All posts by Financial Independence Hub

6 Financial New Year’s Resolutions for 2026

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Image courtesy TriDelta Financial

By Matthew J. Ardrey, CFP, R.F.P. FMA, CIM®

Special to Financial Independence Hub

As I sit here at the beginning of 2026, I would like to take a moment to reflect on 2025. We had increased U.S. protectionism through tariffs, labour market concerns with the advancement of AI, changing interest rates and another strong year of stock market returns.

With all of these macro themes out of our control, I thought of some of the personal conversations I had with clients during the year about things in their control.

1.) Keep a Positive Cashflow

One of the simplest rules in personal finance is to spend less than you earn. One of the most consistent matters I see when drafting financial plans is people know what they earn and know what they save, but do not have a complete grasp on what they are spending.

A simple way to know what you are spending is to subtract savings from after-tax earnings. Whatever remains you are spending. To take control of that spending though, you need to know where the funds are being spent. Armed with that knowledge, you can decide to continue spending on something, reduce it or cut it out altogether.

Once you are in control of your budget, use it to your advantage to save. Savings are key to wealth creation.

2.) Stay Invested

We have now had several strong years of market performance since COVID in 2020. There is no way we can predict what will happen in 2026. We may have another great year or maybe we won’t. Either way, studies show over and over again that staying invested is one of the most important factors in financial success.

There is a famous phrase in investing, “time in the market beats trying to time the market.“ Aside from how impossibly difficult it is to time them market, this also shows the power of compounding returns over time.

3.) Getting Wealthy vs. Staying Wealthy

Many financial plans I did for new clients this year were for people planning to retire in the next five years and almost every one of them had a portfolio that was at least 80-90% in stocks.

A large allocation to stocks is a great way to get wealthy but may not be the best way to preserve your wealth, especially when decumulating that wealth as part of your retirement plan.

Though we have not seen much of it in recent years, stocks can be a very volatile asset class. In the 2008 Global Financial Crisis, the S&P500 fell more than 50% and took close to six years to fully recover. A similar situation would be devastating to a retirement plan, as not only would the portfolio value fall, but there would also be crystallization of losses, as stocks are sold at losses to fund the retirement.

A well diversified portfolio among asset classes and geographic regions can help mitigate the impact of market declines. Once you have made your wealth, you don’t need homeruns to win the game. You can get around the bases on singles and doubles.

4.) Risk Mitigation: Part 1

In every plan I prepare, I want to create safety margin for my client. It could be using a Monte Carlo volatility analysis in retirement projections or an emergency fund against loss of income or large, unexpected expenses.

The benefits of these safety margins include the ability to survive a negative event, stress reduction and with that the ability to think more clearly to make better decisions. Stress clouds decision making and in a time of crisis, it is clear thinking that is most needed.

Life is never a straight line from A to B. Preparing for inevitable risks that life will bring you is sound financial planning.

5.) Keeping up with the Joneses

There is an immense amount of social pressure to fit in. To make sure you are of a similar status of those around you. But have you ever thought, how do others achieve or maintain that status? Your neighbour with the fancy house, pool and great car make look wonderful on the outside but may be swimming in debt up to their neck to “afford” all of their luxuries.

This is where the real value of a comprehensive, personal financial plan is visible. It will quantify if you can afford the reality you want. It also removes all of the rules of thumb and what works for the average person and focuses on what you need to do to achieve your personal financial goals.

6.) Risk Mitigation: Part 2

Much of financial planning is focused on the happy ending. Sailing off into the retirement sunset and enjoying the life you have worked so hard to earn. Unfortunately, life throws us curveballs and ensuring the risk management side of financial planning is covered is just as important. Continue Reading…

Opinion: Bitcoin will continue dropping in 2026. The thrill is gone

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Image courtesy AlainGuillot.com

By Alain Guillot

Special to Financial Independence Hub

Bitcoin was supposed to be many things: digital gold, a hedge against inflation, a revolutionary alternative to money itself. In 2025, it turned out to be something far more mundane: a disappointing asset with no intrinsic value and shrinking excuses.

