Spring is the season of change, of renewal, of rebirth and in that spirit, Demo has update his advisory with a new title: Wealth Insights.
In this message from Demo’s desk, the focus is on doing what you can control. Stay calm, stay involved, stick with your plan, save more and stay the course.
Adding to the many challenges facing investors over recent years, we are now confronted by political changes in the world’s biggest economy. The increasingly protectionist stance held by the U.S. has been top of mind for many investors since Trump took office on January 20TH While Trump’s administration has indicated that Canada is not likely to be significantly affected by trade agreement changes, the path forward will, no doubt, have an impact on the Canadian economy and the global financial markets.
Political change south of the border may also bring opportunity. The revival of the Keystone XL pipeline project has brought optimism to the struggling resources sector. Expected U.S. deregulation and tax reform have been a source of investor confidence, with North American equity markets hitting record highs in the first quarter.
As investors watch anxiously to understand the effects of new U.S policies, we should remember that political decisions cannot be controlled. Equally important, financial markets have faced similar challenges over time, yet have remained relatively resilient and adapted accordingly. Instead, consideration should be given to the things that can be controlled. Here are some thoughts:
Participate. One of the greatest risks in investing is not participating. Recall the start of 2016, which began with a dramatic drop in the markets. Pessimists, not unreasonably, predicted a market meltdown. But since that time (and to the time of writing), the markets have performed well, even after the surprise outcomes of the Brexit and U.S election votes. Investors who avoided the markets would have missed out on these gains. Focusing on the short term is often counterproductive. Instead, participate with a longer-term view in mind.
Put trust in your plan. Market volatility is likely to be a common occurrence as Trump’s sometimes controversial policies continue to be introduced. Don’t listen to the noise. Your portfolio has been built keeping the elements of diversification and asset allocation in mind. These elements have been put in place to help weather short-term periods of volatility. At the same time, remember that volatility often brings opportunity.
Save more. While we will never be able to control the direction of the markets, we can control certain aspects of our finances to make an impact. Saving continues to be a cornerstone in generating future wealth. We can also take action to minimize the amount that is sent into government hands. It is tax season. Soon to follow, potential savings relating to your taxes.
Stay the course. Uncertainties will always be a part of the financial markets. Focus on your longer-term objectives and keep building your investment portfolio with them in mind.
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