Well here we go again -another rate hike, making this the 5th in the past 18 months. The culprit? A strengthening Canadian economy riding the coat-tails of robust US economic growth. The 25bps (a quarter of 1%) increase would have happened sooner, but trade uncertainty over the NAFTA negations held it up. With this week’s announcement, the Bank of Canada is expected to also raise its outlook for the Canadian economy, meaning that further interest rate increase are all but certain.
So, what does this mean for your portfolio? Well, good question for starters, but in the short term it likely means that stocks will come under further pressure, while bonds -especially government bonds, are expected to deliver flat or even slightly negative results.
A better question is, what does that mean for your investor mindset? What do you think when you see your hard-earned dollars stagnate or even move lower in the short term? If the answer falls in the anxious or panic category, then please reach out to me for some guidance. I’ve been managing client money for over a quarter of century now, and have seen markets behave every way they’re going to in the future. Take comfort from that and know that historically markets have always moved higher over the longer term, and that there is no reason to think it will be any different in the future.
The wealth management companies we partner with and invest your hard-earned savings with, have been managing money even longer. They have well-established track records that have delivered solid results over time. And that’s the key word -time. Give your portfolio time. Real time, not 3-5 years but 10-20 years. Through 2 or more market cycles you’ll see it all, and do well if you stay invested for the long term.
As always, call me at anytime -I’m there for you.