Let’s start with first principles. Bitcoin has no intrinsic value. It does not produce cash flow. It does not generate earnings. It does not represent ownership in anything productive. Its value comes from exactly one source: the hope that someone else — ideally a greater fool — will buy it from you at a higher price later.

This is not a controversial statement. It is textbook Greater Fool Theory. Bitcoin holders are not investors; they are speculators betting that demand from new buyers will continue indefinitely. But here’s the problem: by now, every fool on Earth has already heard of Bitcoin.

The Tulip Mania Parallel isn’t an Insult: It’s Accurate

Bitcoin enthusiasts hate comparisons to the Dutch Tulip Mania of the 1600s, but the similarities are undeniable. Tulips weren’t valuable because of what they produced; they were valuable because people believed they could resell them at higher prices. Sound familiar?

Tulips collapsed when the pool of new buyers dried up. Bitcoin faces the same mathematical reality. Adoption is no longer early. There is no untapped population waiting to “discover” Bitcoin. Those who wanted exposure already bought in years ago.

What happens next in any speculative bubble is predictable:

  • Some holders need real-world money for real-world needs: food, rent, taxes.
  • Others look at stagnant prices and lose interest.
  • Boredom replaces euphoria.
  • Selling begins.

Bitcoin does not fail dramatically all at once. It fails slowly, then suddenly.

2025: An Embarrassing year by any standard

Supporters will try to spin the numbers, but facts are stubborn.
In 2025, Bitcoin declined by roughly 4%.

That alone would be bad enough. But investing is always about opportunity cost.

During the same period:

  • The S&P 500 rose about 18%.
  • Productive businesses generated profits.
  • Shareholders were paid dividends.
  • Capital was allocated to companies that actually do something.

Bitcoin did none of that.

A supposedly revolutionary asset losing money in a strong market is not “volatile”: it’s underperforming. A 4% decline isn’t a badge of honor. It’s an embarrassment.

The Myth of Digital Gold is dead

Bitcoin was marketed as “digital gold,” yet gold has thousands of years of history as a store of value. Bitcoin has barely survived a few market cycles, all fueled by cheap money and hype.

To make things even more embarrassing for Bitcoin holders, real gold prices went up 67%, breaking the relationship between real gold and digital gold. Real gold is still tangable and pretty to see; Bitcoin is none of those.

Gold is used in jewelry, electronics, and industry.

The real intrinsic value is that it’s a great tool for criminal activity. When regular citizens hold Bitcoin, they are adding and abetting the criminals. Bitcoin’s real usefulness is:

  • Money Laundering (Digital Washing Machine)
  • Ransomware and Extortion
  • Online Black Markets
  • Tax Evasion and Income Concealment
  • Sanctions Evasion
  • Scams and Fraud

Remove hype and liquidity, and Bitcoin has nothing left to stand on.

Prediction for 2026: No new Highs, Likely new Lows

I’ll make a clear prediction:
Bitcoin will never again reach $100,000. Continue Reading…

The two most powerful forces in Markets

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Image Shutterstock courtesy Outcome

And the seasons they go round and round

And the painted ponies go up and down

We’re captive on the carousel of time

We can’t return we can only look behind

From where we came

And go round and round and round

In the circle game

  • The Circle Game, by Joni Mitchell

 

By Noah Solomon

Special to Financial Independence Hub

This month, I will discuss mean reversion and momentum, which are arguably the two most powerful forces in markets. I will demonstrate that while these two influences can sometimes work in tandem, they often stand in fierce opposition. Lastly, I will discuss mean reversion and momentum in the context of the current market environment, including the related implications for investors.

Mean Reversion: Valuation’s Revenge

One of the most conclusively documented phenomena in modern markets is mean reversion, which is based on the historical tendency of returns to gravitate toward their long-term average. Above-average returns tend to be followed by below-average returns, and vice versa, thereby resulting in a reversion to “normal” levels over the long term.

