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But many of us don’t feel financially ready to stop working. According to a 2022 survey by Toronto Metropolitan University’s National Institute on Aging (NIA), only a third of Canadians over 50 say they have the financial capacity to retire if they choose to. A survey by investment firm Edward Jones, also released in 2022, found that Canadians preparing for retirement have significant concerns about future spending, including healthcare costs (59%), unexpected expenses (58%), economic downturns (42%) and inflation (41%).
These results may sound bleak, but there’s 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 spectrum, they 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 has proven successful over time is to focus investments on industry leaders, or market leaders as they are known in the financial world. These are companies that hold significant, often the largest, market share in their sectors — think household names like PepsiCo, Visa, and UPS. For example, you can invest in these companies through the Harvest Brand Leaders Plus Income ETF (HBF).
Market leaders offer attributes such as customer loyalty, resilience, a long operating history, marketing capacity, ability to invest in innovation, and often a track record of growing dividends. Combined with the size and reach of a market leader, these characteristics help the company shape the direction and competitive characteristics of its industry.
Which sectors should investors focus on?
Picking strong companies is only part of the equation, notes Michael Kovacs, president and CEO of Harvest ETFs, which uses a leader strategy for several of its ETF offerings. The key is to focus on leading companies in sectors where structural economic forces and “megatrends” – ie rapid macro-level shifts in the social and economic landscape driven by factors such as technology and demographics – present opportunities for exceptional growth create.
“We’re focusing on these companies because they’ve historically led growth industries and megatrends,” says Kovacs. “They have also been key to creating and maintaining wealth over time.”
Examples of sectors that currently meet the criteria for high growth potential are technology, healthcare and utilities. Identifying promising sectors is the first step; The next step is to select the individual companies that will make up your portfolio.
Harvest, for example, builds its ETFs with stocks of 20 to 30 leading companies in high-potential sectors. Some may argue that a basket of a few dozen stocks isn’t sufficiently diversified to produce the desired results.