Having attended several workshops and webinars through Sophia Wealth Academy and Sophia Financial Group, and after reading through Tracy Theemes’ book The Financially Empowered Woman, I am now at the point where I truly understand and appreciate the impact that increasing my own financial literacy has on the types of decisions I make regarding my finances.
On more than one occasion, I have heard both Tracy Theemes and Kamal Basra tell us that when women have amassed enough information, the more likely they are to take smart risks when investing. Tracy, in her book, goes into this a bit deeper by saying, “Women do better at managing risk when they are fully apprised of the consequences of their decisions.” In fact, “The more educated they are, the better able to withstand higher levels of risk they become.”
Furthering their mission to provide women with the knowledge, wisdom, and support they need to increase their financial literacy and reach their financial goals, and perhaps take more informed risks when investing, Tracy and Kamal approached Fiona Wilson from Guardian Capital Group to offer a Wise Money Talks webinar. With a focus on investing, the goal was to help women to better understand current market trends and their impact on how investment portfolios are being positioned.
Fiona’s webinar offered an insightful perspective on what is happening in the markets today and how she is currently positioning investment portfolios. She also discussed her approach to dividend investing and new trends in this area, provided a fascinating insight into the use of artificial intelligence (AI) to guide portfolios, and addressed how COVID-19 has sped up many of the technological advances in the realm of investment management.
“In 2021 we are seeing growth come back, and quickly.”
According to Fiona, “In 2021 we are seeing growth come back, and quickly.” Central banks globally have been putting money into the markets, and the markets are starting to recover. “They have been adding liquidity and were keeping interest rates low to support what happened with the COVID crisis and this really helped to buoy the economy and buoy the markets.”
“During the crisis, we saw an increase in personal savings, but people are starting to spend again,” says Fiona, “and we are now seeing growth come back.” There has been a lot of spending on food and an increase in the purchases of recreational vehicles, home renovations, and furniture. The area that has been suffering, however, are services like travel and personal grooming. These areas have slowed down, but with more people getting vaccinations, these sectors will soon start to recover as well.
Dividend investing involves buying stocks that pay dividends and, as a result, provide a regular income from investments. Fiona suggests dividend growth is a very important factor and should be considered in all dividend portfolios. “Historically,” she goes on to say, “Dividends have been a large contributor to total return.”
Fiona suggests that one way to understand dividends is based on what she calls GPS: Growth, Payout, and Sustainability.
Growth: Dividend growth is a significant factor for long-term returns and depends on consistent earnings growth. If a company can grow its earnings every year, it can grow its dividends and continue to pay its investors every year.
Payout: A quality payout helps reduce volatility in share price movements.
Sustainability: Robust global companies emphasize sustainable cash flow growth resulting in a low probability of a dividend cut. Last year, many companies cut their dividends.
From this perspective, there are two very different types of companies to invest in:
Dividend Growers: Usually lower-yielding companies, but they increase their dividends over time. Strong earnings and cash flow for the future. (e.g., McDonald’s, Apple)
Dividend Payers: Higher yielding, lower growth. Not as strong growth prospects but have a higher yield with quality factors. (e.g., Unilever, Nestle)
Fiona believes that it is important to have a combination of both types of companies when investing in dividends.
Artificial Intelligence (AI)
COVID sped up innovation and, as a result, the financial industry has come on board to be at the forefront of these technological advancements. Fiona believes strongly in understanding the process of innovation as it “dramatically advances their opportunities to generate additional idea generation through better pattern recognition, anticipation of future events and complements the creation of sound management decisions.”
According to Fiona, “this involves using machine intelligence to generate actionable insight from predictive analysis through domain expertise and feature selection.” Essentially, because there is so much information out there and the human brain cannot process it all, artificial intelligence (AI), with the help of machines, mines the data that portfolio managers then analyze and use to build investment portfolios. As a result, AI may act as a risk-mitigating factor as we can learn from the data and pull a great deal of information from the data collected.
Fiona does not see computers running the world or portfolios any time soon; however, she sees the value they can have in enhancing the investment process.