Why is my investment account lower than it was before?

Investment account balances fall for two main reasons: (1) Market value declined — the stocks, ETFs, mutual funds, or bonds you own are now trading at a lower price than when you bought them or when you last checked. This is called an unrealized loss. No money has left your account; the market value of your holdings has simply decreased. (2) A withdrawal was made — if money was withdrawn from the account (e.g., a scheduled RRIF mandatory withdrawal, a RESP education withdrawal, or a transfer), the account balance falls. If you have not made any withdrawals but your balance is lower, the cause is market value decline — a normal part of investing.

What is the difference between an unrealized loss and a real loss?

An unrealized loss is a paper loss — your investment has fallen in value, but you have not sold it. If you hold on and the investment recovers, the loss disappears without any financial consequence. A realized loss occurs when you actually sell an investment for less than you paid for it. Only realized losses: (1) affect your tax situation (capital loss can offset capital gains), and (2) permanently remove value from your account. The key insight: an investment account balance dropping by $10,000 is not the same as losing $10,000 of cash. It only becomes a real financial loss if you sell at the lower price. Long-term investors who stay invested through market declines typically see their accounts recover over time.

Is a market drop normal? How often do markets decline?

Market declines are completely normal and happen every year. Historical patterns for Canadian and US equity markets: Intra-year corrections (10%+ declines): occur approximately every 1–2 years. Bear markets (20%+ decline from peak): occur approximately every 3–5 years. Crashes (30%+ decline): occur approximately every 7–10 years — 2000 tech crash, 2008–09 financial crisis, 2020 COVID crash. Despite these declines, the long-term trend of broadly diversified equity markets (TSX Composite, S&P 500) has been upward. The S&P 500 has produced approximately 10%/year average return over 50 years, despite numerous severe drops. Every major market crash in history — including 2008 — was followed by full recovery and new highs within 3–7 years for a diversified investor.

Should I sell my investments when the market drops?

For most long-term investors, no. Selling during a market decline locks in your losses (converts unrealized to realized) and forces you to make a second correct decision — when to buy back in. Studies consistently show that investors who sell during downturns and attempt to time re-entry underperform investors who simply stay invested. The Warren Buffett principle applies: be fearful when others are greedy, and greedy when others are fearful. For Canadians specifically: if your investments are inside a TFSA or RRSP and you sell at a loss, you lose the contribution room permanently (RRSP) or temporarily until the next January (TFSA). Selling locked-in losses inside registered accounts is almost always a mistake unless you have genuine evidence of permanent capital impairment (e.g., a company went bankrupt).

Should I be worried if my GIC, savings account, or bond has a lower value?

It depends on the product. GICs: the face value of a GIC does not change — you will always receive your principal plus interest at maturity. The market value shown in your brokerage account may fluctuate if the GIC is tradeable (non-cashable GICs can be marked to market), but you will receive the full amount at maturity. High-interest savings accounts: these do not decline in value; any lower balance is due to a withdrawal. Bonds: bond market values decline when interest rates rise (inverse relationship). If you hold a bond fund or individual bond to maturity, you will receive the face value — the interim market value decline is unrealized. If you need to sell the bond before maturity, you may receive less than face value if interest rates rose since purchase.

What should I actually do when my investment account drops?

Practical steps for long-term Canadian investors when their account declines: (1) Do nothing if your time horizon is 5+ years and the decline is general market movement. The worst action is panic-selling. (2) If you have new cash to invest — a market decline is a better time to buy more of your existing holdings (at lower prices). This is called dollar-cost averaging. (3) Review your asset allocation — if the decline has moved your portfolio significantly off your target (e.g., from 70/30 equities/bonds to 80/20), a decline is an opportunity to rebalance by selling bonds and buying equities. (4) Check your specific holdings — if an individual stock or sector fund dropped 40% while the overall market dropped 10%, investigate whether there is a company-specific problem. (5) Review your time horizon — if you need the money in 2 years and cannot afford further decline, a market drop is a signal to reduce risk in that portion of your portfolio.

My RRSP dropped significantly. Should I be worried about my retirement?

An RRSP/RRIF balance decline is concerning only if: you are within 5 years of needing to draw on the funds AND the decline is large enough to affect your income plan. For Canadians still in accumulation (10+ years from retirement): a market decline is simply a temporary reduction in a number on a screen. The investment history that matters is the sequence of contributions and growth over decades — not any single year''s balance. For Canadians near retirement or in decumulation: this is a legitimate concern called "sequence of returns risk." Protection strategies include: holding 1–2 years of living expenses in cash or GICs; living off GIC/cash first during a downturn without selling equities; CPP/OAS provide a guaranteed floor that is entirely unaffected by market declines.

