Aren\u2019t Interest Rates Expected to Rise?<\/strong><\/p>\n While there has been talk of looming interest rate hikes by the Bank of Canada for 2022 as a result of more persistent inflation, we suggest that many headwinds are likely to keep rates from significantly increasing, including lower productivity growth, aging demographics and increasing income inequality. Monetary policy is likely to continue playing an important role. Let\u2019s not forget that governments are grappling with higher debt-to-GDP ratios as a result of significant pandemic stimulus and need to service this debt \u2014 with any increase in interest rates, the cost of carrying this debt also rises.<\/p>\n Finding Income, Beyond Fixed Income\u00a0<\/strong>So, where to for income investors? In some cases we\u2019ve had to readjust the longstanding assumptions we\u2019ve made about asset allocation \u2014 the traditional balance between equities and fixed income to achieve portfolio diversification. Diversification remains important, but we can take a deeper approach \u2014 considering risk factors such as value, growth, capitalization size and region, that help to manage volatility, when looking to deliver potentially higher returns. When we look to equities to support the generation of a reliable stream of income, the use of quality, dividend-paying equities has been a good strategy. In many cases, well-established, stable, dividend-paying businesses have continued to grow their dividends.<\/p>\n With many corporations posting strong earnings, various Canadian companies announced increasing dividend payouts in the latter part of 2021. Some analysts expect this to continue as dividend growth has lagged the earnings surge.1 Historically, dividends have consistently and significantly contributed to total returns (Chart A), helping to offset declines during market volatility. Dividend-paying stocks have also outperformed the index (Chart B). As an added benefit, for Canadian investors, dividends and capital gains are taxed at a lower rate than ordinary and interest income. We may also consider other investment vehicles as we look to generate income depending on individual circumstances, such as preferred shares, managed equity investments targeted to income generation or alternative strategies. As liquidity becomes a focus for many clients in retirement, these are just some of the many considerations. We continue to position portfolios to meet these changing needs while adapting for factors like interest rates, and others, in the ever-changing investing landscape.<\/p>\n The information contained herein has been provided for information purposes only. Graphs, charts and other numbers are used for illustrative purposes only and do not reflect future values or future performance of any investment. The information has been provided by J. Hirasawa & Associates and is drawn from sources believed to be reliable. How do we help our clients prepare for income in retirement? In today\u2019s low-rate environment, this continues to be a challenge.Thirty years ago, we could easily have expected to achieve annual\u00a0 income of seven percent on a laddered government bond\u00a0 portfolio. For $1 million of savings, $70,000 could support many\u00a0 retirees. Fast forward to today […]<\/p>\n","protected":false},"author":68,"featured_media":772,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_oasis_is_in_workflow":0,"_oasis_original":0,"_oasis_task_priority":"","_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"footnotes":""},"categories":[27],"tags":[154,37,155,39,14],"class_list":["post-656","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-articles","tag-equity-investments","tag-finance","tag-income-generation","tag-interest-rates","tag-investment"],"_links":{"self":[{"href":"https:\/\/advisor.wellington-altus.ca\/smokinbulls\/wp-json\/wp\/v2\/posts\/656","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/advisor.wellington-altus.ca\/smokinbulls\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/advisor.wellington-altus.ca\/smokinbulls\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/advisor.wellington-altus.ca\/smokinbulls\/wp-json\/wp\/v2\/users\/68"}],"replies":[{"embeddable":true,"href":"https:\/\/advisor.wellington-altus.ca\/smokinbulls\/wp-json\/wp\/v2\/comments?post=656"}],"version-history":[{"count":1,"href":"https:\/\/advisor.wellington-altus.ca\/smokinbulls\/wp-json\/wp\/v2\/posts\/656\/revisions"}],"predecessor-version":[{"id":657,"href":"https:\/\/advisor.wellington-altus.ca\/smokinbulls\/wp-json\/wp\/v2\/posts\/656\/revisions\/657"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/advisor.wellington-altus.ca\/smokinbulls\/wp-json\/wp\/v2\/media\/772"}],"wp:attachment":[{"href":"https:\/\/advisor.wellington-altus.ca\/smokinbulls\/wp-json\/wp\/v2\/media?parent=656"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/advisor.wellington-altus.ca\/smokinbulls\/wp-json\/wp\/v2\/categories?post=656"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/advisor.wellington-altus.ca\/smokinbulls\/wp-json\/wp\/v2\/tags?post=656"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}![\"\"](\"https:\/\/towerwealth.com\/wp-content\/uploads\/2021\/12\/Screen-Shot-2021-12-20-at-23.02.32.png\" "\\"Screen")
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\nThe information does not provide financial, legal, tax or investment advice. Particular investment, tax, or trading strategies should be evaluated relative to each individual\u2019s objectives and risk tolerance. This does not constitute a recommendation or solicitation to buy or sell securities of any kind. Market conditions may change which may impact the information contained in this document. Wellington-Altus Private Wealth Inc. (WAPW) and the authors do not guarantee the accuracy or completeness of the information contained herein, nor does WAPW, nor the authors, assume any liability for any loss that may result from the reliance by any person upon any such information or opinions. Before acting on any of the above, please contact me for individual financial advice based on your personal circumstances. WAPW is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada.
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