Buffett succinctly summarized this observation in his statement, “I would rather sustain the penalties resulting from over-conservatism than face the consequences of error, perhaps with permanent capital loss, resulting from the adoption of a ‘New Era’ philosophy where trees really do grow to the sky.“

Mean reversion has been pervasive across geographies, sectors, individual stocks, and broad asset classes. Countries whose markets have outperformed their peers by large amounts have subsequently underperformed, while previously unloved regions have gone on to be investor favourites. Similarly, “winning” stocks and sectors have morphed into stragglers, while those that were neglected have become market heroes. Lastly, at times when broad asset classes have experienced higher than average returns, they have subsequently delivered subpar performance, while producing streaks of better than average performance after periods of subpar returns.

At the heart of mean reversion lie valuations. Whenever a given stock, sector, or market has delivered higher than average returns for an extended period, this outperformance is usually accompanied by lofty valuations which are fundamentally unjustifiable. These excessive multiples begin to weigh on prices, leading to underperformance and the return of valuations to more rational levels. By the same token, at times when a given asset or group of assets have experienced below average returns for a prolonged period, their multiples tend to become unreasonably depressed. The resultant “bargains” ultimately attract investor interest, which in turn leads to outperformance and the establishment of more rational valuations.

Momentum: The Road to Valhalla and Dystopia

The other principal force that drives markets is mean reversion’s volatile counterpart, momentum. Momentum investing capitalizes on the tendency for trends to persist by buying into rising assets and selling into falling ones. As is the case with mean reversion, academic research has found momentum across individual securities, sectors, and broad asset classes.

Unlike mean reversion, which is based on fundamental valuation principles, momentum is best explained by behavioural biases and emotions. Spurred by fear of missing out (FOMO) and greed, investors tend to buy assets whose price has been rising, leading to further gains. In similar fashion, fear and despondency can cause people to sell assets whose price has been falling, thereby reinforcing negative trends and causing additional losses.

Mean Reversion, Momentum, & the Market Cycle

As illustrated in the graph below, the market cycle can be divided into four phases.

The Market Cycle: S&P 500 Index

 

1st Phase: The March to Valhalla

  • At the beginning of this phase, markets are neither materially overvalued nor undervalued. Then, some catalyst or combination of factors causes prices to begin straying increasingly further above their “fair” or intrinsic values.
  • This deviation is often caused by overly optimistic assumptions about the economy and/or profit growth. It can also stem from overexcitement about some theme du jour, like technology stocks during the dotcom bubble (as depicted in the 1st phase in the graph), real estate during the years preceding the great financial crisis, or (dare I say) today’s AI-related companies.
  • Towards the end of the period, optimism morphs into full-blown euphoria and the momentum monster kicks into high gear. This dynamic eventually causes many assets to be priced to perfection, leaving them in the precarious position of offering little, if any upside while harbouring significant downside risks, as was the case in late 1999-early 2000.

2nd Phase: The Beginning of the End

  • This period takes the reins from its predecessor when valuations stand well above average levels, broad sentiment starts to turn, and fear begins to take centre stage, thereby causing prices to start falling.
  • As the phase progresses, negative momentum begins to take hold, and prices continue their decline. This process unfolds until they once again reflect reasonable assumptions regarding the future and assets are more or less fairly valued, as was the case between the peak of the dotcom bubble and the bear market bottom of late 2002.

3rd Phase: The End of the World is Nigh – I Will Never Invest in Anything Again

  • At this point, fear and skepticism begin to metastasize into full-blown panic, accompanied by a widespread belief that things can only get worse. Relatedly, negative momentum reaches its nadir, leading to a final cyclical swoon in prices, as occurred towards the end of the tech-wreck in mid-to-late 2002.
  • By the end of the period, sentiment becomes completely washed out, leaving many assets at materially depressed valuations that offer significant upside for relatively low risk.

