All posts by Jonathan Chevreau

Expect strong single-digit returns in possible soft landing: Franklin Templeton’s 2024 Global Investment Outlook

Investors can expect strong positive single-digit returns for the ten years between 2024 and 2034, portfolio managers for Franklin Templeton Investments told advisors on Thursday.

Ian Riach

Speaking at the 2024 Global Investment Outlook in Toronto, portfolio manager Ian Riach said Canadian equities will have expected returns in C$ of 7.2%, a tad below the 7.4% of U.S. equities and 8.6% for both EAFE and Emerging Markets and 8.1% for China. Riach is Senior Vice President and Portfolio Manager for Franklin Templeton Investment Solutions and CIO of Fiduciary Trust Canada.

Fixed-income returns are expected to be in the low single digits: 3.9% for Government of Canada bonds, 6% for investment-grade Canadian bonds and 4.8% for  hedged global bonds, again all in C$. See above chart for the Volatility of each of these asset classes, as well as the past 20-year annualized returns for each. From my read of the chart, expected returns of North American equities the next decade are slightly below past 20-year annualized returns but EAFE and Emerging Markets expected returns are slightly higher, with the exception of China.

Fixed-income investors who were dismayed by bond returns in 2022 will no doubt be relieved to see expected future returns of Canadian bonds and global bonds are higher than in the past 20 years. “Expected returns for fixed income have become more attractive; recent volatility [is] expected to subside​,” Riach said in the presentation provided to attendees.

Capital markets expectations (CME) are used to set Strategic Asset Allocation, which forms the basis of Franklin Templeton’s long-term strategic mix for portfolios and funds, the document explains: “Portfolio managers then tactically adjust.”

“This year CMEs are generally higher than last year. Primarily due to higher cash and bond yields as a starting point,” the document says.

Global equity returns are expected to revert to longer- term averages and outperform bonds​,  EAFE equities “look attractive,” and Emerging market equities are expected to outperform developed market equities​, albeit with more volatility.

These expected returns will be in an environment of 1 to 3% inflation in Canada in 2024, versus a more “hard-wired” 2% for U.S. inflation. U.S. rates are expected to stay “higher for longer” but Canadian rates will likely start to fall before U.S. rates, Riach said. Other speakers also expect the first rate cuts to happen in 2024.

Risking risks of Recession

However, Templeton expects rising risks of recession, especially in the U.S. Interest rates could stay higher for longer and Riach consequently is expecting “tepid growth” from the economy. He was particularly cautious about the Canadian economy, given that we have the highest debt levels among the G7. “Debt is a headwind to Growth.”

Riach described three major broad portfolio themes. The first is that Recession risks are moderating but “reasons for caution remain.” The second is that on interest rates, central banks have reached “Peak policy, but expect higher rates for longer.” The third is that “Among the risks, opportunities exist.” Addressing the narrow market of the top ten stocks in the S&P500 (the Magnificent 7 Big Tech stocks plus United Health, Berkshire Hathaway and ExxonMobi), market breadth should broaden to the rest of the market.

For portfolio positioning, Riach suggested selectively adding to Equities, overweighting U.S. and Emerging markets equities, underweighting Canada and Europe equities, and for Fixed Income,”trimming duration and prefer higher quality corporates.” In short, “a diversified and dynamic approach [is] the most likely path to stable returns.”

Jeff Schulze, Head of Economic and Market Strategy, ClearBridge Investments (part of Franklin Templeton) gave a presentation titled “Anatomy of a Recession.” A recession always starts as a “soft landing,” as the slide below illustrates.  “We’re not out of danger. Leading indicators point to Recession,” he said, “The base case is Recession.” While the S&P500 consensus is for earnings growth, the U.S. GDP is expected to worsen.



He described himself  not as a permabear but a permabull, at least until a year ago. If as he expects there’s a “soft landing” with stocks possibly correcting by 15 to 20% in 2024 Schulze would view that as an opportunity to add to U.S.  equities in preparation for the next secular bull market.

One of the catalysts will be A.I., not just for the Magnificent 7 but also for the S&P500 laggards. As the chart below illustrates, economic growth often holds up well leading into a recession, with a rapid decline coming only just before the onset of a recession.  Continue Reading…

Most Canadians unprepared for Retirement & running out of time, Deloitte study finds

CNW Group/Deloitte Canada

A majority of  nearly retired Canadian households — 55 per cent — will have to make lifestyle changes to avoid running out of money in their old age, says a Deloitte Canada report released on Wednesday.

Worse, that percentage jumps to almost three quarters (73%) if you factor in unexpected costs like health care, long-term care costs and occasional one-off expenses. You can find the full release here from Canada Newswire.

