3 of the biggest concerns today for Canadian investors include:
US Recession
While Canadians insist on their cultural differences from the United States, economic ties are more difficult to deny. The United States is by far Canada’s largest trading partner, and any fluctuation in the US economy has an effect on Canada. Investors whose assets are not directly tied to US interests may not be as directly affected, but with the increasingly interlocked nature of the global economy, seemingly distant economic events can have a major impact on the value of investments. Many corporations with a Canadian public face are closely tied to, and even owned by, American interests. Canadians have good reason to keep a close eye on the health of the American economy.
Exchange Rates
The issue of exchange rates is also closely related to the question of the American economy and its effect on Canada. If the loonie begins to sink in relation to the US dollar, imports become more expensive. However, if the loonie gets too strong, foreign buyers are deterred from Canadian goods, damaging the export market. Economists attempt to keep things on an even keel, allowing a slow and steady rate of growth that doesn’t alarm buyers and sellers on either side of the border. Particularly in volatile economic times, this balance is not always easy to maintain.
Inflation
Invested assets gain value over time, if they are increasing at a greater rate than inflation. If your investment is increasing by 2 percent per year, and the inflation rate is also at 2 percent per year, you’re simply breaking even. Inflation rates must be evaluated when seeking out potential investment opportunities.
When all the variables are taken into account and combined with the uncertainty of future trends, investment decisions can become complex enough to require the help of a professional.