Sun, Jan 29, 2023 12:00 PM GMT
There’s no doubt Canadians are feeling uneasy in the current economic climate. We hear it all over the news, on social media, and more recently, in the results from the 2022 IG Wealth Management Financial Confidence Index.
Now in its fifth year, the annual Index, conducted in partnership with Ipsos Canada, tracks and reports on Canadians’ overall financial confidence, with a focus on four pillars: personal financial outlook, planning and literacy, trust in the economy and current financial situation.
Let’s start with some good news. The survey’s results indicated that Canadians remain relatively confident about the state of their current personal financial situations, lining up with the 2021 Index scores in three of the four areas. However, Canadians are losing confidence in their trust in the economy. As a result, overall confidence for the year is down 11 per cent over 2021, amid fears of rising inflation and mortgage rates, cost of living concerns, and market volatility.
According to Damon Murchison, President and CEO of IG Wealth Management, “People are generally feeling good when it comes to their personal financial situation. However, after a year in which major global events and the lasting effects of the pandemic have roiled financial markets and contributed to decades-high inflation, they are feeling much less confident about the overall economy and where things could be headed in the year ahead.”
To this end, the Index shows that 55 per cent of Canadians believe we are currently in a recession; more than two-thirds believe there will be a recession in 2023, and 46 per cent feel the inflation rate will increase next year, putting home ownership further out of reach for young people. Among those 18 to 34 years old, 36 per cent will be postponing home ownership goals, according to Index results.
Interestingly, the results noted that overall financial confidence is stronger by 11 per cent among those who work with a financial advisor.
“Canadians are trying to make sense of what’s happening around them and how it could potentially impact their personal situation, so it makes sense that those who have access to professional advice are feeling more confident,” says Murchison. “People who work with an advisor tend to feel more financially confident, and report better outcomes when it comes to their ability to save, and even their ability to enjoy life because they’re worrying less about their finances.”
All investors feel stress during times of market volatility. Working with a certified financial planner can help you understand the long-term implications of your investments and whether you need to adjust your overall plan. An advisor can use financial planning software to give you clarity and assess how and when you may be able to achieve your goals. Finally, your advisor can teach you how to avoid making rash decisions and fixating on daily stock fluctuations, which may be detrimental, and look at the big picture instead.
Talk to a Crossgrove & Company advisor to learn how you can build your financial confidence and achieve your financial goals during times of market volatility.
Reference: Toronto Star