4th Phase: Maybe Things Aren’t So Bad – I Like Bargains

  • At the beginning of this phase, all but the most steel-nerved investors have run for the exits in one form or another, as was the case at the bottom of the early 2000s bear market.
  • Tempted by bargain basement valuations, a minority of rational and courageous contrarians begin stepping in to scoop up bargains.
  • The advent of fresh buying, combined with a dearth of remaining sellers, sparks a recovery in prices.
  • This recovery begins to attract additional buyers to the party and reawakens the ghost of positive momentum, leading to further gains until the end of the period, when assets are neither materially undervalued nor overvalued.

Postscript:

  • Repeat phases 1-4 in tragic (or comedic) fashion of Shakespearean proportions.

Momentum is a Fairweather Friend. Value is Forever

Over the short term, momentum and sentiment are the primary determinants of asset prices. At times when FOMO, greed and optimism are most pronounced, the power of momentum cannot be understated. Rationality and traditional valuation principles are widely forgotten, which can lead to irrationally high and unsustainable prices. Conversely, when fear and pessimism rule the roost, negative momentum can easily overshadow the fact that many beaten down assets present unusually attractive opportunities, which in turn can lead to senselessly low prices.

Notwithstanding that extreme environments have historically reverted, investors have time and again failed to take advantage of this fact, joining the overwhelming chorus of “this time it’s different.” According to famed economist John Kenneth Galbraith:

“When the same or closely similar circumstances occur again, sometimes in only a few years, they are hailed by a new, often youthful, and always supremely self-confident generation as a brilliantly innovative discovery in the financial and larger economic world. There can be few fields of human endeavor in which history counts for so little as the world of finance. Past experience, to the extent that it is part of memory at all, is dismissed as the primitive refuge of those who do not have the insight to appreciate the incredible wonders of the present.”

However, sentiment and momentum are fickle beasts that are extremely difficult, if not impossible to time. While they can sustain for extended periods and carry prices to fundamentally absurd extremes at both ends of the spectrum, they also have a tendency to suddenly and violently turn, leaving those who had been riding the momentum express caught in a train wreck of losses. As legendary trader Ed Seykota stated, “The trend is your friend except at the end where it bends.” Continue Reading…

The Blazingly Simple Portfolio shines in TFSAs

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By Dale Roberts, cutthecrapinvesting

Special to Financial Independence Hub

In 2010 the Globe & Mail offered a simple Canadian stock portfolio idea. It was also called the Canadian Essentials Portfolio. The portfolio concept was courtesy of political science professor Mike Henderson who singled out the companies for the essential roles they play in the Canadian economy. He identifed the companies in the year 2000 and it formed the core of the retirement investments for he and his wife. The cumulative 10-year total return on these stocks to 2010 was 305%, greatly outpacing the 72% for the S&P/TSX composite index. In a recent article, the Globe detailed how Kate, a 71 year old retiree in Guelph used the Essentials Portfolio to take her TFSA to over $250,000.

For those who have a Globe subscription here’s the Essentials article from 2010, and the Essentials update in 2018.

The 2018 update reported that the annualized return since the beginning of 2000 for the Canadian Essentials Portfolio was 13.1%, including dividends, while the S&P/TSX Composite Index made 7.6%.

The blazingly simple portfolio

Once again, the idea was to hold companies that are essential to the Canadian economy. These companies are not going away and they are in everyday use. In fact, it’s the same concept as the Canadian Wide Moat portfolio that I’ve offered on this blog .

The Essentials Portfolio is concentrated in 3 sectors, while the Canadian Wide Moat approach offers 4 sectors by including the very important grocers. The returns would have been helped greatly in the last two decades by adding grocers.

