How planner is guided by lesson learned from a billionaire

Why interest-rate forecast means now is a good time to invest

How planner is guided by lesson learned from a billionaire
Gerald Goertsen, financial planner and elder planning counselor with DeThomas Wealth Management

Coming off a difficult year, Gerald Goertsen relies on two components to counsel clients: his belief in a good environment going forward as rates and inflation come down and the lesson he learned 18 years ago from a billionaire.

“Every time the market takes a downturn, add as much as you can,” Goertsen, financial planner and elder planning counselor with DeThomas Wealth Management in Kelowna, B.C., says.

And if that’s difficult to do, there’s always the option of making more income. Canada has a surplus of jobs right now and wages are also on the rise, factors that help people save and invest more — if they’re disciplined, Goertsen adds, although “in today’s world many choose to have a coffee in their hand rather than a full wallet, and at the end of the day all they end up with is an empty cup”. The same advice applies if a client has any high-interest debt. He advises people to act like they’re in university again with time only for studying and working part time, and pay off those credit cards. Then, keep the job for another six months or so to build up an emergency fund. With that reserve in place, clients will have a cushion to keep them out of debt.

“That will ease your stress load and make life better now and in the future,” Goertsen says, noting that an emergency fund will also help clients weather the looming recession, though he expects it will be softer than anticipated due to the aforementioned full employment and rising wages, which mean people are continuing to spend.

“That’s why it’s important to add as much as they can while there’s this chatter of recession because once it’s over, the markets will rebound as they’ve already started to do,” he says. “September 30 last year was the bottom and it’s since climbed, with volatility but consistently.”

Looking ahead, Goertsen sees energy continuing to produce well as companies buy back shares like crazy before those are taxed starting Jan. 1, 2024. He expects a good year overall as interest rates start to come down in the fall and the bond market takes off.

“What I’m hearing from fund managers is they’re expecting double digits to the upside for the bond market which will help the balanced fund market and as interest rates fall that’ll help the equity market. We’re expecting a positive future in the markets.”

With the next rate announcement looming, Goertsen is forecasting either a 25 or 50 basis point increase, a six month pause, and then a gradual reduction in rates — to that end, if a client is at the renewal point of their mortgage he recommends a variable rate because he’s predicting lower interest rates a year from now — and overall, his advice to clients is always to stay focused on the long term. The economic environment will get better.

“I tell them it’s been proven staying the course is the best course of action,” Goertsen says. “Don’t let short-term volatility scare you, and things will work out in the long run.”