Some 4,000 retired and near-retired Canadian households were surveyed, all between ages 55 and 64.

The resulting report is titled Running out of time: An urgent call to fortify Canada’s private retirement pillars.  It includes recommendations that can help 38 per cent of near-retirees achieve better financial security in retirement, and generate billions for the financial services industry.

Other findings include:

“By employing a host of radical and innovative solutions, Canada can help to protect those vulnerable both near and in-retirement, and set a global standard for how it tackles retirement on the world stage,” says Hwan Kim, Partner, Financial Services Innovation and Open Banking at Deloitte Canada in the press release, “Given roughly 40 per cent of retirement wealth inequality is due to a lack of financial knowledge, the financial services ecosystem must collaborate with the health care system and public sector to equip Canadians with accessible retirement advice, holistic near-retirement offerings, updated pension planning, quality health care, and new resources to retire confidently.”

The report concedes the saving for Retirement has always been “a daunting challenge for working Canadians,” things have gotten worse the last few years. The shift from employer-provided guaranteed Defined Benefit pensions to group RRSPs and Defined Contribution pensions that fluctuate with financial markets is a major hurdle. The report also cites the rising costs of retirement, a lack of high-quality, near-retirement planning resources, and unexpected expenses during late-stage retirement.

According to the report, 55 per cent of near-retiree households will need to make lifestyle changes to avoid outliving their financial savings – a number that is expected to jump to 73% when factoring in unexpected expenses such as healthcare, long-term care costs, and one-off expenditures.

A Bank of Montreal survey released early in 2023 found Canadians believe they need $1.7 million to retire. My blog on this in February asked whether this was doable or not.

Financial services silos must collaborate

The Deloitte report says the Canadian financial services “ecosystem must collaborate across banking, wealth management, insurance, and the public sector.” This ecosystem needs to focus on three main categories of commercially viable solutions: improve the quality and accessibility of near-retirement advice and products, help retirees manage rising retirement costs, and help Canadians build healthy saving habits early on. Continue Reading…

Read these 2 books if you care about Democracy

Joe Biden this week carrying a copy of Democracy Awakening, via Threads.

While the Hub’s focus is primarily on investing, personal finance and Retirement, Findependence has given me sufficient leisure time to absorb a lot of content on politics and the ongoing battle to preserve democracy and in particular American democracy. What’s the point of achieving Financial Independence for oneself and one’s family, if you find yourself suddenly living in a fascist autocracy?

To that end, I have recently read two excellent books that summarize where we are, where we have come from and where we likely may be going. These books came to my attention from two relatively new social media sites I joined in the past year.

For those who care, I am still on Twitter (now X) but restrict most of my posts there to the financial matters on which this blog focuses. I post there as @JonChevreau, which is the same handle I have on Mastodon (since Nov 6, 2022) and Threads, which I joined a week after its early July launch this summer. Threads is now almost the polar opposite of X politically, a veritable Blue haven: just last week Joe & Jill Biden both signed on as @potus and @flotus respectively, as well as under their real names. So did vice president Kamala Harris (posting as @VP and @kamalaharris).

But back to the books. The first must read is Prequel, by the brilliant U.S. broadcaster Rachel Maddow [cover image shown on the left]. Tellingly, it’s subtitled An American Fight Against Fascism.

The second is Democracy Awakening, by Heather Cox Richardson [cover shown below]. Both are available as ebooks on the Libby app, through (hopefully) your local library. I couldn’t find either book on Scribd (now called Everand) but they do have ebook Summaries of both.

An American Hitler?

Given that the 2024 U.S. election is now about 12 months away, there is a certain urgency to these books. The Maddow book I’d read first since it’s a brilliant historical recap of the rise of German Fascism in the 1930s and — the shocking bit! — how close Germany came to installing fascists in America. It’s literally about Germany’s search for an American Hitler it hoped to install. It’s full of sinister characters you’ve probably not heard about before, like the assassinated Huey Long.

Maddow credits the reader with enough intelligence to extrapolate from that period into the current dangerous environment. One is left to infer how she feels about the parallels to the modern GOP and its fascist leader and would-be dictator: she never says their names although she is usually more explicit in her MSNBC and podcast commentaries.

Modern readers could easily substitute Putin’s Russia for Hitler’s Germany and draw their own conclusions about the parallels to collusion with foreign powers.  There are also similarities between protracted attempts by the U.S. government to try the perpetrators in court and the protracted Delay tactics of the Defence — including many U.S. senators of the 1930s and early 1940s. And as is currently the case, these tactics largely seemed to work, since the Allies won World War II before most of the collaborators were brought to justice. Frustrating indeed, as many of today’s Americans bristled at the ultimate futility of the Mueller Report around 2019 and other protracted legal proceedings that may not be resolved before the 2024 election.

