I am going to try to keep this as simple as possible (I can hear the skepticism).
When looking to explain portfolio returns over the last 17 months (since January 1st 2015 till now) you simply have to look at the returns for the TSX (Canadian market) and the SP500 (broad based U.S. market. The chart below shows the results over that time frame.
The return for the TSX is NEGATIVE 2.69% and the return for the SP500 is 2.93% so if you have 50% of each you have close to a ZERO return over that period.
Now if you look back over a longer time frame (which should be the case when ownership of equities is involved) you will see a different picture (and more desirable) For the purpose of this illustration I will use 5 years.
Now the average return if 50% of TSX and 50% of SP500 were held would be closer to 6-7% (plus dividends)
A BALANCED portfolio would have a lower return than that depending on the exposure to FIXED INCOME but returns will have probably been much better than a 5 year GIC.
BOTTOM LINE: if you are trying to BEAT the total return of a 5 year GIC then uncertainty of returns is your reality but by looking at results over 5 year periods we can see the benefit of accepting some volatility PARTICULARLY while we are in the ACCUMULATION stage of our life.
I encourage EVERYONE to arrange a time to meet over the coming late spring and summer months to review your account and update your RETIREMENT accumulation and/or income plan.
WE ALSO HAVE SOME OPPORTUNISTIC strategies for those looking for higher volatility/return positions.
The views expressed do not necessarily reflect the opinion of Argosy Securities Inc. This does not constitute an offer or solicitation to buy or sell any of the securities mentioned. The information contained herein may not apply to all types of investors. Please consult a professional before making an investment decision.