But many of us don’t feel financially ready to stop working. According to a 2022 survey by the National Institute on Ageing (NIA) at Toronto Metropolitan University, only one-third of Canadians aged 50-plus say they have the financial capacity to retire when they hope to do so. A survey by investment firm Edward Jones, also published in 2022, found that Canadians preparing for retirement have significant worries about future expenses, including health-care costs (59%), unexpected expenses (58%), economic downturns (42%) and inflation (41%).
These findings may sound grim, but there is also good news in the data points: Many people are enjoying retirement with a reasonable sense of personal and financial well-being. Regardless of where individuals fall on the retirement-savings spectrum, all share the need for a solid strategy to ensure they don’t outlast their money. And with so many options, how does a person choose?
What is a market leader?
One approach that’s proven successful over time is to focus investments on industry leaders, or market leaders, as they’re called in the world of finance. These are companies that hold significant market share, often the largest share, in their sectors—think household names like PepsiCo, Visa and UPS. You can gain exposure to these firms via the Harvest Brand Leaders Plus Income ETF (HBF), for example.
Market leaders offer attributes such as consumer loyalty, resilience, a long operating history, marketing capacity, the ability to invest in innovation and, often, a track record of raising dividends. Combined with a market leader’s size and reach, these features help the company to shape the direction and competitive characteristics of its sector.
Which sectors should investors focus on?
Choosing strong companies is only part of the equation, notes Michael Kovacs, president and CEO of Harvest ETFs, which uses a leaders strategy for several of its ETF offerings. The key is to home in on leaders in sectors where structural economic forces and “megatrends”—that is, rapid macro-level changes in the social and economic landscape driven by factors such as technology and demographics—create opportunities for exceptional growth.
“We focus on these businesses because they have historically led growth industries and megatrends,” Kovacs says. “They have also been the key to the creation and preservation of wealth over time.”
Examples of sectors meeting the criteria for high-growth potential these days include technology, health care and utilities. Identifying promising sectors is the first step; the next step is choosing the individual companies that will make up your portfolio.
Harvest, for example, constructs its ETFs with shares in 20 to 30 leader companies in high-potential sectors. Some might argue a basket of a couple dozen stocks is not sufficiently diverse to achieve desired results.
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