Alexandra Horwood is director, wealth management, portfolio manager, and investment advisor at Richardson Wealth Ltd.
For most of the bear cycle in mining stocks during the past decade, financial advisors have had the ability to lower their clients’ tax bills by triggering a capital loss.
But things have changed as mining stocks have been on a tear since gold became a haven at the start of the COVID-19 pandemic – and advisors who serve Canadians invested in the mining sector should consider how to manage the windfall strategically.
Mining is a cyclical sector. It generates a lot of wealth for many people – including the jobs it creates in financial hubs like Toronto and Vancouver and the remote communities where the mines themselves are located. But along with the highs come the lows, and for investors, it’s important to be protected during these times of uncertainty.
There are several ways to ensure this “boom and bust” cycle doesn’t creep into investors’ personal lives, and that involves some planning to even out the market fluctuations.
By following a disciplined approach, advisors can ensure their clients participate when mining stocks are performing well while protecting against the uncertainty and stress the mining sector can yield.