Planning the next move – whether in real estate or other investments

Canadian TSX and real estate prices have dropped substantially in value in the first three quarters of 2022. American indexes fell into bear-market territory earlier this year, some shedding more than 25 per cent of their value Meanwhile, inflation, currently at 7.0%, has been putting the squeeze on our budgets, and the Bank of Canada just recently raised interest rates a 5th time this year to further put pressure on households to curtain spending.  A recession is certain by end of 2022.

While news of market downturns whether effecting real estate or investments and recessions is disheartening, market volatility can present opportunities for prepared investors. Research tends to show that investors who’ve stuck to their investing plan through turbulent times have historically been rewarded.  Housing prices are falling and rents are increasing which could present a great opportunity to invest in real estate.

If not prepared to buy in a market downturn, “doing nothing” can also be an investor’s best course of action. Unexpected situations can lead us to make all sorts of snap decisions with the potential to jeopardize our investing plans.  Avoid the temptation to sell off losses in your portfolio and wait until volatility eases. 

There’s more to being an active direct investor than buying and selling. One should also be researching, monitoring, and finding new ideas.

Don Stoddart, President of Key Mortgage Partners stresses “Monitoring the market to find the best price in the area you have selected to live is ACTION.  A good mortgage broker partnered with a real estate professional should be able to alert you in a timely fashion when the market is about to turn upward from its current downward trend so that your purchase is ideally timed.”

If you’ve slowed down your pace of investing, too, or simply want some ideas for being an engaged investor during this bear market – and possibly an upcoming recession – here are some ways to stay on top of your investing plan.

Taking a closer look at your real estate and stock holdings

Take a long, hard look at your holdings and keep up to date on market conditions 

For rental property investors, average monthly rents are increasing at an unprecedented pace.

Housing prices are adjusting down from the 2020-2021 highs due to rapid interest rate hikes by the Bank of Canada which creates a buying opportunity for real estate investors.

Interest rates are still historically low and affordable for rental property investors.

Real estate is a long-term investment, and the long-term outlook is positive for investing now.

If holding mutual funds or individual stocks or ETFs, click through to each of the securities’ detailed quote pages and dive into the details. Though many of your holdings could be in the red, a closer look reveals that many of the companies appear to have solid plans for mitigating the uncertainty ahead. If the company has solid earnings this may be a buying opportunity. Remember if the stock, mutual fund, or ETF you bought is yielding dividends these are likely being automatically re-invested at a lower price which for a patient investor will yield rewards in the long-term.  In addition, the yield is rising on a dividend stock as the stock falls so look for opportunities to purchase more stock of blue-chip companies.

Educate yourself – improve your financial literacy

Every morning review all the economic news – follow many businesses, real estate and investing news sources, including those that challenge your viewpoints on investing.

Update you and your spouse wills.  Passing away without a will can result in unintended and disastrous delays and consequences for your spouse and heirs.  Remember your executor needs a valid will and death certificate to present to banks, Service Canada, and Service (Province), to move property into a spouse or other heirs’ possession, to change/update service providers and to cancel credit and debit cards.