With high inflation, high government debt, rising central bank rates and market volatility, 2022 has experienced an unprecedented combination of economic headwinds. In such a challenging environment, investors may want to consider effectively optimizing their portfolios to safeguard their wealth from this seemingly perfect storm. The Financial Post spoke with Sightline Wealth Management for insight.
According to Sightline Senior Investment Advisor Paul de Sousa, he believes the first step investors should contemplate taking is portfolio diversification. “But we’re not talking about the outdated idea of diversification — a 60/40 allocation between stocks and bonds that was devised a half-century ago,” he explains. “Investors need to look more deeply than that to achieve diversification, especially now.”
In today’s current environment, commodities that always have a demand regardless of inflation levels and alternative investments are two areas investors may want to consider when looking for more portfolio diversification. Some of these asset classes may even go one step further by also potentially providing an additional income stream.
In de Sousa’s opinion, “Mortgages and rental properties are two separate asset classes that can provide income. Carefully curated private debt can also provide positive returns, as can certain absolute return alternative investment funds, with the objective to achieve positive returns regardless of overall stock market performance.”
However, when there are so many economic headwinds at work and a potential recession looming, investors should consider working with an experienced investment advisor to overcome these challenges.
De Sousa believes, “a volatile period such as this, it can be difficult to keep on top of all the market forces at work. An experienced active portfolio manager can provide the necessary insight to optimize and balance a diversified portfolio,” he tells the publication.
Click here to read the entire Financial Post article.
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