Here’s the ‘Essential’ holdings from 2000 …

Canadian National Railway (CN-T), Canadian Pacific Railway (CNR-T), Enbridge (ENB-T), TransCanada Pipelines, now TC Energy, (TRP-T), Royal Bank of Canada (RBC-T), TD Bank (TD-T), Bank of Nova Scotia (BNS-T), Canadian Utilities (CU-T), Fortis (FTS-T) and Emera (EMA-T).

It’s railways, financials and utilities. It’s a case of boring and staple blue chips beating the crap out of the broader market. That should be of no surprise.

Check out Canada’s top Robo Advisor

In Canadian stock portfolios on Cut The Crap Investing I offered this chart from Norm Rothery.

We see that the low volatility approach is a bit better. And there is a lot of boring essentials blue chip in the Canadian low volatility index.

And there is a lot of boring essentials blue chip in the Canadian low volatility index. The essentials, wide moats, low volatility and high dividend styles are all mostly concentrated in the same sectors.

In the high-dividend space check out the Beat The TSX Portfolio. It too has a long history of incredible performance, but with much greater volatility at times.

Back to Kate and her TFSA

Kate has maxed out her TFSA space and made the life-changing move of dumping her high fee mutual funds in favour of the Essentials stock portfolio approach.

Canadians should dump their high-fee mutual funds.

From the Globe & Mail post …

By early 2020, Kate had a substantial CEP in place. Her TFSA is now worth $247,000 as of mid-June, with most of the growth coming after January, 2020. Kate’s TFSA is not one of the million-dollar-plus TFSAs that the Trouncers series has often profiled, but after adjusting for the constraints of maintaining a relatively smooth ride and an undemanding workload, she sees her TFSA hitting a home run in terms of her own needs.

In the post, how to use your TFSA I noted that a maxed-out growth-oriented global ETF portfolio strategy would have delivered about $225,000 to the end of 2024. Given the gains in 2025 and the additional $7,000 contribution space, we can call it a draw. The ETF global ETF model would also be in the $245,000 range.

More risk for the same returns

For Kate’s experience, she took on much more risk for the same returns as a global ETF portfolio. She’s concentrated in a few stocks (concentration risk). All of her TFSA rests largely on the success of Canada (geographic and political risk). She’s mostly concentrated in one currency – the Loonie.

As we’ve seen recently, President Trump has suggested he might ruin Canada economically if we don’t cooperate on trade terms. He could ruin Canada in the near term. He might. That demonstrates that the risk is present. Risk to Canada could show up in other ways, it’s doesn’t have to be a Donald Trump.

Net, net, just because Kate’s strategy worked very well, doesn’t mean that it’s a good idea. It’s not. 100% concentration in Canadian equities in any account carries incredible risks.

Just because something worked doesn’t mean it’s a good idea. If a driver claims that he drove without car insurance for 30 years, it’s a good idea because he never had an accident? He saved a lof of money; it was a good strategy? Of course not. It’s the same false argument for extreme portfolio concentration risk.

If Kate had invested in the Canadian Essentials and a sensible U.S. stock portfolio, her returns would be much greater.

What is the cost of your Canadian home bias?

Our best performers over the last 15 years are U.S. stocks and ETFs.

Canadian stock portfolio weights

Of course, it’s a personal decision. Do you want a 20% , 30%, 40%, 50% Canadian weight? Many experts will suggest that 30% Canadian is optimal within a global portfolio. And again, I like the idea of the Essentials, Wide Moat, or Low Volatility approach. The long term outperformance is meaningful and likely to repeat IMHO. But we need to pay attention to geographic allocation.

But of course – past performance doesn’t guarantee future returns.

Norm Rothery tracks the Canadian low volatilty stock model for the Globe and at Stingy Investor. The current holdings are …

Algoma Central, Alta Gas, Atco Ltd, Scotiabank, CIBC, Canadian Utilities, Emera, Enbridge, Fortis, Hydro One, Intact Financial, MCAN Mortgage, Metro, National Bank, Royal Bank of Canada, Waste Connections, PowerCorp, Quebecor, Rogers Sugar, Sienna Senior Living.

