At the start of 2019, 86% of CFOs were preparing for a recession by 2020; however, due to many factors, like strong retail leasing demand by multinational corporations, the marijuana business in Canada and ongoing trade talks between Canada, U.S. and Mexico regarding the signed USMCA (US-Mexico-Canada Agreement) has many feeling more confident.
Furthermore, Canada retail confidence is positive with year-to-date retail sales slightly up; however, globally things are cooling off partly due to many new trade agreements, trade deficits and from trade wars all happening simultaneously. Accordingly, here are six simple strategies for protecting your investment portfolio.
1. Put Your Money in Hard Assets
If there is one big lesson from the last global financial crisis it is that even the biggest and oldest companies can fail. Taxpayers may not be so forgiving and generous with bailouts this time around. When companies go bust, they can evaporate all the capital with them.
Look for those with plenty of hard assets. Or better, invest right into tangible assets like real estate yourself.
2. Avoid Relying on Luxury Spending
While the Jeff Bezos and Mark Zuckerberg’s of our time may make it out just fine, relying on luxury consumer spending can prove catastrophic. For example, Airbnb rentals.
More staple goods and discount stores should prove to once again even benefit from a boost in performance during these times.
3. Stay Diversified
Do stay diversified, but know what you are investing in. Blindly investing in 100 stocks or funds of funds, isn’t a good defensive investment strategy. All of those can go down together. Stay focused, but diversified enough that you aren’t relying on only one sector or asset class to preserve your wealth.
4. Invest for Income
No matter how great your salary, income will be even more important over the next few years. Try to up your portfolio allocation to income producing investments. Ideally those which can continue to throw off strong cash flow, regardless of temporary value fluctuations.
5. Value Add Investments
Look for assets that you can add value too, even in a recession. Most investments give you zero control over your own asset value. You are at the whim of emotional and manipulated markets. Then there are a few choices, like commercial real estate where you can add value and find ways to improve performance, regardless of the economy. That’s where you can grow your wealth, even in tighter times.
6. Choose a Great Asset Manager
Choose an asset manager with experience through several economic cycles. Only they really have the benefit of 20/20 hindsight which they can apply to making smart money moves now to enjoy great times ahead.
Check out ReDev Properties Group’s track record and investments today. See how we’ve thrived through the challenges and delivered great returns, while others have fallen victim to the change in markets.