Many Canadians are understandably concerned about high inflation and the rising cost of living, especially for food and housing. According to the 2023 TD “Beyond Banking” survey, most respondents say they’re still able to pay the bills however, three quarters are worried that inflation and the rising cost of living are interfering with their ability to reach their savings and investment goals. More than half say they don’t have any extra money at the end of the month.
Jonathan Grant is an Associate Portfolio Manager and Senior Investment Advisor with the Grant Wealth Management Group at TD Wealth Private Investment Advice in Orillia. He says, “With economic headwinds predicted to continue for a while longer, Canadians might want to consider seeking advise on how to make their savings and investment dollars go as far as possible.”
TD’s Wealth Strategy Process relies on a diverse group of analysts and portfolio managers from across TD Asset Management and TD Wealth who are experienced professionals in their field. These specialists have a deep understanding of the global economy and how financial markets function and behave. Jonathan says, “Using risk factors to manage exposure, we build and manage goals-based portfolios that blend the best of traditional and alternative asset classes.”
Fixed Income Investments Are Attractive
Jonathan Grant generally prefers fixed income funds over cash or equivalents. While current rates have made cash returns more attractive, total returns from fixed income are expected to outperform over the next 12 months. Jonathan says, “we maintain a maximum overweight to fixed income as yields across the asset class remain well above the lows of the past decade and offer attractive, risk-adjusted potential returns. We believe fixed income will also outperform equities over the next 12 months.”
Given that TD Wealth’s outlook for global equities remains cautious, he believes fixed income is a better bet. Jonathan says, “corporate earnings continue to face headwinds as nominal growth slows and further profit deterioration is expected. Over time, the expectation is that higher quality companies will over come those headwinds.”
Not in a recession yet
Recessions can be worrisome with higher inflation and higher interest rates. One of the most troubling elements of a recession is high unemployment. However, as Jonathan points out, “we’re seeing extremely low unemployment right now. We have an incredibly buoyant job market with more jobs available than people to fill them.”
While talk of a recession can be unnerving, it’s a very normal part of an economic cycle. Jonathan says, “rarely are we surprised by recessions. We have many indicators that can tell us that they’re coming. Portfolio Managers at TD Wealth Private Investment Advice give a lot of thought to how they manage clients’ portfolios through all economic cycles.”
Investors should stay put
Due to the market volatility over the past year, the natural inclination for some is to exit the market, sit on the sidelines, and wait for a good time to jump back in. Jonathan says, “I believe exiting our portfolios is the wrong thing to do. We know that over time there are dips in the market, but we also know that some of the best market environments happen coming out of those dips. If you miss some of those best market days, it can have an impact on your savings and investment goals over the long term.”
Over time, markets rise as economies grow, but there are periods when markets fluctuate. Jonathan stresses, “even if there are dips, we always rise in the end because economies do grow over time. I encourage my clients to focus on their long-term goals and remain invested. We encourage people to stay the course, don’t panic, and to hold onto their investments over time.”
Paying your future self
This idea of putting a little bit away over time cab be incredibly powerful. With dollar cost averaging you buy in smaller amounts at regular intervals and getting the benefit of buying at the average price over time.
Jonathan says, “nobody can pick the timing of the markets. I believe the most powerful tools in an investing strategy are time and diversification, with a consistent focus on your long-term goals.”
Jonathan Grant would be happy to offer his professional advice on how you can meet your investment goals in a volatile market.
Article excerpted from “A Game Plan for Financial Adversity” TD Moneytalk, February 14, 2023
The information contained herein has been provided by TD Wealth and is for information purposes only. The information has been drawn from sources believed to be reliable. The information does not provide financial, legal, tax, or investment advice. Particular investment, tax, or trading strategies should be evaluated relative to each individual’s objectives and risk tolerance.
The views expressed are those of Jonathan Grant, Associate Portfolio Manager and Senior Investment Advisor with Grant Wealth Management Group as of April 14, 2023, and are subject to change based on market and other conditions. Grant Wealth Management Group is part of TD Wealth Private Investment Advice, a division of TD Waterhouse Canada Inc. which is a subsidiary of the Toronto-Dominion Bank.