The Toronto Money Show was held this weekend and offered a chance to hear experts talk about how to find the best investing opportunities in challenging times.
Among the speakers was a Harvest Portfolios Group team led by CEO Michael Kovacs and Managing Director David Wysocki. Harvest board member and McMaster University business school professor Dr. Nick Bontis was also there.
Mr. Kovacs, who founded Harvest in 2009, hosted a breakout session talking about the Harvest strategy of conservative growth and income as it relates to retirement and the demographics of aging.
Retirees have two main issues, he said. They have a longer life expectancy which means their financial resources have to last longer. At the same time, interest rates have dropped and in some cases are below zero, which means interest rate returns are falling.
He noted that $1 million in 1999 would have yielded about 5% on a 5-year GIC, or $50,000 of annual income. Today, the same 5-year GIC, is yielding 1.3% , or $13,000 of income.
One solution for investors is to accept slightly higher risk with conservative stock market investments in companies who are global leaders. These companies have long track records of business success, a history of rising dividends and the financial resources to withstand the ups and down of the economic cycle. Investors get a total return which includes the dividends and capital gains as the stock prices rise.
Mr. Kovacs noted that the average annual return of the S&P 500 index over the past 25 years has been 9.63% and the average annual return over the past 90 years has been 8.84%.
“The Harvest approach is to focus on great businesses for the long term that are global brands with strong fundamentals,” he said.
Mr. Kovacs said Harvest also uses a covered call option strategy to reduce volatility and increase Income.
He is a fan of the Warren Buffett way which focuses on the fundamentals of value and wealth creation.
“The Buffett Way buys great companies and holds on to them,” Mr. Kovacs said. “That’s what we do. Over time their share prices rise and they pay dividends. Those energizers add up to excellent returns over time.”
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