Five wealth-planning strategies for turbulent markets

Wealth protection

Turbulent economic markets can often lead to fear and anxiety amongst investors. These tactics can help you navigate those tougher periods.


Economic markets can be fickle beasts. But when volatility strikes, that’s the time for investors to remain calm.

From tighter financial conditions aiming to combat inflation, to international conflicts and heightened geopolitical tensions, investors’ confidence in financial markets is often at the mercy of a tumultuous global landscape. This can leave many wondering what to do with their current holdings.

Concern in such circumstances is normal but doesn’t make it warranted. Markets regularly experience strong pull backs, such as in 2008 following the global financial crisis.

“Drops in the market are relatively common and eventually normality will return,” says Frédérique Carrier, managing director and head of Investment Strategy for RBC Wealth Management in the British Isles. “Only the timing is in question.”

The key to managing these markets is to stick to an existing plan. “What happens month-to-month is less important than the desired result in 15 or 25 years. It’s about not being distracted by short-term events,” says Dean Moore, managing director and head of Wealth Planning for RBC Wealth Management in the British Isles.

One way to stay on track is to turn your attention to where you can make a difference. “You can’t control the market, but you can control your strategy,” Carrier says.

Here are five strategies that can help you achieve your wealth-planning goals despite market turbulence:

1. Tax-loss harvesting

A drop in the major stock market indexes can present individuals suitable opportunities to exit an investment that’s no longer desirable and take advantage of tax allowances. “In the past, if you sold an investment, you may have paid capital gains tax,” Moore says. “But a market drop may change that. Any losses incurred can be used to reduce the tax burden on future gains.”

2. Diversification

Downturns in the market can hit some investors hard, especially if their holdings are concentrated in a few types of assets. As a result, these kinds of portfolios can experience significant turbulence.

However, a well-diversified portfolio – holding many different types of assets – may help mitigate risks by reducing volatility. “We had advised our clients going into the COVID-19 pandemic to have a defensive portfolio with an allocation to a variety of sectors given the business cycle was in its late stage,” Carrier says. “A defensive portfolio is a way to weather turbulence.” Typically, diversified portfolios include stocks from a variety of countries as well as bonds, cash and real estate.

3. Buying low

One possible upside to a drop in the market is that most prices for securities are lower. That will include some financially strong firms that will emerge and prosper once the storm passes. Some will be selling for bargain-basement prices. Investors who have the available cash and the resilience to buy during a period of uncertainty may be able to profit.

However, the timing of when to buy can be tricky. “It is difficult to know where exactly the bottom of the market will be,” says Carrier. “Using a series of tranches where you don’t go all-in on a single day, but do so over a period of time, can be beneficial.” This technique means investors don’t have to pinpoint the day the market reaches its absolute low.

4. Insurance

Life and health insurance are integral to wealth planning and frequently get used to help cover inheritance taxes. Rising interest rates can lead to lower premiums, particularly for whole of life cover.

“When markets are down, it can be a good time to review your existing policies or arrange new cover to lock in favourable rates,” Moore says.

5. Strategic annual gifting

Increasing interest rates can often mean those looking to buy a home require a higher deposit. Making gifts in this scenario can be a good way to help children navigate a difficult mortgage market.

“We’ve also seen clients taking advantage of lower markets to transfer investments into trust, perhaps to contribute toward their grandchildren’s school fees,” says Moore. “As assets grow, the gains can be captured inside the trust and be free from inheritance tax.”

The bottom line

Your plan – not the market – should be your focus. Instead of reacting out of fear, review your strategies to make sure they reflect your current risk appetite, goals and timeline. And make adjustments where necessary.

“Have your objectives in mind and make sure your tolerance for risk is in line with what you told your advisor,” Carrier says. “That’s how you weather storms.”

Important information: This document contains general information only. It is not intended to be specific investment advice or an investment recommendation. Please bear in mind that the investments or services contained within this document may not be suitable for all investors. Past performance is not a guide to future performance, future returns are not guaranteed, and a loss of original capital may occur. The tax treatment depends on the individual circumstances of each client and may be subject to change in the future. If you have any questions regarding the topics discussed in this article please speak to your Relationship Manager, or Investment Counsellor.

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