If you have new money to invest, we consider the Canadian stock market a good place to put some of your money. We would take this opportunity to invest in Canadian equity funds or a broad-based ETF for the long term.
What to do about mutual funds
If you have new money to invest, we consider the Canadian stock market as a good place to put some of your money. Even with the fairly robust January gain, the market is still down about seven per cent over the last year. So we would take this opportunity to invest in Canadian equities for the long term.
If you prefer mutual-fund investing over investment in individual stocks or income trusts, your first purchases in the Canadian market should consist of conservative, diversified equity funds.
We particularly like Beutel Goodman Canadian Equity and Mawer Canadian Equity Funds in this regard, with their low fees. Another option is simply to buy the broad market itself through an exchange-traded fund such as iShares S&P/TSX 60 Index ETF.
More income-oriented investors will want to consider Dynamic Equity Income and Sentry Canadian Income Funds (the latter is listed in our Mutual Fund Planning Guide). Dynamic pays a distribution that yields 4.4 per cent, while Sentry pays one that yields 5.0 per cent.
What to do about common stocks
The Canadian stock market got off to a good start this year. But recently the market pulled back a bit, snapping a rally, partly on concern about global economic growth.
This concern was triggered by an International Monetary Fund report that said the organization is expecting weaker global growth in 2019 than it had projected last October.
Meanwhile, a report that the US had cancelled trade talks with China also contributed to the weakness. The report was subsequently denied.
Finally, disappointing company forecasts helped dampen market sentiment.
These events suggest you should not expect markets to experience the same smooth sailing ahead as they have enjoyed so far this year. Continue to invest cautiously, investing gradually and sticking to an asset-allocation plan that suits your circumstances and temperament.
This is an edited version of an article that was originally published for subscribers in the February 1, 2019, issue of Money Reporter. You can profit from the award-winning advice subscribers receive regularly in Money Reporter.
Money Reporter, MPL Communications Inc.
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