In one of our most recent Portfolio Minutes we discussed why we believe Ethics, Sustainability and Governance (ESG) are so important to long term investment success. History has taught us that over time companies that fail to adhere to these three principles will suffer, likely producing more risk and lower rates of return for their shareholders.
Coupled with this commitment to sound ESG practices is our equally strong belief in Capitalism. Capitalism is rooted in the idea that those who build a thing, come up with a new idea, or create a better way of delivering goods and services to the end user should benefit economically from their work. Likewise, those who invest in these goals should profit from those investments. In this way not only will the wealth of those individual builders, inventors and investors grow, but the overall wealth of society itself will grow. Finally, through ongoing improvements, motivated by the goal of increasing profitability and wealth, people will cooperate with one another.
This principle has proven to be effective across cultures and countries as diverse as Europe, North America, Japan, Asia and throughout the world, and today we live in a world that is richer, healthier, and with longer life spans and less total poverty than at any time in history. This is not to say that there is not room for even more improvement. In fact, the process of Capitalism itself continues to show us that we can always do better.
Put simply, by giving everyone the opportunity to do what they do best, and then to benefit from that work economically, everyone benefits.
A brief two-and-a-half minute video in which the economist Milton Friedman discusses the making of a pencil helps to make this point very dramatically.
TFSAs are a powerful planning tool allowing Canadians to build a pool of tax-free assets that can be used at any point in their lifetime. Please feel free to contact a member of the CH team, as we would be more than happy to chat further about your TFSA and answer any questions you have.
Brian Trafford, Chief Investment Officer
& Your CH Financial Team