How to grow your money in 2023 amid economic uncertainty

Canadian investors who have weathered a tumultuous 2022 face additional uncertainty in the year ahead amid heightened recession risk, higher interest rates, persistent inflation, a nervous stock market and a plummeting real estate market.

Investment pros and personal finance experts say the easiest way to make your money grow this year is to keep it simple.

It’s a good time to invest in the stock market now that prices have come down a lot, especially for people who have time on their hands, said Michelle Hung, investment expert and author of “The Sassy Investor.”

“Investing in some broad index funds like the S&P 500 Index, S&P/TSX Composite Index, and high-quality dividend funds is good for long-term money growth,” she said.

“There is good value there with companies that pay regular dividends and have modest growth potential and are less volatile than, say, technology companies. Canadian bank stocks fall into this category. They are always good to have in your wallet.

Hung also suggests including some safer investment options like guaranteed investment certificates (GICs). The two main characteristics of each GIC are the term and the interest rate.

“Some GICs pay more than five percent a year,” she said.

Hung added that with higher interest rates, fixed income products, such as bonds, are now a better investment option than at any time in the past decade.

As for the direction the stock markets are taking, Carol Schleif, chief investment officer at BMO Family Office, expects them to go from jitters to forks as investors settle into the new normal of higher interest rates. A range-bound market is when the price of financial assets like stocks or commodities stays within a relatively narrow range for an extended period of time.

“There are ways to balance the risks of investing in stocks. Be diversified by market capitalization, location and industry. Watch your costs and turnover. Take a long-term attitude and use cost averaging and rebalancing to your advantage,” she said.

Being in cash right now isn’t a bad idea, Schleif added.

“Cash is no longer garbage. Many advisors incorporate cash into asset allocation recommendations, when it was never considered a separate asset class. Investors may be paid to be patient,” she said.

Cash, or liquid funds, in an investment portfolio gives you leeway in times of financial uncertainty.

When thinking of the stock market as a vehicle for building wealth, Diana Orlic, portfolio manager and wealth advisor at Richardson Wealth, said it’s important to consider what stage of life you’re in.

“If you’re young, you actually want terrible markets, because you’re the one buying and you want to buy low,” she said.

“If you’re well established and have a good net worth, I think now is a great time to review your portfolio. If you have gains, take them – take your winners. If there are things that you are not comfortable with, now is the time to make a point.

Orlic said she prefers Canadian markets for commodities, materials and utilities stocks and U.S. markets for financials and health care at the moment.

Tech stocks have been battered in 2022, and while Orlic doesn’t expect them to be the leaders in the next stage of the market, it isn’t negative on the sector.

“I think there is still room for growth there. But will (tech) perform like previous years? I think that remains to be seen. »

For people looking for less conventional investment opportunities, The Sassy Investor’s Hung said the crypto market is still worth looking into as popular cryptocurrencies like bitcoin and ethereum try to get back on its feet after a difficult 2022.

“I have my eye on cryptocurrency now that it’s out of fashion. It’s not for everyone, but for those who can handle higher risk, it’s class d ‘assets to watch,’” she said.

Real estate is a good investment as long as you don’t put all or most of your eggs in the basket, said Richardson Wealth’s Orlic.

“If all of your assets are in real estate, the problem could be if some of the investment properties aren’t doing well or people aren’t paying. Do you have the cash to sustain it through tough times? Do you have the cash to sustain it if interest rates rise and mortgage costs rise? »

BMO’s Ms Schleif says timber, mineral rights, farmland, wine and art are alternative investments to consider, although getting good advice is crucial in selecting the right alternative investments and understanding their tax implications, she explained.

When researching investment opportunities, financial advisor and financial coach Parween Mander urges people not to be impulsive amid all the noise that has really raged during the COVID-19 pandemic era.

“I think we really need to be aware of the role of social media and personal finance advice in encouraging people to take advantage of today’s housing and stock markets and invest because things are cheaper,” she said. .

“Advice like buying real estate to move to Airbnb, crypto and stock picking is very dangerous advice that some people may think is good for them because it’s a ‘good time to invest “.”

It’s especially important in times of uncertainty to be smart with your money, Mander said, and prioritize debt resilience and ultimately make sure your financial foundation is secure before you go. seek to develop it.


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