In this newsletter's economic update, we discuss how while it seems that not much has changed over the past year (high inflation, rising interest rates, and tempered expectations for economic growth), things may be different beneath the surface.
We are also highlighting a recent special article from Leanne Kaufman (President and CEO of RBC Royal Trust) on the importance of having a Will. Elinesky Schuett Private Wealth is also proud to highlight some of our upcoming community events and partnerships, including the Inspirational Women luncheon hosted by the Guelph Chamber of Commerce, and the Milton Sports Celebrity Dinner hosted by the Milton Chamber of Commerce.
Economic Update
Global markets have benefited from a combination of subtle changes that have taken place in recent months. It’s also a reminder of an important, but often overlooked factor in investing: time.
2023 so far – different under the surface
At first glance, it may seem that not much has changed over the past year: inflation is still high, interest rates are still rising, and expectations remain for future economic growth to slow. That was exactly the case nearly a year ago. Beneath the surface however, things are different.
The pace of inflation is slowing and its trajectory over the next year may take it closer to the more normal levels we were accustomed to years ago than the elevated levels we saw last year. Meanwhile, interest rates are rising, as they were in 2022. But, unlike last year, the scale of the rate hikes is diminishing, and policy makers are increasingly talking about “disinflation” rather than just “inflation”.
Lastly, while expectations for slowing growth and an outright recession remain, the global economy to this point has been arguably resilient. In fact, some estimates for economic growth have moved higher of late as a result. These shifts (while seemingly marginal) have been key drivers of the greater stability in equity and bond markets in recent months.
Time, focusing on the long-term, and investment strategy
These developments are a reminder that things can change over time, for better or worse. There are two more noteworthy takeaways that investors should keep in mind when it comes to the issue of time.
First, it’s important to avoid focusing too much on the short-term and risk letting current circumstances dictate emotions and decision making because things can inevitably change. Most broad bear markets in history have been followed by a bull market, and vice versa. Some of these transitions can take time to unfold, such as with the global financial crisis in 2008/2009. Others can occur more swiftly, such as in the wake of the pandemic.
Secondly, investing can be particularly rewarding if an investor has time on their side. This is primarily because the investing experience over the long-run, particularly in equities, is dictated more by the earnings growth and dividends generated from the underlying businesses rather than the happenings that unfold from one year to the next. The longer-term pace of earnings growth has historically averaged in the mid to upper single digits for the broad equity market as a whole. Add to that the phenomenon of compounding which results in non-linear, or exponential, growth, and it’s no wonder that equities are relied upon in portfolios when growth over time is required. The bottom-line: avoid getting caught thinking too short-term, and for those with time on their side, focus instead on the power of compounding returns over the long run.
We remain confident in our approach
It is possible that the trajectory of inflation, interest rates, and growth shift yet again at some point this year, forcing investors to reevaluate expectations about the short-term. However, while we are constantly and proactively monitoring these factors, we remain confident in our portfolio approach in alignment with our clients' financial plans - which for many, remain focused predominantly on the long-term.
Why you must have a Will - no matter the size of your estate
In this special RBC Wealth Management Insights article, Leanne Kaufman (President and CEO of RBC Royal Trust) explains the importance of having a Will as part of your estate planning.
Learn more about the statistics around those who have a Will and more insights in the article below - and please reach out to your advisor if you have questions.
Inspirational Women luncheon
Elinesky Schuett Private Wealth is proud to be the presenting sponsor of the upcoming Inspirational Women seminar at Cutten Fields on Thursday February 16th.
Our own Jennifer Goody-Brown will be interviewing Kristy Miller, CEO & Founder of The Scented Market, where attendees will hear about Kristy's Dragon's Den experience and other business success stories.
Tickets are available through the link below. Hope to see you there!
Milton Sports Celebrity Dinner
February 22nd is the Milton Sports Celebrity Dinner, organized by the Milton Chamber of Commerce. Elinesky Schuett Private Wealth is proud to be the presenting sponsor for the event, which is in support of the Scholarship Program - funding local students in their post-secondary education.
Celebrity guests this year include RBC Olympian and Paralympic Sledge Hockey player James Dunn, Sportscasters Tessa Bonhomme and Ken Reid, and NHL all-stars Al Iafrate and Jeremy Roenick.
We're looking forward to this great event in Milton and supporting the Scholarship Program.
As always, we are available to connect with you personally. Please don’t hesitate to contact us at 519-822-2024 or elineskyschuett@rbc.com.