Now is a great time to look at your income investments. Recent interest rate hikes in North America have significantly reduced the prices, making 2023 an interesting entry point. But this is not about market timing or making a quick profit, it’s about taking advantage of structural changes in interest rate policy designed to deal with inflation and to unwind emergency lending rates post pandemic. There are many investments that could fall under the income category, so for simplicity we will define them as investments made with the primary purpose of generating cash flow. Looking at the prevailing conditions in 2023 there are three categories everyone should re-evaluate – bonds, REITs and infrastructure.
Investors today are dealing with strong macro winds. It is not about the war in Ukraine, earthquakes or the divides in politics - those are all areas of concern to be addressed in other forums - it is about the persistent rise in interest rates. A wise and tenured investment manager was asked what his prediction was on rates and his response was that no one can really predict two things, inflation and interest rate direction. Recall the smart minds at the central banks calling “inflation transitory” not too long ago?
Investors today are dealing with strong macro winds. It is not about the war in Ukraine, earthquakes or the divides in politics - those are all areas of concern to be addressed in other forums - it is about the persistent rise in interest rates. A wise and tenured investment manager was asked what his prediction was on rates and his response was that no one can really predict two things, inflation and interest rate direction. Recall the smart minds at the central banks calling “inflation transitory” not too long ago?
Florida is often described, uncharitably, as God’s waiting room – a warm no man’s land where seniors go to wile away their remaining years. The view is that these folk, happily retired, do very little other than sit in a rocking chair and swing the occasional golf club. But conventional retirement, including this snowbird stereotype, is increasingly out of step with modern living.
So much of the investment industry is focused on the “how” - how to get enhanced returns, how to build a portfolio, how to save tax, or how to capture the “next big thing”. Very few companies emphasize the “Why” but given the increased commoditization of investment products and the pressure on many advisors to sell proprietary funds, it’s never been so important for individual investors to find their “Why”.
Intergenerational wealth, on our TV screens at least, conjures images of Succession’s Logan Roy dismissing one of his weasel kids with a sneer and expletive. In the real world, there is a monumental wealth shift happening, with US$30 trillion expected to be passed over to 90 million millennials in the next decade alone.
Canada’s benchmark interest rate hit an all-time high of 16% in 1991 – and here investors are in 2022, freaking out over projections it’ll touch 1% by June. But there’s a reason for the current unease. Despite rate increases being forecast the minute governments and central banks opened the floodgates on trillions of dollars of stimulus, things have now “got real”.
Between the pandemic, inflation, and geopolitical tensions, market uncertainty reigns right now. You might have heard some disturbing words, like shares “plunging”, prices “soaring”, and investment “volatility”. Many people, therefore, are asking themselves: should I take money out of the market and get back in when skies are clearer?
As Canadians locked their doors to avoid the freezing temperatures this winter, many settled back and watched the action unfold in China. But, at times, it was difficult to tell the bigger story. Was it which athletes made the podium, how many times Xi Jinping cozied up to Vladimir Putin, or was it the growing number of reports explaining the slowing Chinese economy?
It’s that time of year again. The Christmas tree has come down, you’ve dived into your new year’s resolutions, and … now it’s RRSP time.
