this help is a financial planning fail. Investors who have yet to retire can prepare for a stock market crash by basing a portfolio on Canadian, U.S. and international stocks, and then including cent bonds, guaranteed investment certificates and cash. Basically, you want to cushion the declines while allowing plenty of upside. Retirees still need their investments to grow, based on the idea that someone retiring at 65 in relatively good health should plan to live 25-plus years. In your final years, it's possible that care needs will demand cash like never before. Growth helps you enjoy life in your active years, and have enough at the end. But my sense of interacting with retirees for three decades as a personal finance guy is that they worry – a lot – when stocks crash. There's a deceptive sense of finality to stock market mayhem that makes them feel their finances may never recover. Diversification with stocks, bonds, GICs and cash is the primary line of defence against stock market declines. Next comes a cordoned-off segment of your portfolio where you hold money market funds, investment savings accounts or a GIC ladder that frees up money on an annual basis. If stocks crash and it's your time to make a RRIF withdrawal, you draw from your safe investments and leave your stocks alone so they have time to rebound. Keep enough safely parked money to cover your needs for three years. One or two years may not cover the sort of protracted market downturn we've seen before. Five years ties up too much money in low-yielding safe investments. You can get a yield around 2.4 per cent from money market exchange-traded funds, with a risk level close to zero. These funds hold government and corporate bonds that mature in a year or less, which minimizes the chance of default. One-year GICs from alternative banks you can access through many online brokers yields of 3.4 per cent for one year and 3.8 per cent for two years. There's now reason to wonder if bonds can be fully relied upon as a diversifier for retirees who fear a stock market decline. Bonds in the 2020s are not the docile asset they once were – strong when the financial world is struggling, stable in normal times and mildly weak in high-growth periods where rates rise. High inflation four years ago decimated the bond market so badly that it lost more than the stock market. The bond market today is under strain caused by worry about high levels of government debt, notably in the United States. Investors have been selling government bonds lately, driving their prices down. Investors looking well ahead to retirement can take all of this in stride, but nervous retirees may want to expand their use of GICs and money market funds. Use them to keep money safe from upsets in both the stock and bond markets.