On September 1, Statistics Canada released a report confirming that Canada’s economy contracted for two consecutive quarters, meaning that the Canadian economy is now officially in recession. Combined with economic problems in China, Russia, and the European Union, it is no wonder that Canadian investors are so concerned. Something that isn’t helped by the fact that the federal leadership is currently engaged in a closely-contested campaign, meaning that there is no clear indication on how the federal government will act to salvage the situation.
What Should You Do?
As the old say goes, you should hope for the best but plan for the worst. Simply put, if you have investments, you should speak with your financial advisor about them to make sure that you can survive the storm if the situation becomes worse.
Be sure to ask these 3 questions when doing so:
Is my portfolio protected?
There are a number of steps that can be taken to protect a portfolio from recessions. For example, counter-cyclical assets actually rise in value during recessions, meaning that their inclusion can balance out the fall in value of the rest of the portfolio. Similarly, a properly diversified portfolio protects against disasters because no storm can swamp all boats. You need to know how your portfolio is protected before you can get started on your recession-proofing.
How will my portfolio perform in a recession?
Once you know the current state of your portfolio, you need to ask your financial advisor about how it will perform under a range of possible futures as well as the chances of those futures happening. This will tell you whether you should make changes to your portfolio or leave it be, which is important because such changes can be expensive and risky in their own right.
How can I recession-proof my portfolio?
Finally, if you have decided to recession-proof your portfolio, you should mine your financial advisor’s expertise and experience for all the best ways to do so.
Of course, these are not the sole issues that should be brought up. Your financial advisor exists to provide you with all of the information that you need to make the right choice for your financial well-being. As a result, you should not hesitate to avail yourself of their financial expertise and experience until you have a complete understanding of the situation.