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“The problem with going in and out of the market is you have to time when to go in and when to go back out,” he said. “What happens if you have to sell? That can happen to anybody who has to sell.”

For example, the RESP is like a condensed version of retirement planning for education, and it also requires people to plan ahead for when they need the money so they won’t be withdrawing their cash at the worst possible time.

“Typically I tell people when (their kids) start hitting Grade 8 to start switching it over to fixed income,” Gillespie said. “You know with an RESP you are going to be using it in two to three years. You have to invest your money based on when you want it back.”

He starts the switch from investments to cast in Grade 8 because it gives him time to hold off selling as he waits for the market to turn around. Wait until Grade 12 to start and you’ve got no buffer.

The same is for retirement: you should have cash ready five years before you actually need it.

How long can you hold off selling? If you’re buying a house today, first-time buyers can take up to $25,000 out of their registered retirement savings plans and pay it back over 15 years, but it would mean selling at a low point.

“You would be selling your investments at the bottom of the market and buying a house at the top of the market,” said Vince Gaetano, principal broker at Monster Mortgage, who really doesn’t believe in using RRSP savings for buying a home. But, if you choose to go that route, he says the money should be close to liquid cash a year in advance because of scenarios like what we are seeing today.

Felix Narhi, Vancouver-based portfolio manager of the Pender US All Cap Equity Fund and the Pender Strategic Growth and Income Fund, said people are driven by psychology. “It’s easy to say buy low, sell high but we do the exact reverse,” he said. “We can’t recover from mistakes in the past but we can learn from them.”

In the interim, Gillespie suggests just cashing in what you need for the next two years and hoping the market comes back.

If you believe the economists at CIBC World Markets — and history — that’s exactly what will happen.

gmarr@nationalpost.com

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