Whether you blame it on high inflation, declining real estate values or myriad factors coming out of a global pandemic that created the perfect economic storm, there’s no denying the harsh reality that Canada’s wealth gap is widening at a rapid rate.
Warren Buffett, the infamous investor known as the Oracle of Omaha, often advises people to “buy low, sell high” during market downturns. Buffett’s investment philosophy is centred around long-term investment in undervalued companies. He emphasizes the importance of buying during market lows and holding strong through market volatility.
During economic downturns, credit limits tighten significantly for average investors, making it difficult to adopt Buffett’s strategy. In contrast, wealthy individuals can increase their investments in risky assets due to their broader access to credit. Our findings indicate a bigger problem: systemic barriers prevent average investors from capitalizing on potentially lucrative or riskier opportunities, exacerbating their financial vulnerability.
According to the World Economic Forum, young people are actively investing in capital markets, with 70 per cent of retail investors under the age of 45. However, financial literacy rates for young people globally are below 50 per cent. There is a dire need to enhance access to financial information and education.
This will empower average investors to have a stronger borrowing cap, so they can more easily participate in the market and build their portfolios to increase their potential wealth.