Skip to main content

Heard the argument that the economy will grow more slowly than in the past because of our aging population?

The same applies to your investment portfolio. The latest financial market return projections issued for financial planners to use in their work suggest investors of all types should rein in expectations on how their portfolios will perform over the long term (10 years and longer). Forget double digits, or even high single digits. Anything north of 5 per cent looks out of reach for most investors.

The return projections for 2019 were recently published by the FP Canada Standards Council and Institut québécois de planification financière. They’re meant to provide an analytical view on returns that is free from the bias of individual planners and investment advisers. You can find expected returns for the major asset classes in this recent post. Now let’s look at how these return expectations come together in portfolios designed for conservative, balanced and aggressive investors. Note: These are after-fee returns, with the fee set at 1.25 per cent.

Story continues below advertisement

  • Conservative (5-per-cent cash, 70-per-cent bonds, 25-per-cent Canadian stocks): Average net annual returns of 3.16 per cent.
  • Balanced (5-per-cent cash, 45-per-cent bonds, 40-per-cent Canadian stocks, 10-per-cent foreign developed market stocks): An annualized 3.74 per cent
  • Aggressive (5-per-cent cash, 20-per-cent bonds, 35-per-cent Canadian stocks, 25-per-cent foreign developed market stocks, 15-per-cent emerging market stocks): 4.5 per cent annually.

It’s not only the returns for these three investor profiles that seem low. So are the fees. While some advisers may charge as little as 1.25 per cent of your account assets in fees, there are additional costs for investments. Even a low-cost portfolio of exchange-traded funds could add an additional 0.25 to 0.5 of a percentage point. In mutual funds, fees could easily exceed 2 per cent.

Sadly, this suggests that if the subdued projections for financial planners err at all, it’s on the optimistic side. How depressing.

Report an error Editorial code of conduct
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

Cannabis pro newsletter