By Jennifer Rideout
Last year was challenging and especially harsh for balanced and income-focused investors. In most periods, bond markets have helped offset poor equity performance.
This year both stocks and bonds have declined together. Bond markets suffered from increased inflation and Central Bank tightening. Unfortunately, 2022 was the worst period for balanced portfolios in nearly 100 years.
Looking ahead to 2023, I remain cautiously optimistic about the economic outlook. With predictions that interest rate increases are not over, perhaps sometime in 2023, we could see inflation decline. If inflation has peaked and interest rates begin to fall, we could see a rebound in the bond market.
While there are still many unknowns, the general principles I have followed since the beginning help us navigate any challenges that may come our way. How do we relate to finances in these uncertain times?
Here are a few points to consider:
I recommend separating short-term savings from long-term investment goals. If you require money in the short term, you should hold funds in a short-term savings vehicle.
Market timing is tricky to do consistently over the long term. By trying to time the markets, you risk missing out on returns.
Expect market dips. How you react to these dips will significantly impact your long-term investment success. Even though the general trend of the stock markets is up, they do not go straight up.
Focus on the long-term financial plan. If you invest money to support your lifestyle over the long term, short-term market volatility should not be a concern.
Diversification is essential. Diversification by asset class, country weighting, and investment style will help minimize the volatility.
Like everyone, you want to make intelligent decisions about your finances for you and those you care about, both in the current economic environment and in the future. You want to make sure you are dealing effectively with your finances to address today’s challenges and take advantage of opportunities.
That’s why I’d like to offer a second opinion of your financial situation to ensure that you’re on track to achieving your financial goals. I would be more than happy to discuss whether that makes sense for you. I don’t take clients unless I can add substantial value to their financial lives, so if you and your financial advisor are already doing a great job, certainly I would recommend that you continue that path.
In the wealth management hierarchy, I see several different advisory roles. The first is the single-focused investment advisor, who will help with your portfolio. The goal is limited to growing your portfolio, and you will see results in a single area: your investment portfolio. Then you have the financial advisors who manage your money and reactively deal with other wealth planning components you ask them to address. The results end up being driven by you. I focus on wealth management, proactively helping you make intelligent decisions around advanced planning items (see below) and I make sure that we are on track in achieving all that is important to you.
Advanced planning focuses on concerns beyond your investment portfolio:
- We focus on tax mitigation, minimizing the impact of taxes on your investment returns while ensuring the cash flow you need (not only for your investment portfolio but for all your assets, including real estate and business interests).
- We facilitate the most tax-efficient way to pass assets to loved ones in ways that meet your wishes with minimal difficulty and cost.
- We review risk mitigation and legal structures to protect against lawsuits and transfer risk to insurance companies.
- We can also help you maximize and magnify the charitable gifts that you may decide to make.
Reach out if you would like to schedule a time to begin your second opinion review. There is no cost nor obligation for this first meeting. In the meantime, please email or call if you have any questions.
May 2023 bring you good health, happiness, and success!
Jennifer Rideout PFP®
Assante Capital Management Ltd.
Jennifer Rideout is a Wealth Advisor with Assante Capital Management Ltd. The opinions expressed are those of the author and not necessarily those of Assante Capital Management Ltd. Please contact her at 902-423-1200 or visit https://advisor.assante.com/sustainable-wealth-family-office/ to discuss your particular circumstances prior to acting on the information above. Assante Capital Management Ltd. is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada. Insurance products and services are provided through Assante Estate and Insurance Services Inc.
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