Other recent holdings are George Weston, Great West Life, Keyera Corp, Loblaw, Pembina, Sun Life and TMX Group. Personally, I would continue to hold stocks that come and go within the low volatility portfolio; I would simply consider and new holdings that are added to the list.

As you can see the low volatility portfolio is dominated by financials, utilities (including pipelines and telco) and grocers.

Inflation protection

Contrary to how the Essentials portfolio was billed, it is not inflation friendly. That was demonstrated in 2021 and 2022 when we had the COVID-inspired inflation spike that led to a rising rate environment.

The Essentials was down 1.9% in 2021 and up only 2.5% in 2022 as inflation surged, delivering a negative real return.

Cut The Crap Investing readers were prepared (at least armed with the knowledge), holding gold in a balanced portfolio. I also put Canadian oil and gas stocks on the table in late 2020. Fantastic returns were on the way in 2021 and 2022. Oil and gas is the most reliable inflation-fighting sector. Here’s XEG-T.

I have long put the Purpose PRA-T ETF on the table as a one-stop, well-diversifed inflation fighting asset. Here’s PRA over the last 5 years, averaging 15% annual.

The inflation paradox

Inflation fighters would have greatly helped portfolios over the last 5 years of course. But certainly unexpected and high inflation is rare.

And ironically, it is the avoidance of these cyclical sectors such as oil and gas and materials that has led to the success of the Essentials and Wide Moat Portfolios since the 1980’s, as we have mostly been in a low inflation, disinflationary environment. It’s possible the inflation fighters will be a drag on performance if we return to low inflation / disinflationary times.

An accumulator might stick to the Essentials / Wide Moat ‘stuff’. I think it’s a good idea for retirees and those in the retirement risk zone to hold some dedicated inflation protection.

As always the above is not advice. Think of it as information for consideration as you build your portfolio. 🙂

 

Dale Roberts is a former advertising writer and creative director and long time index investor. In 2013, he followed his passion to become an investment advisor, and then trainer at Tangerine Investments. He won Advisor of the Year in his first year. He left Tangerine in 2018 to start Cut The Crap Investing, where he helps investors learn how to use ETFs, simple stock portfolio models and Robo Advisors to full advantage in the accumulation stage, and especially in retirement. A ‘hyper-focuser’ Dale has spent thousands of hours studying retirement – from the financial planning aspects to the portfolio models that make it happen. Early in 2025 he co-founded Retirement Club for Canadians, described in this Findependence Hub blog. Keep in mind Dale is not a financial planner. Retirement Club provides ideas and learning for consideration. As we know, self-directed investors are responsible for their own investment decisions.  This blog originally appeared on his site on July 17, 2025 and is republished with permission.

Looking Back: 2025 Financial Insights Year-end Recap

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Canva Custom Creation: Lowrie Financial

By Steve Lowrie, CFA

Special to Financial Independence Hub

As we close out 2025, it’s worth pausing to reflect on the financial principles that matter most. This year, I focused on investment philosophy, retirement planning options, and helping you avoid strategies that look appealing but rarely deliver results.

Below, I’ve grouped this year’s most important insights into themes that matter for your financial future, not because they made headlines, but because they make a difference in real portfolios and real lives.

2025 Financial Insight 1: Focused and Disciplined Investment Philosophy

Measure what actually Matters

Too many investors obsess over beating “the market”; but which market? U.S. stocks like S&P 500? Canadian stocks? The NASDAQ, which is really a proxy for technology stocks? That target keeps shifting based on whatever performed best recently, making it a moving goalpost that has nothing to do with your actual goals.

In Personal Financial Goals vs. Market Benchmarks, I pointed out that your only meaningful benchmark is whether you’re on track to fund the life you’ve planned for. Everything else is just comparison that pulls you off course.

Ask yourself: Am I on track to retire when I want to? Can I fund the experiences that matter most? If the answer is yes, you’re succeeding, regardless of what any index did this quarter.