Maddow of course hints at this right at the end, quoting one frustrated prosecutor (O. John Rogge) from the 1940s:

“The study of how one totalitarian government attempted to penetrate our country may help us with another totalitarian country attempting to do the same thing …the American people should be told about the fascist threat to democracy.”

Continue Reading…

Retired Money: What is Infinite Banking and should I consider it in Retirement?

Image via karlyukav on Freepik

My latest MoneySense Retired Money column looks at a topic I cheerfully admit I’d never heard of until the editors drew it to my attention: Infinite Banking (IB). Not to toot my own horn, but that’s unusual, as I have been writing about personal finance for the better part of three decades.

In any case, you can find the full MoneySense column by clicking on the highlighted headline here: Infinite banking in Canada: Should you borrow from your life insurance policy?

According to a  useful primer in Policy Advisor, Infinite banking is “a concept that suggests you can use your whole life insurance policy to ‘be your own bank.’ “ It was created in the 1980s by American economist R. Nelson Nash, who introduced the idea in his book, ‘Becoming Your Own Banker.’ He founded IBC (Infinite Banking Concept) in the U.S. and eventually it migrated to Canada.

One of the sources cited in the column evinced some skepticism when he said of Infinite Banking (IB for short): “those who have sipped rather than chugged the IB Kool-Aid say it’s a strategy that may be too complex to be marketed on a mass scale.”

If you’re not familiar with life insurance, Infinite Banking does seem a bit arcane. Rather than put your money in a traditional bank – which until the last year or so paid next to nothing in interest on accounts – you would invest in a Whole Life or Universal Life insurance product, either of which provides some “cash value” from the investment portion of those policies. Then if you want to borrow money, instead of paying hefty interest payments to a bank, you borrow against your life insurance policy.

Watch this YouTube video primer

Those new to Infinite Banking should definitely look at a YouTube primer made by Philip Setter, CEO of Calgary-based Affinity Life ( There he readily concedes that much of the marketing hype is to portray Infinite Banking as some kind of “massive secret for the wealthy,” which essentially amounts to buying a whole life insurance policy and borrowing against it. In the video he calls out some of the conspiracy-mongering that seems to be attached to infinite banking, including the primary message from some promoters that traditional banks and governments are out to rip off the average consumer.  Continue Reading…

Most near-retirees would keep working if they could reduce hours and stress

Statistics Canada

Canada’s aging population means more retirees but most Canadians contemplating retiring say they would keep working if they could reduce their hours and stress. That was the top line of a Statistics Canada Daily release issued early in August. It was also the subject of a CBC Radio interview I conducted that aired in multiple cities on Thursday, Nov. 2.  Here’s the link.  Go to Episodes, then Nov. 2nd, then click on the line that says Canadians would choose to work past 65 under certain circumstances.

The interviewer is CBC Business columnist Rubina Ahmed-Haq, who focuses on money, workplace and financial wellness.  The 4-minute interview with me and others touched on most of the topics this site does, including semi-retirement, entrepreneurship, Findependence and Victory Lap Retirement (the latter a book I co-authored with ex banker Mike Drak.). At the outset I clarified that I myself am still working at at 70, albeit self-employed through this web site and regular writing and editing for

I was asked about the FIRE movement (Financial Independence/Retire Early) and I explained that while there are many FIRE proponents who claim to have “retired” in their 30s, in my experience these people have not really retired: rather, they have ceased to be salaried employees with the commuting grind, bosses and meetings and all that comes with it. Most have in reality become self-employed or semi-retired entrprepreneurs: in fact, many of the FIRE bloggers I have read are running web sites that accept advertising, and/or writing books that pay royalties and in some cases are on the speaking circuit accepting speaking fees. Having done all of these myself over the years, that’s not my idea of full retirement!

10% of 70-plus cohort still working at least part-time

Statistics Canada

Going back to the Statistics Canada Daily, it reported that in June 2023, 21.8% of Canadians between ages 55 and 59 were either completely or partially retired. That doubles to 44.9% for those aged 60 to 64, and doubles again to 80.5% for those 65 to 69. By the time Canadians reach my age (70), it plateaus around 90% who are at least partially retired.

Interestingly, as I may have alluded to on-air, I can think of several people who are working well past 70, including some prominent journalists and financial gurus. I guess both are seen by proponents as a relatively satisfying occupation, particularly those who like myself do both by writing (or editing) about money.

Not surprisingly, for those who are completely retired, the main factor in determining the timing was financial: usually having qualified to start receiving pension benefits. This was cited by 35% of the men and 28.2% of the women who reported being completely retired.

Continue Reading…