How the Great Resignation is Impacting Investing

There is much to consider when looking at various investment vehicles. Markets are experiencing a lot of fluctuation, affecting individual stock ownership and many managed funds and account types. As Interest rates rise, companies owe more money, which cuts profits. Another trend to consider when looking at how investments are impacted globally is The Great Resignation.

What is The Great Resignation, and how is it impacting investments?

Many Canadians and Americans were laid off from their jobs in early 2020 when the pandemic began. These mass layoffs across multiple industries caused numerous professionals to consider career changes or start their own projects. 

Many professionals are expected to return to work as businesses open up again. However, many Boomer-aged workers, who were close to retirement, decided to retire early. And more professionals are simply looking for work that offers a better work-life balance. 

In the US, close to 24 million people quit their jobs between April and September 2021. In Canada, 35% of Canadians are considering leaving their jobs, according to Life Work’s Mental Health Index. This mass exodus of people led to worker shortages and forced many companies to allocate more money to hiring and retention. 

As companies struggle to find skilled employees and retain their team members, wage increases will temporarily drop profits. This impacts profit margins and the amount an investor can make. 

How to manage your investments during this time:

We can expect to see some volatility as the markets settle and companies adjust to new interest rates and bring on new team members. However, we’re starting to see a levelling off of the impacts of this period of high resignation. 

Keep these three things in mind as you work to manage your portfolio: 

• Remain flexible and consider rebalancing your portfolio.
• Ask for advice from someone with knowledge and experience. 
• Look for alternative investments that will be more protected from this volatility. 

There’s an opportunity for investors to make money, despite the market volatility. As cash shrinks in value due to high inflation rates, the money you borrow will be worth less in the future. If you can borrow at fixed interest rates, you can invest this money in inflation-responsive alternative investments, such as real estate. In this way, you can make money and owe less depending on the percentage you make on the investment. You can make money as the value grows for the asset you’ve purchased and the value of the owed principal in the loan shrinks due to inflation. You can also look at investing in inflation-responsive real estate investments without borrowing money if you have cash available and are looking for an alternative investment. 

Real estate investments are very appealing to savvy investors. However, owning and maintaining a physical property can be stressful, time-consuming, and involve a larger debt ratio than investing in a mortgage pool managed by a MIC. Contact Jordan on our team today if you’re curious about adding a managed mortgage fund to your investment portfolio.