“It was the best of times, it was the worst of times.” If you’re a fan of Charles Dickens, this line might ring a bell. It was taken from “A Tale of Two Cities” which was published in 1859. Although it doesn’t compare to the current marketplace; it does focus on the French Revolution which was a time of global decline of monarchy under the dictatorship of Napoleon. I won’t dive any deeper into the historical upheaval of France, which is when this book was based.
It was the line that drew my attention based on the past 60 days that we’ve experienced in the markets. In December 2018, the S&P 500 was down 9% and the Dow was down 8.7%, which was the worst December since 1931 (Great Depression). In my opinion, it’s the worst December ever as it’s hard to compare our world to the Great Depression. On the flip side, in January 2019, the S&P 500 was up 7.9% and the Dow was up 7.2%, which was the best January since 1987. In turn, I am calling this the best January ever as the US was coming out of a recession in the 80’s which lead to “Black Monday” in October 1987. It’s merely the time-frame that I am focusing on as a lot has happened in a matter of 60 days, compared to any other 60 day time period.
When you go from the worst December to the best January to one of the best RRSP seasons ever, that, in turn, defines market volatility. Now that RRSP season is behind us, I thought that I would share some of the returns that we’ve experienced in the past two months. Here are year-to-date returns for three of the main stock exchanges that we follow on a day to day basis:
When you put these together, you can build a rolling average return utilizing what’s called the S&P/TSX Composite Index, and this return was 9.95%. Considering we came off a fairly rough December, we’ve officially recouped some, or most, of our losses from 2018. I expect that the pressure of volatility is on the rise as we continue down the path of 2019. It is important to remember that volatility is not something to shy away from; there are benefits to staying the course and managing through the ups and downs.
Connect Wealth is an independent financial planning firm that offers holistic advice to clients based on their current goals and future aspirations. We use well-established workflows and cutting edge technology to maximize financial efficiencies while simplifying the process for clients. Learn how you can maximize your financial opportunities at connectwealthp.wpengine.com
How To Best Use This Investment Account
What is a Tax-Free Savings Account (TFSA) and how can you benefit from it?
Since it was launched back in 2009, financial advisors and institutions have added a new investment acronym, TFSA. While there has been lots of discussion and advertising about TFSAs, it still seems that there is confusion about how to best use this tool. Read more
What Are Your Options?
What is the best investment plan to use to save for retirement? It used to be fairly simple; the answer was maximizing your RRSP. Do you know what is the best strategy for your situation? Do you know what your options are?
Here is a basic overview:
1. Save – The first rule of thumb to be concerned about is that you are saving money for your future. Too many Canadians are spending all of what they earn and not putting away any money for their future. A good place to start is to aim at putting away 10% of what you make.
2. Tax Efficient – Ever since the launch of the TFSA, there has been a debate by financial professionals over which investment plan is more tax efficient to use, the RRSP or TFSA? My opinion is that it depends on your situation both now and in the future and should be looked at on a case-by-case basis to see what fits best. I would be cautious if a financial advisor is always only promoting one plan type over the other, both have their benefits. (For more info on TFSAs, see my article from Sept 2013 – http://jaybrecknell.ca/demystifying-tfsa/)
3. Business Owner – If you are a business owner the question can get even more complex as you have more options. Should you use your RRSP, TFSA or instead save your retirement funds in a holding company? Since corporate tax rates are at an all time low in Canada more business owners are saving corporately versus in a RRSP or TFSA. There can be many benefits to saving corporately as it can provide flexibility to the business owner. As this can be complex it needs to be put together by a professional that understands your corporate structure and the tax and legal rules that are involved.
As with any financial strategy we would recommend ensuring that you have your personal situation reviewed by a professional to make sure that is done in the best way possible. If you have any questions or would like your plan reviewed feel free to contact us.
Did Your Pension Move When You Did?
Do you have a UK (United Kingdom) pension? There are a good number of British expatriates who are now Canadian residents that have pensions back in the UK. Have you forgotten about that plan from an old employer? Do you know your options?
When I create a retirement plan for a client I review what savings and pensions they may have. Quite often, past pension plans can be forgotten or misplaced, so this exploratory part of the process is critical so that nothing is missed. Read more
Singer Olfert Financial group
Five key takeaways from the federal budget