You are aged 30 to 45 and you are concerned about the evolution of your assets. Interest rates have started a downward cycle and stock markets have already risen significantly. Corporate profits continue to be good, but there is talk of an economic slowdown. Another element, the unpredictable Donald Trump will be back in the Oval Office. Overview with two experts.
Published at 9:00 a.m.
Jean Gagnon
Special collaboration
What doesn’t change
Regardless of age and changing situations, it is important to avoid complacency and rigorously respect your investor profile, explains Guy Côté, portfolio manager at National Bank Financial, from the outset. Furthermore, for the 30-45 age group, many people do not have a sufficiently “aggressive” profile, notes Philippe Hynes, president and CEO of Tonus Capital. If they have a good income and feel able to cope with a year of negative returns, they can seek higher returns which will encourage faster wealth growth, he says.
La diversification
Financial advisors generally don’t recommend that younger investors hold a lot of bonds in their portfolios. Given their time horizon, we suggest they favor growth stocks instead. When these stocks experience more difficult times, they will have plenty of time to recover, it is explained. But for the less adventurous, we can afford to hold a little more bonds currently, while rates are higher than in recent years, underlines Guy Côté. Especially since the bond market could provide good returns if the cycle of interest rate cuts that began last summer were to continue for a few years.
Trump volatility
We can predict without much risk of being mistaken that the 47e president will sometimes be unpredictable, notes Guy Côté. After all, his first term had been. Let us console ourselves by telling ourselves that big, unpredictable news often offers good opportunities because of the turmoil it causes in the markets. The category of investors aged 30 to 45 has a lot of time ahead of them, which allows them to maintain liquidity that they can use during these market declines, suggests Philippe Hynes. If it is not the unpredictability of the next American president, it is stock markets whose valuations are already relatively high which should provide several purchasing opportunities at better prices, he believes.
Fashions change
In recent years, financial flows have been directed towards the stock markets, especially in large cap stocks. Profit increases justified this strategy. And the movement accelerated when the craze for artificial intelligence caused several techno titles to explode. It was the investment that everyone supported, recalls Philippe Hynes. Although the S&P 500 should continue to be a choice for investors, it must be recognized that the concentration in this niche is now very strong. The idea is certainly not to leave this niche, but rather to look for promising securities that are not correlated with the S&P 500. The small and medium-sized enterprise sector has been neglected for several years and now offers good opportunities for diversification. in the long term, especially if fashion starts to change somewhat, according to him.
A Canadian dollar under pressure
The loonie has been under pressure for more than three years now. It has lost almost 6.5% against the US dollar since 1is January 2024. With the arrival of a very protectionist administration in the White House, pressure on the Canadian dollar should continue, confirms Guy Côté. Maintaining a good weighting of your investments in American currencies remains a good strategy, according to him.
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