Don’t bet against the Market

When breaking news hits, it’s tempting to think you can act before the market does. But as I wrote in Betting on the Markets Being Wrong, by the time you hear or read about a news event, it’s safest to assume the market has already priced it in. Every trade has two sides, and the question to ask is: Who is on the other side of mine? In today’s markets, where roughly 80 to 90 per cent of trading is done by institutions with teams of highly skilled analysts and high-powered computers, the odds are that it’s an institution on the other side. That institution, or the person trading on its behalf, must believe they are getting a good price; otherwise, they wouldn’t do the trade. To take this a bit further, you also must ask yourself: What do you know that a professional on the other side of the trade doesn’t know?

Instead of trying to outsmart the market, recognize that prices already reflect available information. Successful investing isn’t about prediction; it’s about discipline.

The Gap between Belief and Action

Perhaps the most troubling revelation of 2025 was detailed in The Financial Philosophy Gap. Research analyzing over 4,000 Canadian financial advisors found they systematically underperformed simple, evidence-based strategies by approximately 3% annually, not because of conflicts of interest, but because of genuinely misguided beliefs about investing.

Even more striking: when these advisors left the industry, they continued making the same mistakes in their personal portfolios. The lesson? Philosophy without consistent execution isn’t really philosophy at all. It’s just expensive intentions.

2025 Financial Insight 2: Planning for your Retirement and Beyond

Three approaches to Retirement Freedom

Retirement at 65 is becoming quaint. In Mini, Semi, or Early Retirement, I explored three very different approaches people are actually taking:

Mini-retirement (a career intermission to travel or recharge) requires dedicated savings but lets you enjoy life while you still have the energy. Semi-retirement (scaling back to part-time work) dramatically reduces the capital you need for full retirement while maintaining purpose and social connection. Early retirement (the complete exit) requires substantially more savings, potentially millions, to fund decades without employment income.

Each path has different financial implications for CPP timing, RRSP withdrawals, and withdrawal rates. The right choice depends on your resources, your lifestyle goals, and what brings meaning to your life.

Passing it on, Thoughtfully

With over $1 trillion expected to transfer from baby boomers to younger generations in Canada, Transferring Wealth to Your Children, Sensibly examined two contrasting approaches: incremental lifetime gifts versus traditional large estate inheritance.

The analysis revealed striking differences. Incremental giving can reduce lifetime taxes significantly and offers the personal reward of seeing your wealth make a difference while you’re here. But it comes with a financial trade-off: in my example, about $1.1 million in today’s dollars compared to maximizing estate value.

The best approach isn’t about the math alone. It’s about aligning your financial decisions with your values, supporting family at meaningful life stages, and creating opportunities for shared experiences and guidance.

2025 Financial Insight 3: Avoiding Investment Traps

The Real Estate Obsession

Canadians love real estate, but in Why Canadians Love Real Estate as an Investment Vehicle, I examined why the numbers often don’t support the emotional attachment.

From 1990 to 2023, average Canadian home prices grew about 6.3% annually. After maintenance, taxes, insurance, and transaction costs (roughly 2% of market value yearly), the net return drops to about 4.5%. Meanwhile, the S&P/TSX Composite returned roughly 8% annually over the same period.

More concerning, cap rates on investment properties have fallen so low that many investors now rely entirely on capital appreciation, not cash flow, to make any sort of positive return. That’s not an investment strategy. It’s speculation.

The DIY Trap

In DIY Investing: Is It Really for You?, I explored why managing your own investments is harder than it looks. Dr. William Bernstein argues that successful DIY investing requires four rare qualities: genuine interest in the process, mathematical skill, strong grasp of financial history, and emotional discipline.

Even if you have all four, most investors still underperform the very investments they hold, not because they pick bad funds, but because they buy when markets feel good and sell when they feel scary. The result is a silent drag on performance from poorly timed decisions. Continue Reading…