This text is part of the special Personal Finance section
Inflationary pressure, rising interest rates, possibility of recession: the current context seems gloomy for savers and individual investors. Experts give them some advice on how to better succeed in the game.
Before being able to invest, a person must first save, recalls Sylvain B. Tremblay, vice-president at Optimum Investment Management. “No one is required to do the impossible, but we can take the opportunity to review our budget planning, make a budget – if this has not been done – and prioritize our spending. » It is first of all the budgetary item of discretionary expenses which should be included: those which are superfluous and impulsive. “Online purchases, subscriptions to online platforms streaming, outings to restaurants, etc. » However, he warns against budgets that are too restrictive: “If it’s too radical, it won’t last. You have to dose it. »
Financial planner and portfolio manager at Onyx Group, IA Private Wealth Management, Simon Houle broadly highlights the importance of paying yourself first by systematically drawing an amount from the source and investing it. “You pay yourself for the future and force yourself to manage the remaining balance well. » The man who is also secretary-treasurer on the board of directors of ÉducÉpargne mentions that with good savings and investment discipline, everyone will give themselves the tools to “live a life that suits them”.
Portfolio manager at Claret Vincent Fournier echoes the fable of Jean de La Fontaine “ The grasshopper and the ant “. The saver who has put money aside is doing much better these days. “On the other hand, those who have delayed making a budget, saving and investing find it more difficult: it hurts twice as much today, because they have to both reduce their pace of life and save. » The past decade, marked by exceptionally low interest rates, has encouraged many to live beyond their means. Savings should be used for two purposes, according to him: to finance projects (retirement, or the purchase of a house for the youngest) and to provide a cushion in the event of unforeseen circumstances. “You want to be able to fall back on an emergency fund the day the bottleneck gets tighter. »
Investments: staying the course
“It’s extremely important not to change your asset allocation depending on the ups and downs of the economy. It is a mistake to try to synchronize with the fluctuations of the stock markets,” underlines Vincent Fournier. You must respect your investment policy, whatever your investor profile (prudent, balanced or growth). “People have cognitive biases that influence their investment decisions and lead them to believe they are better than they actually are. They are guided by their emotions. » Hence the importance of a tool like the investment policy, provided you respect it. “It’s when market sentiment is most negative that we tend to want to sell, when the opposite should happen. It’s counterintuitive, and even the pros fall for it. »
Simon Houle agrees. “If the investor is going there for the long term, he must respect his investor profile and his initial strategy. » He emphasizes that stock markets are a leading indicator of economic developments. “They are six to eight months ahead. It’s possible that we’ve already reached the bottom. » For long-term investors, he suggests continuing to invest at regular intervals. For the fixed income portion, the safest of a portfolio, one avenue to consider is that of bonds, which took a hit last year with rising rates and which trade at a discount. “They evolve in a manner opposite to interest rates, and these could decrease from 2025.” On the other hand, according to him, it is not recommended to be in the market if the investor has a horizon to short term. “With today’s rates, a simple 5% high interest savings account can do the trick. »
What some investors can do after significant stock market fluctuations is take the opportunity to rebalance their portfolio to reflect their initial weighting, notes Sylvain B. Tremblay. “We have, for example, reduced our overweighting in equities and increased our bond portion. » Vincent Fournier specifies that the ideal is to rebalance with new contributions, and he adds that it is crucial to maintain your investments at all times. “Research shows that your performance was significantly affected if you missed just ten of the best days in the stock market over the last 20 years. »
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