THE IMPORTANCE OF BEING PATIENT
For many of us, summer is a quieter time of year. The weather is warmer, vacation is calling, and when we are at work, workloads tend to be lighter.
That is not necessarily the case here at Marche Wealth Management, because we are always, always vigilant in our observation of market and economic conditions, and ready at all times to act in alignment with our long-time strategy.
But right now, there is calm in the markets that seems parallel with the summer mood. Low volatility, which we noted in last month’s Marche Monthly, continues – and in fact is near multi-year lows.
As always, we remain patient as investors. As volatility has been so frequent over the past few years, we remained patient in not reacting emotionally to upturns and downturns. Now that there is relative calm, we stay patient in not feeling the need to buy or sell something for its own sake. In fact, as regular readers will know, we make friends with volatility, because it can give us the opportunity to buy good companies on sale (see the February 2022 issue of Marche Monthly, “Here’s why it’s a good thing,” for a refresher). In this period of low volatility, we will continue to watch closely and, if and when we see opportunities to buy high-quality, underpriced assets that meet our stringent criteria, we will act.
HOT TOPICS
You might think that after three years of talking about interest rates and inflation, people would not be so keen to keep the conversation going. But I continue to find these topics are of great interest to our clients in my ongoing stream of calls with them.
As the US Federal Reserve and Bank of Canada both conveyed in June, inflation remains an issue, and we are not quite done with the effort to dampen it via interest rate hikes. While the Fed decided to keep interest rates on hold for the first time since early 2022 (previously, it had hiked rates at ten consecutive meetings), Chairman Jerome Powell indicated the pause was aimed at slowing the speed at which interest rates have been rising over the past year, rather than officially marking an end to their rate tightening campaign.
Meanwhile, the Bank of Canada, which earlier this year was one of the first central banks to pause interest rate hikes, resumed its rate increases in early June. The BOC suggested they have concerns that inflation could get stuck materially above their target of 2%, which leaves the door open to more interest rate increases in the months to come.
It is interesting to note that on the one hand, we can interpret persistent inflation as a positive sign that consumers and businesses have adapted quite well to higher interest rates. On the other hand, consumer and business resilience may mean that inflation is going to be with us longer than we would like – so we expect central banks to continue working to get it under control.
THE JOB YOU (OR YOUR LOVED ONE) MAY NOT WANT
Inflation and interest rates aren’t the only topics that became hot during the pandemic. So did wills, estates, and one issue in particular: whom to name as an executor.
For many people, being an executor will be one of the most trying experiences of their lives. This is because of the emotional weight that often comes with the job – since the executor is usually a surviving family member or friend dealing with their grief – and also because it can be very complex work that takes years to complete.
This is why more and more of our clients are deciding to relieve their loved ones of the burden – by naming a professional executor.
In a special collaboration with RBC, David Chilton – The Wealthy Barber – has written many blogs and posted many short videos in support of appointing a professional executor (otherwise known as a corporate executor). Have a look at this recent video, in which he makes his case. You can find his other posts on our blog, here.
A related option is to name a friend or relative as a co-executor to a corporate executor, a choice that some of our clients have exercised. This keeps in the loop someone with an emotional attachment to you, without giving them the full weight of the main job.
Of course, if you want to discuss this matter further, please do not hesitate to contact us. As you can see from our list of team members at the end of this post, we have very deep expertise in will and estate planning, with Karen Snowdon-Steacy (TEP, Senior Trust Advisor), Alleen Sakarian (LL.B., TEP, Will and Estate Specialist), and Andrew Sipes, (CLU, CFP, Will and Estate Planning Specialist) standing by.
LIVE AND LEARN
The last few years of fluctuations in the market and in inflation and interest rates have given many Canadians a real-world education on these issues. Which is a good thing, because financial and economic literacy rates remain low. This is something of special concern to us, because we believe it is important for our clients to have at least a basic level of literacy, and also because we work with so many multi-generational families, meaning that we have younger clients – and the earlier that people become literate, the more benefit they can accrue during their lives.
I am mentioning this issue this month because the Bank of Canada has just released results of a survey which reports low levels of economic literacy. Granted, for some reason the survey they cite was conducted only in France, Italy and the Netherlands, but I can assure you from years of experience that low literacy levels most definitely exist right here in Canada.
The researchers wanted to know: What do people know about macroeconomic policies and trade-offs in public finance in general? Their survey contained five questions regarding inflation, deficits and central banking, with this outcome: “Respondents only correctly answered an average of two questions out of five, and fewer than 5% obtained the maximum score. This, despite respondents devoting considerable effort to these questions.”
Fortunately, here at Marche Wealth Management we have some fantastic financial and economic literacy resources. In the October 2022 edition of this blog, we introduced the remarkable Noah Booth, a teenager who has written a remarkable book for teenagers and kids about financial literacy. It’s called A Rich Future: Essential Financial Concepts for Youth.
We also presented a 30-minute conversation with Noah – and you can watch the recording online. It’s the perfect video for you to watch with your younger children, grandchildren, nieces and nephews. Just click here for the video, to hear about Noah’s passion for personal finance, his motivations to write a financial literacy book that would help other kids and teenagers, and key concepts every young person should know to help build a successful financial future.
We also have these great resources:
-The RBC Wealth Management Financial Literacy Program, including a guidebook with practical tips and ideas for helping kids, teens and young adults build money smarts and develop sound financial management skills.
-Teaching Your Kids About Financial Literacy: From earning and saving to budgeting and investing, here are some age-specific financial literacy tips for kids, teens and young adults.
Embedded in our brand foundation is the fundamental belief that wealth management doesn’t need to be complicated. Instead, it needs to be simple. If you or anyone you know would like support in learning more about financial and economic issues, please: do not hesitate to contact me.
Here’s to a great summer!
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We don’t speak jargon. We’re all about uncomplicating your life, so we speak plain English. If there is someone you care about – someone who would appreciate this simple and straightforward approach – please feel free to share this message with them or put us in touch.
Want to discuss any aspect of this month’s blog, or any other issue on your mind? Have a story idea? I am always happy to receive your call or email.
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