In his June letter to clients, Head of RBC InvestEase, Rajan Bansi reviews the changes happening in the economy and how to invest despite uncertainty.

The inherent nature of a transition – especially, change – ensures its always occurring. What’s often unknown about a transition is exactly ‘where’ we’re going, what ‘there’ looks like, and how long that stage of a transition will last.

Canadians are currently facing a bevy of transitions on numerous fronts. On the topic of the pandemic, much of the country is preparing for a summer of some fun thanks to rising vaccination rates and lower case counts due to the restrictions in place over the last two months.

With respect to the economy, our colleagues at RBC Economics point out that the employment market transitioned back to losses (PDF) in April after a string of from gains due to restrictions imposed to battle a deadly third wave of coronavirus infections¹.

Perhaps the most confounding question on the economic front has been inflation. Statistics Canada said the most recent prices in April revealed a 3.4% year-over-year increases thanks to a jump in goods that ranged from oil to lumber. What remains to be seen is the permanence of these price increases. Will loosening restrictions and increased global trade result in moderate inflation over the medium term or has the pandemic inflicted long lasting changes to the supply chain that will affect the prices consumers should expect to pay for goods and services going forward?

Our colleagues at RBC Economics² feel some of these price increases (PDF) will prove transitory but the impact of stronger consumer demand in the second half of the year may place added pressure on the Bank of Canada to tighten monetary conditions.

How should you invest if change is continuous and unpredictable? Invest for the long term with a discipline that accounts for change. All clients of RBC InvestEase are placed into a suitable portfolio after we assess the answers to our know-your-client questionnaire and the information supplied in our onboarding process. We periodically buy and sell the holdings in each account to ensure a portfolio remains suitable for each client. We also encourage every client to have a regular monthly contribution to go along with their initial deposit. This not only allows clients to dollar cost average but it also takes advantage of the nature of compounding.

In the current environment, a silver lining of making a regular contribution into an investment account is to take advantage of current opportunities. The examples of rising inflation we provided have resulted in financial markets changing their forecast of future interest rate hikes, which in turn has led to higher yields in the bond market. A client with a regular monthly contribution into a portfolio that owns a bond fund would see fresh deposits invested into bond ETFs that offer higher yields, which will contribute to their long-term total returns.

The truth about investing is it’s impossible (for us at least) to predict the daily gyrations of financial markets. We do know that investing in a low-fee diversified portfolio for the long-term is a great way to build your wealth. Delegating the investment decisions to us allows a professional to help with your money. You’ll get to have more spare time to yourself and we’ll always be here to support you when you need us.

Change is constant, but money stress doesn’t need to be.