The best investment approach for most Canadians is far simpler than the industry suggests. These strategies historically outperform most active alternatives.
Foundation First
Before investing: 3–6 months emergency fund, all high-interest debt paid off, clear understanding of your timeline and goals.
The Power of Index Investing
~80–90% of actively managed funds underperform their benchmark over 10+ years. The culprit: fees. A mutual fund at 2.5% MER vs. ETF at 0.2% — that 2.3% gap on $100,000 over 20 years at 7% return costs over $165,000 in lost wealth.
The Three-Fund Portfolio
- VCN/XIU (25%): Canadian equities — dividends, home market
- XAW/VXC (50%): Global equities — growth, diversification
- VAB/ZAG (25%): Canadian bonds — stability (reduce equity % as you age)
Dollar-Cost Averaging
Invest a fixed amount monthly regardless of conditions. Missing just the 10 best trading days in a decade can halve your total returns — staying invested is the key.
💡 Account Priority: (1) FHSA if buying first home, (2) RRSP if income above $60K, (3) TFSA always, (4) Non-registered after registered accounts are maxed.