Canadians are holding a record $75 billion in extra cash and continue to sock away money at a rate not seen in more than four years, according to a new report from CIBC World Markets.
Normally that extra money would be invested in equities, but the study finds that nervousness over volatility in the markets has many Canadians reluctant to take the plunge.
While real estate in Vancouver seems bulletproof, with property assessments up over 20% in the past year, North American stock markets are down 20% from their highs last April.
So where is a good place to put your money?
Ludovic Siouffi joined Simi Sara today to talk about what people need to consider before they make any investment choices.
Siouffi is an investment & insurance advisor with Canaccord Genuity Wealth Management, and in a recent article he addresses a question he gets asked a lot, “Do I invest into real estate or buy into the markets?”
In order to help clients come up with the right answer for themselves, he presents a series of questions for investors to consider before they decide if real estate is the best place to park their money.
Believe it or not, buying a second property in Vancouver may not be the safest bet
One of the questions he poses is whether or not you’d need to access your money in a hurry if an emergency occurred. If the answer is yes, then a second property may not be the best idea.
“We can’t kook at it as a guaranteed investment at the end of the day. It has its own risks, it could go down, and we have to get away from that mentality of just thinking that real estate will one hundred percent go up.”
Siouffi says for that reason he encourages people to diversify their risk away from too much real estate exposure.
LISTEN to the interview with investment & insurance advisor Ludovic Siouffi:
Diversify, diversify, diversify
Everything tied into the Vancouver market? Your home, your mortgage, your job?
Then Siouffi believes investing in more real estate in Vancouver can possibly overexpose you to single-market risks.
In simple terms? Don’t put all your eggs in one basket.
“Bias aside of me working within the investment world, adding that extra component of a balanced mandate will add a great amount of diversification to your overall net worth. Because, again, real estate – granted it’s been going exceptionally well over the years – is not a guaranteed investment.”
He suggests people consider investing in the markets and building up an investment portfolio that isn’t simply dependent on Vancouver’s hot real estate market.
“I think a nice diversified portfolio makes sense.”
Siouffi says he can appreciate the backlash he’ll get for suggesting that Vancouver real estate isn’t the end all, be all.
“I am of the personal view that it will keep going up. Now that’s my own personal view, and I really hope it goes that way. But, again, it’s not one hundred percent guaranteed.”