Are you doing enough to protect your wealth in a shifting economy?

Many affluent Canadians have already realized that economic uncertainty is the new normal. Between the market volatility of the past few years, the potential lost opportunities from the new Federal budget explained below, US tariffs and shifting global trade dynamics, financial planning challenges abound. While the Federal Budget, passed recently brings some needed tax stability and productivity super-deductions on new business investments, business owners and high-net worth families truly need protection strategies now more than ever. This article explores practical approaches to safeguarding wealth through diversification, strategic asset positioning and tax-efficient planning.

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Strategic Diversification Principles.  In the following areas, are you ensuring you have enough diversification to avoid the volatility that can be caused by high concentrations?

• Asset class diversification: equities, fixed income, real estate, and alternative investments
• Geographic diversification: Canadian, US, international and emerging markets exposure
• Sector diversification: Balance beyond traditional Canadian strengths, as mentioned above
• Currency diversification: US dollar and other major currency exposures reduce Canadian-dollar only risk.

Implementing Practical Measures.  Taking a balanced and consistent approach and using specific investments can offer natural diversification. Consider the following options:

• ETFs and mutual funds which provide cost-efficient diversification without individual stock selection complexities
• Corporate-class structures may offer tax advantages for non-registered accounts
• Consistent portfolio rebalancing to prevent concentration drift
• As a business owner, start gradually moving wealth outside your core operating business, especially as retirement approaches
• Investing in other international markets to diversify away from the current ongoing trade dispute in North America. 

Be sure you are properly diversified or you may experience outsized negative impacts if volatility hits your over-concentrated asset classes and investments.

The first line of defence: diversification

If there is one golden rule about investing, this may be it. Diversification reduces your exposure to volatility and creates resilience against sector-specific downturns and trade shocks.

The Canadian Concentration Challenge.  Affluent Canadians tend to hold concentrated positions in their businesses, real estate, or sector-specific investments, which exposes them to higher risk due to increased volatility in these asset classes or sectors.  On top of that, as a Canadian investor, the S&P/TSX is heavily weighted toward financials, energy and materials, which make up about 65% of the index combined. Additionally, geographic concentration may amplify hidden vulnerabilities to regional economic shifts and trade disruptions, as we are seeing with the current US administration’s trade war.

Even as 85% of Canada-US trade remains tariff-free, diversification is even more critical, as trade is still in a highly volatile state.

Are you investing in Safe-Havens?

Safe-haven assets are not about maximizing returns; they are about preserving capital and maintaining flexibility when opportunities arise during market downturns.

Canadian safe-haven assets include government bonds (Canadian and provincial), short-term GICs and high-interest savings accounts, gold and precious metals, defensive equity sectors and quality dividend-paying companies. Bonds provide stability and capital preservation, GICs offer liquidity and guaranteed returns, gold and metals offer further diversification (not for speculation), defensive equity sectors, including utilities, staples or healthcare, provide an offset to core investment sectors such as technology, financial and materials, while dividend-paying financial institutions such as banks or insurance companies ensure stable investment income.

Don’t forget the important role of fixed income. Fixed income products remain foundational for wealth preservation, reduce reinvestment risk and offer a balance between current income and capital preservation. Whether you’re using laddered bonds or GIC strategies, they are indispensable to combating volatility.

Ensure a comfortable liquid position.  Avoid forced selling in downturns, but you should have a liquidity plan through TFSAs or high-interest savings accounts to balance income pressures in volatile times. Professionals should maintain three to six months liquidity, while business owners should plan for six to 12 months to be fully prepared.

Other strategies to consider include:

• Maximizing TFSA contributions for tax-free growth and flexible withdrawals
• Strategic RRSP/RRIF withdrawals to stay below OAS clawback thresholds
• Pension income splitting to reduce a couple’s combined tax burden
• Life insurance for estate liquidity to pay capital gains tax upon death
• Entrepreneurs should implement business exits strategically to maximize exemptions
• Business owners should leverage the new Super-Deduction for capital investments

These are just a few of the strategies to consider. Be sure to connect with the appropriate professional for tailored advice to your specific circumstances.

The Last Word

Economic and trade uncertainty demands proactive wealth protection strategies. If you are not employing diversification, defensive positioning and tax-efficient planning as foundational practices, your portfolio may be heading in the wrong direction. Taking advantage of new strategies, such as the Super-Deduction for business owners or others outlined here should be discussed with your financial advisor and other professionals. Being proactive is the key to establishing a plan during market volatility. As in last month’s discussion of fundamentals over headlines[PM1] , the focus here is on disciplined, value-oriented decisions rather than reactions to news

Steve’s Advice: “Budget 2025 gives us the stability to plan with confidence. The question isn’t whether uncertainty will continue; it’s whether you’re positioned to turn that uncertainty into opportunity.”

If you are a client, thank you for taking the time to read this and I look forward to our next conversation. Please feel free to share this with your friends and family who may be in need of another viewpoint. If you are looking for a second opinion on your portfolio or would like to have a planning conversation tailored to your needs, book a no-obligation complimentary portfolio review with me today.

Sources

Department of Finance Canada. "Budget 2025: Canada Strong – Our Plan." November 2025. https://www.budget.canada.ca/2025/home-accueil-en.html

Bank of Canada. "Monetary Policy." Accessed November 2025. https://www.bankofcanada.ca/monetary-policy-introduction/

Statistics Canada. "Consumer Price Index." Accessed November 2025. https://www.statcan.gc.ca/en/subjects-start/prices_and_price_indexes/consumer_price_indexes

TMX Group. "S&P/TSX Composite Index." Accessed November 2025. https://www.tmxinfoservices.com/indices/index-information?symbol=%5ETSX

RBC Wealth Management. "Federal Budget 2025: A Summary of Key Measures That May Impact You." November 4, 2025. https://www.rbcwealthmanagement.com/en-ca/insights/federal-budget-2025

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