Changing economic environment: what impact on my investment strategy?

Should inflation scare us? Should the predicted recession cause you to rethink your investment strategy? A changing economic context brings its share of questions and uncertainties. We'll try to shed some light on the subject from our perspective.

First, let's define the terms. 

Inflation vs. recession

Inflation is the rate of increase in the price of goods or services over a given period, often calculated in months or years. It is often referred to as the rising cost of living or the price of certain key items in our daily lives.

A recession occurs when there is a decline in economic activity for several consecutive months and this decline coincides with a decrease in the gross domestic product (GDP) of a country or province.

It is not uncommon for inflation to eventually lead to a recession. High prices lead people to reduce their consumption habits and investments.

Changing economy, changing strategy?

Which brings us to our question. In times of inflation or recession, should you review your investment strategy, and more importantly, what impact will your decision have?

There are several possible avenues. First, there is the famous status quo. In short, you don't change anything, you stay the course and you're comfortable doing so. Then there is the more opportunistic option: you invest a little more. The person who chooses this option seeks, for example, to take advantage of the drop in value of certain securities to make acquisitions that, just a few months ago, would have cost him more. Finally, there is the option of withdrawing from some or all of the investments, when the rules allow. In times of uncertainty, seeing the value of some investments melt by a few hundred dollars can fuel our fears. In this case, it's important to get advice on the feasibility of doing so and on the pros and cons that accompany such a decision.

You know what's best for you, but...

No scenario is wrong. What you need to understand is that the scenario you choose, based on the information you have and that we have when you make your decision, is the one that must best conform to your profile. 

The first thing to do when making a choice like this is to listen to your risk tolerance level. The second is to discuss it with your mutual fund representative, who will be able to give you more information on the subject.

You will always be the best person to know how far you are willing to go. But in any case, our team will be there to listen and advise you.

This article was prepared by Pierre Dauth, who is a mutual fund representative with Investia Financial Services Inc. This is not an official publication of Investia Financial Services Inc. The views (including any recommendations) expressed in this article are those of the author alone, and are not necessary those of Investia Financial Services Inc.