The plan

Yesterday we ragged on mutual funds and those who sell them.

As you may know, for the past (staggering) eighteen years this blog has existed, we have resolutely advocated ETFs as a far superior way to hold and grow your wealth. Exchange-traded funds are cheap, liquid, flexible, transparent and don’t come with an icky trailer fee or hidden penalty.

Of course, the vast majority of Canadians will never read this blog and think Garth is a pudgy country music star (not a financial guy with chiseled abs). That’s why they’ve stuffed more than $2 trillion into high-priced, opaque mutuals and have just a third as much in ETFs.

So this is one pillar of investing. Get the right kind of product. ETFs.

As important is having the right mix of assets inside a portfolio (and by that we mean the totality of everything you have – RRSPs, TFSAs, a RRIF, first-home account, non-reg or cash). For years we have blathered on about a ‘B&D portfolio’, which means balanced and diversified.

The ‘diversified’ part involves owning equities through index funds – ETFs that track the TSX or the S&P 500, for example – and not individual stocks. That lowers volatility and seriously reduces risk, especially in times like this – of economic flux, trade wars, real wars, political polarization, energy shocks and rampant technological change.

Being diversified also means being global. A good portfolio should have Canadian, American and international equity exposure. Avoid home country bias, with too much of your money in maple. And it’s always wise to tamp down currency risk by having a portion of your funds denominated in US$. Maybe a quarter.

The ‘balance’ part has two major components – bonds and preferreds. Okay, bonds are boring. We get it. But not only do they traditionally counterbalance stocks (when one falters, the other resists), bonds throw off some interest and can yield capital gains depending on the direction of interest rates. Same with preferreds, which are interest-rate sensitive and fluctuate in capital value. But prefs are great because they pay you to own them with a plump yield. Plus the income stream is tax-reduced. Win, win.

For decades investors have found that a portfolio with about 60% in growth assets (equities) and 40% in the safe stuff was the sweet spot. During every one of those years some smartypants has written a scary article titled, “Is the 60-40 portfolio dead?” and concluded that it was. Of course, they were all wrong.

The B&D, 60-40 thing has performed as planned – shepherding investors through recessions, inflation and calamities like Y2K, Nine Eleven, the dot-com bust, the credit crisis, Covid, Drake and Trump. Those investors who maintained the mix by rebalancing maybe once a year (selling gainers and buying losers to stay at sixty-forty) sailed through it all. Over the past 50 years, they have seen an average annual return of just over 7%.

Of course, that’s not a Nvidia, Tesla or Amazon rate of return. But at 7% assets double every decade, volatility is lower, life-planning easier and in retirement an income stream is more predictable and reassuring.

These days, it continues. In fact, returns have been outsized, given the advance in equities and the actions of central banks. As of this week, the B&D model portfolio that my snappy portfolio-manager colleagues look after has gained 10.36% so far in 2026. That’s notsobad considering the TSX is ahead 10.2% and the S&P 500 has gained 9.1%.

By the way, here are the current weightings of that portfolio – which can be scaled up or down depending on size:

• Cash 2%
• Bonds (five funds – global & Canadian) 30%
• Canadian equities (three funds – TSX, dividend and REITs) 22%
• US equities (five funds – large and small cap, value, sector) 23%
• International (six funds – global, dividend, emerging) 15%
• Preferred shares (one fund – NA) 8%

Of course, you can buy one ETF that holds a balance, but many of them are US bond-heavy, so watch out for that. You can also DIY your portfolio, eschewing any professional help – because you don’t have enough to be professionally managed (anything over $250,000 begs attention), you think paying for anything is revolting (plan on about 1% of assets annually, which is taken from gains monthly and may be tax-deductible) or you don’t trust anyone (the biggest impediment).

What should you get for your 1% a year?

A trusted person to safeguard your money yet strive for the kind of long-term growth described here. A financial plan. A cash flow and income plan for every year of your retirement. Estate planning help. Tax mitigation. Assistance with big stuff like buying real estate or divorce, inheritance or unexpected millions if your kid becomes a TikTok sensation. Plus somebody who talks to you routinely, sells you nothing and wipes away financial stress.

Life’s too short and brutish to worry about money. So don’t.

About the picture: “Kids moved out of their apartment in Boston for a new job in California,” writes blog dog Dharma Bum (“Steerage Section Secialist SSS”). ” No mortgage, no commission, just picked up and moved. Flexibility and youth. What a combo! I don’t think the cat, Bo, knows what’s going on.”

To be in touch or send a picture of your beast, email to ‘[email protected]’.

Source: https://www.greaterfool.ca/2026/07/07/the-plan-6/