investment planning

Randy worked for a small business. When the owner died suddenly, the business accounts were frozen and it took several weeks before they could be accessed to meet payroll. Randy had trouble meeting his financial obligations and had to find a new job.

Jane worked at a small company for many years. When the owner decided to retire, she offered to sell the business to Jane. As she didn't have the funds available, the business was sold to someone else. The new owner let Jane go shortly after taking over.

One of the most interesting facets of the financial services industry is how so many people tend to invest their money and plan their financial affairs by chasing trends and doing what is "popular".

For example, many investors like a "sure thing" and will often pile into an investment sector that is hot.

As human beings we often like to see evidence first that something is coming into reality before we join the trend, which is the opposite of how financial planning, regular planning and goal setting actually work to create results.

With the December market correction in both the US, Canada and elsewhere slowly receding into the past, it is a good time to review what exactly happened and how clients have reacted to the recent events.

To put December into context, it was the most severe correction late in the year since the early 1930's. The market valuations improved dramatically as a result of the correction with Price\Earnings (P\E) multiplies falling by 5 points, which is the most in about 25 years and has happened only about 5 times in history.

It is that time of year again when news broadcasters turn our thoughts to the how the world and the investment markets may run into trouble. There are special reports stating that markets are at record levels, interest rates are rising, Trump, Trump and more Trump, trade deals, China, the end of globalization, inflation is rising, inflation is a non-factor...well you get the drift.

When asked if they had any regrets, Baby Boomers wished they had started investing and saving at a much earlier age. Hindsight being 20/20, the Boomer generation can pass on some much needed advice and guidance to their kids and grandkids. It is normal for younger people to focus on earning money to accommodate their lifestyle but few have the foresight to pay themselves first. It is easy for younger generations to imagine their whole life ahead of them and have the attitude that of course I'll be financially set when I'm ready to retire'.

Bill Nye the Science Guy met with Prime Minister Justin Trudeau in Ottawa earlier this year to promote the use of alternative energy fuels in our economy. He is a strong advocate of moving away from carbon-based fuels. Yet, Nye admitted, in a Toronto radio interview some days later, that the economy will likely transition away from carbon-based fuels by 80% by 2040 and 100% by 2050. It will, in other words, take some time to effect this transition.

Our previous article looked at the increase in market volatility in 2018 in historical terms to put it in perspective. The other factor to consider is where are we in the market cycle and what this might mean for you personally in terms of your own long-term financial strategy.

Many market commentators suggest that we are past the half-way mark as far as the longevity of this equity market run since mid-2009. If history is any guide, there is very likely more time left before the next recession or bear market (defined as a 20% or more correction in the equity markets).

This year began with some market turbulence resulting in a correction in the S&P Index in late January of about 10%, and about 7% for the TSX during the same period. You would have thought the world was ending with all the hand-wringing and hysteria stirred up by media reports at the time.

More importantly, for a couple of years now, the media has been focusing on volatility as if it’s something important that the investing public needs to be concerned about, which is akin to inventing a whole new way to look at managing money.

The US has been Canada’s largest trading partner for decades, so our economy is closely tied to the fortunes of our southern neighbour. In addition, because the US economy is still currently the largest in the world, whenever an investor implements or revises a financial strategy, it is always important to consider how US Government policies affect the Canadian economy in positive and negative ways.

There are many different types of global economic risks that financial advisors take into account when preparing a financial action plan for their clients. This is where advice and judgment come into play when working with you as a client. One area that is gaining increasing prominence is the role of the United States and its dollar in international affairs.