You may have noticed recent headlines focusing on trade tensions between Canada and the United States.
This news has created uncertainty for many Canadians, raising concerns about jobs, economic stability, and personal savings. As tariffs continue to make headlines, you may be wondering how this could impact your retirement plans and long-term investments.
Paul Punzo, Chief Investment Officer, IPC Private Wealth and Blair Setford, VP, Product Management, Investment Planning Counsel, share their views on tariffs and recent trade tensions in the following video and summary:
Understanding the Impact on Your Investments
While tariffs can present challenges for certain industries, it’s worth noting that sectors most affected—such as manufacturing—actually make up a small portion of the Canadian stock market. More broadly, trade uncertainty can contribute to market fluctuations, which in turn may temporarily slow the growth of investment accounts like your RRSP, TFSA, and pension.
During these periods of volatility, it will be important to remember that emotions can often influence investment decisions, leading to actions that may not align with your long-term financial goals. Trying to time the market in response to short-term geopolitical risks can result in costly mistakes to avoid, such as reducing exposure to certain asset classes at precisely the wrong moment - this is where professional portfolio management plays an important role. Your advisor is there is to assist you in making decisions that are aligned to your long-term strategy and to help ensure the best possible outcome.
The Importance of Diversification
Market movements often reflect current investor sentiment rather than economic fundamentals, and history shows that markets tend to look beyond temporary disruptions. The most effective ways to navigate today’s uncertainties is to maintain a well-diversified portfolio. This includes exposure to U.S. equities, which provide access to sectors that are underrepresented in Canada, such as Technology and Healthcare. These industries continue to experience strong growth and can continue to offer important investment opportunities over the long term.
Additionally, currency fluctuations can work in your favour. If the Canadian dollar weakens against the U.S. dollar, returns from U.S. investments can be amplified, helping to offset some of the effects of market volatility.
Staying the Course
The good news is that periods of market turbulence often present opportunities. Lower stock prices can allow long-term investors to purchase quality assets at attractive valuations. Professional investment managers actively seek out these opportunities to position portfolios for future growth.
The key to long-term financial success is patience. Staying invested and allowing your assets to compound over time will be critical to building and preserving wealth. While trade disputes and market fluctuations may create short-term noise, history has shown that a disciplined approach to investing remains the best strategy.
If you have any questions or concerns about how your portfolio is currently positioned, please speak with your advisor.