How to increase your money in 2023
Canadian investors who have weathered a tumultuous 2022 face further uncertainty next year amid rising recession risks, higher interest rates, persistent inflation, a mixed stock market turmoil and the real estate market plummeted.
Investment experts and personal finance experts say the easiest way to grow your money this year is to keep things simple.
Now is a good time to invest in the stock market as prices have dropped quite a bit, especially for those with time, says investment expert and book author, “The Sassy Investor” Michelle Hung. .
“Investing in some of the broadest market index funds like the S&P 500 index, the S&P/TSX composite, and high-quality dividend funds is good for long-term currency growth,” she said.
“There’s some good value out there with companies that pay steady dividends and have modest growth potential and are less volatile, such as technology companies. Canadian bank stocks fall into that category. They’re always good to have in your portfolio.”
Mr. Hung also suggested that some safer investment options should be included such as a guaranteed investment certificate (GIC). The two main characteristics of every GIC are the term and the interest rate.
“Some GICs are paying up to 5% annually,” she said.
Mr. 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.
When it comes to the direction of the stock market, Carol Schleif, chief investment officer at BMO Family Office, expects the market to move from jitters to range-bound as investors settle into high interest rates. than the new normal. A range-bound market is when the prices of financial assets such as stocks or commodities remain within a relatively tight range for an extended period of time.
“There are many ways to balance the risks of investing in stocks. Diversify by market capitalization, locality, and industry. Keep an eye on your expenses and revenue. Take a long-term attitude. and use dollar cost averaging and rebalancing to your advantage,” she said.
Schleif added: “Having cash right now is not a bad idea.
“Cash isn’t junk anymore. Many advisors are including cash holdings in their asset allocation recommendations – where it wasn’t previously considered an asset class in its own right. Investors Investors can be paid to be patient,” she said.
Cash, or liquid money, in a portfolio gives you flexibility 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, says it’s important to consider where you’re at any part of life.
“If you’re young, you really want the market to suck, because you’re a buyer and you want to buy low,” she said.
“If you’re established and have a good net worth, I think this is the perfect time to rethink your portfolio. If you’re profitable, grab them — embrace the winners. . If there’s something you’re not comfortable with, now is the time to adjust.”
Orlic said she prefers the Canadian market for commodities, materials and utilities stocks and the US healthcare and financial markets at the moment.
Tech stocks have plummeted in 2022, and while Orlic doesn’t expect them to be leaders in the next leg of the market, she’s not negative on the sector.
“I think there’s still room for growth there. But will (the technology) work like it did in previous years? I think that remains to be seen.”
For those looking for less conventional investment opportunities, Hung of The Sassy Investor said the crypto market is still worth looking into as popular cryptocurrencies like bitcoin and ethereum try to regain their footing. foothold after the challenging 2022.
“I’m keeping an eye on crypto right now because it’s falling out of favor. It’s not for everyone, but for those who can accept higher risks, it’s an asset class to need. keep an eye on it,” she said.
Real estate is a good investment as long as you don’t put all or most of your eggs in one basket, says Orlic of Richardson Wealth.
“If all your assets are real estate, trouble can arise if some of the investment properties don’t do well or people don’t pay. You have the cash flow to sustain it during the tough times. do you have the money? to maintain it if interest rates go up and mortgage costs go up?”
BMO’s Schleif points out that timber, mineral rights, farmland, wine and art are alternative investments worth considering, despite receiving good guidance on choosing alternative investments being consistent and understanding their tax implications is important, she explains.
When looking for investment opportunities, Parween Mander, financial advisor and financial coach, is urging people not to be impulsive amid all the noise that really flares up during the COVID-19 pandemic.
“I think we really need to be mindful of the role social media and personal financial advice are playing in encouraging people to take advantage of the current real estate and stock markets and invest for everyone. cheaper stuff,” 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 right for them because it is a ‘great time to invest’. private.”‘
It’s especially important in these uncertain times to use money wisely, while prioritizing debt resilience and, ultimately, making sure your financial foundation is secure, says Mander. before trying to build on it.
This report by The Canadian Press was first published on January 3, 2022.