Why Is My Investment Account Down? What to Do When Your Portfolio Drops

A falling investment account balance is alarming but almost always normal. Here is how to think through what happened and what — if anything — to do.

This page makes much more sense when you view it beside average stock market returns, stock market basics for beginners in Canada, and the dollar-cost averaging calculator. If the drop is making you question your whole plan, go back to how to start investing and best all-in-one ETFs in Canada before making a panic decision.

Quick diagnosis

What you see	Likely cause	Action needed?
All holdings down similarly	Broad market decline (normal)	Usually no action required
One holding down significantly, others okay	Company-specific issue	Investigate the holding
Account down but you made a withdrawal	Your own activity	None
GIC shows lower market value	Interest rate rise (mark-to-market)	None — hold to maturity
Account was positive, now shows negative	Likely margin account or covered short	Contact your broker immediately
Unknown transaction showing outflow	Unauthorized or mistaken transaction	Contact broker immediately

Historical context: Canadian market recoveries

Decline event	Peak-to-trough decline	Time to full recovery
Dot-com crash 2000–2002	~50% (tech-heavy)	~5–7 years
2008–09 financial crisis	~49% (S&P 500)	~5 years
COVID crash (Feb–Mar 2020)	~34% (S&P 500)	~6 months
2022 rate-rise bear market	~25% (global equities)	~18 months

Every one of these was followed by a full recovery for a diversified investor who stayed invested.

Unrealized vs. realized losses in registered accounts

Account type	Selling at a loss locks in	Tax consequence of sale
TFSA	Loss permanently — contribution room NOT restored until Jan 1	No capital loss available (TFSA gains/losses are tax-sheltered)
RRSP	Loss permanently — contribution room not restored	No capital loss available (RRSP gains/losses are tax-sheltered)
Non-registered	Loss realized — capital loss can offset capital gains	Capital loss is reportable and valuable

In a TFSA: If you bought $10,000 of stock and it dropped to $6,000 and you sell, your TFSA contribution room only recovers $6,000 next January — you permanently lost $4,000 of TFSA room. Selling at a loss inside a TFSA costs you twice.

What volatility-tolerant looks like in practice

If your portfolio dropped 20% and you have 20+ years to retirement:

You are experiencing a completely expected event
The right response is to continue your regular contributions
Dollar-cost averaging means your new contributions buy more units at lower prices
Historically, the Canadian and global equity markets recover and reach new highs

If your portfolio dropped 20% and you retire in 3 years:

This warrants a conversation with a financial planner
Consider gradually de-risking toward more GICs and bonds
CPP and OAS income forms a non-market floor — factor it into your income picture

Management fees and how they affect your balance

Sometimes an account balance drop is not a market move at all — it is a fee:

Fee type	When deducted	Where you see it
Annual account fee	Often charged in January or quarter-end	Transaction line in account history
ETF MER (management expense ratio)	Daily — invisible; already in the price	Reflected in unit price, never shown separately
Robo-advisor management fee	Monthly or quarterly	Transaction history
Trading commissions	On each trade	Transaction history
Currency conversion	On USD buy/sell	Bid-ask spread and/or explicit fee

ETF MERs are the one fee that never shows as a separate transaction — they are deducted inside the fund and reduce the daily NAV slightly. A 0.20% MER on a $100,000 portfolio costs approximately $200/year, appearing as very slightly slower NAV growth rather than any visible charge.

What NOT to do when your account is down

Temptation	Why it backfires
Sell everything and wait in cash	Locks in the loss; most recoveries happen in sharp bursts that cash holders miss
Move to GICs “until things improve”	Markets often recover before GIC maturities; you sell low and re-enter high
Check your account multiple times daily	Increases anxiety without changing outcomes
Compare to pre-drop peak	Peak-to-current comparison amplifies emotional pain; focus on long-term returns
Stop contributing	Reduces the number of cheaper units you buy during the decline

When to actually be concerned

Market declines during accumulation are normal and expected. These situations warrant professional review:

Your portfolio is concentrated in a single stock or sector (not a diversified ETF) and the company-specific news is concerning
You are within 3 years of retirement and your sequence of returns risk is high
The drop revealed your true risk tolerance — you cannot sleep at night — meaning your allocation was wrong from the start
You have ongoing automatic rebalancing that is buying into a falling asset class beyond your comfort level

For most Canadians holding a one-fund or two-fund ETF portfolio, market declines require no action other than continuing to contribute.