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What is the best investment strategy in a recession?

Jonathan Grant, Associate Portfolio Manager and Senior Investment Advisor with TD Wealth Private Investment Advisor offers guidance to investors in Orillia who may be worried about their porfolios

Is reading the latest economic headlines and listening to talk of a recession keeping you up at night?

Inflation is rising and the value of your portfolio may be falling, but Jonathan Grant, an Associate Portfolio Manager and Senior Investment Advisor with the Grant Wealth Management Group at TD Wealth Private Investment Advice in Orillia says investors should remain calm.

Should you take your money out of the market?

Investors who are in a stable financial position and have a suitably long-term horizon shouldn’t be deterred by a short-term downtown in the economy. Jonathan says, “you can often find good value by continuing to invest in equities, even when the market is in decline. The idea of investing in a downturn may not seem wise, however, investing during a recession can still pay off.”

An economic slowdown can offer opportunities to find value when stocks in reputable and reliable companies are available at a discounted price. Look for opportunities to buy a stake in a company with a solid track record.

Recessions are part of a natural economic cycle; it’s how the economy works.

Jonathan stresses that the most important thing to remember is, “after every recession to date there has been an economic expansion that has more than made up for the previous declines.” From 1962 until today, Canada has survived numerous recessions, which are two consecutive quarters of negative economic growth, and each time the economy has come back strong.

A case in point is the crash of October 1987; the market has since gained about 250%.

Investing is not a game

Jonathan Grant does not like to view investing as a game that can be played one day and watched from the sidelines the next. He says, “being invested consistently means you can benefit from the power of compound growth over decades.” Grant adds, “if your goal is saving for a comfortable retirement, you won’t want to miss any opportunities that could help you to build solid returns over time.”

Investing can be a lifelong undertaking, but not something that you should view from the sidelines if you are looking to meet your financial goals. If you’re out of the market when companies are growing, you inevitably miss out.

Don’t get spooked over negative news

Central banks around the world are wrestling with the effects of rising inflation. Watching the value of your portfolio dip amid a market setback can be scary. But remember, the market typically bottoms well before the economic storm-clouds part, often when headlines and investor sentiment are still rather negative.

Don’t panic and keep to your long-term plan

Whether you’re investing at the bottom of a recession, or at the height of a market boom, don’t get overly emotional about your investments. Checking your portfolio’s performance too frequently when values are declining can make your blood pressure rise.

Panic-driven decisions are seldom wise. Keep calm in the face of uncertainty and remember over the long-term portfolios tend to gain value. Jonathan says, “if you’re worried that a recession and negative economic news might harm your investments, don’t let your emotions get the better of you. Consider staying in the market because the good news is that recessions don’t last forever.”

In the meantime, if you are concerned about the markets, your investment portfolio, and/or the overall health of your finances, Jonathan encourages you to contact him and his team today. A second opinion is always complimentary.

Jonathan’s discovery process will help uncover your investment needs and create a portfolio that is suitable based on your investment needs and create a portfolio that is suitable based on your risk profile. He will create and present an Investment Policy Statement that will establish risk parameters to ensure that you are invested appropriately within your risk profile.

Lastly, Jonathan will present a Wealth Plan based on your specific investment goals and objectives along with an investment portfolio that owns high-quality and well-diversified investment securities.

For more information contact Jonathan Grant at (705) 330-0067 or e-mail: [email protected]


Source: Money Talk brought to you by TD
The views expressed are those of Jonathan Grant, Associate Portfolio Manager and Senior Investment Advisor, as of October 7, 2022, and are subject to change based on market and other conditions.