Perspective – Changes
July 23, 2020
Who would have thought that things could change so abruptly for every human being on the earth! To say that this pandemic is unprecedented is somewhat of an understatement!
The media keeps talking about the ‘new normal’ and we all wonder what that means…really. Will it be different for everyone? What about our investments and retirement plans? Will we need to adjust the variable estimates for return and inflation in our plan? Of course, as with any other time, there is no way for anyone…skilled and professional as they might be…to forecast or accurately project these things.
When the pandemic began, many economists suggested that it would be a ‘V’ shaped recession and it certainly started out that way on the down side. However, the ‘V’ is not looking symmetrical from this side! They also said at the time that the downturn in the market was not due to fundamentals as company balance sheets were generally solid. The downside was caused mostly by fear! True as that was, with the length of time it is taking for the economy to be opened up, the fundamentals are definitely being affected.
The other variable, the effect of which is difficult to project, is consumer perspective. In a recent news cast it was reported that a survey was conducted of Canadians with some interesting, but not surprising, results. It was reported that 45% of Canadians regret they did not save more! Having liquid savings for these unforeseen times and circumstances is certainly a smart move.
The survey also reported that 56% of Canadians realize that they are spending too many dollars on things they do not really need! Will that change in perspective affect the daily lives of families in the months and years ahead? There would be some impact on the economy if retail sales are reduced because consumers…56% of them…become more discretionary in their spending habits. The survey also indicated that many of the respondents are currently holding on to cash due to uncertainty with jobs, government support and future needs. That factor is having a meaningful impact on today’s lower interest rates.
What does all this mean for us? Be assured that money managers have been factoring in these and many other considerations. They are actively analyzing opportunities available to them as they choose the most appropriate investments for the funds under their management. Although it is always a good idea to review your investment plan in relation to your anticipated future financial needs, there may be few reasons to make drastic changes to your strategy. Your advisor will be able to analyze and suggest any adjustments needed to continue your forward movement while at the same time helping to manage volatility. Call them if you have concerns.
As Canada’s economy begins to move forward, economists seem somewhat surprised at the growth and momentum building within markets and consumer confidence. Let’s keep that going by doing our part to control the spread of this pandemic. We all know what to do! And let’s not be afraid of these changes to our perspectives on saving, spending and family life! These adjustments could very well build long term strength in our economy and your financial future!