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Don’t Put All Your Investment Eggs In the Real Estate Basket

The Market Volatility Continues

The last hour of every trading day lately seems to provide investors with that roller coaster feeling. With each hour of every day, the market seems to take on a new identity. Depending on who said what or what the rumour du jour seems to be, the stock market can move triple digits either way! What do investors think and how is the volatility driving their investment decisions?

The longer this volatility lasts, the more investors seem to be shying away from investing. The stock market collapse during the recession of 2008 was much harsher than any of the more recent setbacks, however, investors are remembering their experiences from that year and recent volatility is making them reluctant to be investing their hard-earned dollars today. The fear for some individuals is that the North American markets could return to a recession once again, and that fear is driving investors' decisions.

Paying Down Mortgages Instead Of Investing

In conversations with investors, I find more and more of them paying down their mortgage or other debts instead of investing, even though it is costing them very little interest to carry their debts. By paying down the mortgage rather than investing in the stock market, individuals are saying they cannot make more in equities than the interest rate they are borrowing at, and believe real estate is a better choice.

In my opinion, investors' decisions are being clouded by their negative experiences with volatility in their investments. While the market at times can take on a negative tone, investing in equities (which includes real estate investment trusts) is still the best way to grow wealth over time.

Individuals should have balance in their portfolios - real estate as part of a diversified portfolio makes sense, but investors shouldn't be sinking all their disposal income into their mortgages, especially if their interest rate is very low.

The real estate market in Toronto and across Canada is coming off its highs and slowing down, while the country's stock market has continued to perform well and I believe still has room to grow. Why would an investor put all his or her money in real estate at this time?

It makes more sense to use the low interest rate environment to create a balanced portfolio and invest in large Canadian or U.S. equities paying good dividends to compliment investing in your home. If real estate prices should take a turn for the worst, investors will have their investments to fall back on, or vice versa.

When it comes to people's homes they seem to forget the phrase, never put all your eggs in one basket.

Qualities Of A Good Advisor

The Canadian and U.S. markets continue to be as volatile as they ever have been. Whether it is geopolitical tensions between Russia and Ukraine, terrorist activities around the world, or the price of oil and commodities falling sharply, the current volatility is here to stay!

As an investor, with market volatility as high as it is, whom can you turn to, to help you invest your hard earned money? It is in times like this, where investors really need the help of a professional Investment Advisor to guide them through the ups and downs of the market. The most important question is, how do you know that your current advisor is doing a good job and that you have the right person to advise you?

The Qualities

The number one quality of an exceptional investment advisor is that they consider the needs of their client ahead of their own. Do you trust your investment advisor? Your advisor should not be worried about how they will get paid but instead are concerned about how their client's goals and objectives will be met.

Some investors have it incorrect in that they look at the letters behind an advisors name or how big their business may be to figure out if they are good at what they do. Although education and size of business are important, they are not as important as finding the right person that will watch out for your best interests ahead of everything else.

You want to work with an advisor that follows and understands the markets. You don't want someone that passes off the responsibility of your account to someone else (i.e. mutual fund or third party manager). Your advisor should understand what is happening on Bay and Wall Streets and be able to explain why the market is behaving as it is.

It is paramount that you deal with an Investment Advisor that provides exceptional service. When you have a question and need clarification, your advisor should be there to provide answers in a timely manner! An advisor should be front and centre especially in volatile times like today, when investors need direction and a plan to weather these turbulent markets.

Good Time For a Second Opinion

If you think that your investments are not being looked after, you are probably right. You deserve better! There are many good quality advisors that provide excellent service, follow and understand the markets and put the needs of their clients first. As an investor, you should be searching for an advisor that has these qualities. 

Call me today if you would like a second opinion on your portfolio.

Wine Tasting Sips & Investment Tips 2015

WineTastingEvent-January2015

We had a great turnout for our annual wine tasting event on January 22, 2015 at Quince Bistro in Toronto.

Joining us were some of my current clients and some new people - all interested in learning about the potential pitfalls that could derail the market rally in 2015.  We had a good discussion about what investors can do to try to avoid potential headaches, and there were lots of questions – especially about the current drop in interest rates.

I look forward to helping all my current and prospective clients build solid investment strategies to grow their money.  Whether you're just starting to invest, in your prime earning years, or enjoying retirement - I can help you build a portfolio to reach your financial goals.  Call me today if you have any questions about the markets or would like a second opinion on your investments.

 

What's Next For The Canadian Dollar?

GlobalNews-January21-14

Yesterday on a Global News panel, we discussed what the Canadian dollar will do next as the price of oil continues to plunge.

The impact of the Bank of Canada's interest rate cut to .75% brought the dollar down to 81.1 cents US overnight, but equity markets liked the cut and the TSX increased to 14,662.42.  Depending on whether the banks end up lowering their prime rate - it may increase small business borrowing to drive the economy forward.  Should you be investing in the US markets right now?  And going forward - what can we expect in interest rates and mortgages?

Watch the Global News Panel interview here.

RRSP Dilemma: Pay Down Debt Or Squirrel Your Money Away For Retirement?

In an interview with Gary Marr from the Financial Post yesterday, we discussed the RRSP dilemma - debt or money for retirement?  For many people, paying down debt comes first.  But for some, with lines of credit at barely 2.5%, they don't realize they could take that money and even at a low-risk investment of 3% or 4%, basically double it. 

For many people who have mortages with rates below 3%, it's important to discuss other investing options.  With my clients, we always work on deciding how they can have enough money / cash flow to put away money for a long-term investments.

Read the full article in the Financial Post here.

Interview On MoneySense.ca

MoneySense

Recently, I was interviewed by MoneySense.ca after the volatility we've seen at the TSX.  They ran this article:  6 Mistakes Investors Make When Markets Tank

We discussed some of the mistakes people make including: trying to time the market, leaning too heavily on fixed income, flocking to gold as a safe haven, trusting talking heads on tv, chasing hot investments, and planning to make money quickly.

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