Inflation

Inflation

Four Horsemen of the Apocalypse?

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Image by Pixabay

By John De Goey, CFP, CIM

Special to Financial Independence Hub

Over the past number of months, I have become increasingly interested in a series of ideas put forward by a handful of economists who were both iconoclastic and influential in their time.  It seems their ideas are experiencing a bit of a renaissance. Some of these economists achieved moderate fame, and some had more credibility than others.

Here I’d like to explore the related theories and ideas of Joseph Schumpeter, Nikolai Kondratieff, Simon Kuznets and Hyman Minsky.

Let’s begin with portraits of the four thinkers

Joseph Schumpeter (1883-1950) — His big idea was ‘creative destruction,’ the notion that capitalism advances through waves of entrepreneurial innovation that destroy old industries and create new ones, driving productivity growth though with upheaval for incumbents.

Nikolai Kondratiev (1892 – 1938) — Held the view that ‘long waves’ (lasting roughly 50–60 years) explain how economies experience ‘super cycles’ that are tied to major technological revolutions (e.g., steam/rail, electricity/chemicals, information) that reshape investment, growth, and prices. The current wave has been dominated by the internet and artificial intelligence and likely started in the mid to late1980s.

Simon Kuznets (1901 – 1985) — Wrote about structural change and long-run growth. He felt that the economy reorganizes itself across sectors and shifts in income distribution accompany growth. He was among the first to write about income inequality and the structural changes he identified matter for things like productivity and living standards.

Hyman Minsky (1919 – 1996) — Is best known for his financial instability hypothesis: stability breeds complacency; credit cycles move through hedge, speculative, and ponzi financing, causing systemic fragility and crises when optimism turns to debt distress, leading to a “Minsky Moment” when it all comes crashing down. Over-extended credit leading to a collapse in prices was a major factor in the dot.com crisis and the global financial crisis of 2007-09.

What these ideas have in common is intuitively obvious from an ‘eye test’ perspective. Still, the concepts are difficult to explain reliably using econometric data. In many instances, these men were mocked because their theories didn’t fit neatly into how the world was perceived, but all four have left a mark on how we interpret information in the 21st century.

The reason I’m running into their ideas more and more these days is that there’s as strong consensus among their adherents that their related theories are relevant again based on recent developments. They seem to be converging and so may ultimately amplify one another if the waves coincide.

The unifying theme is that growth is not just a smooth upward trend, but rather something that is driven by transformative forces that reorganize both production and finance. Innovation and technology have long been accepted as central engines of change, but their effects spill over into organizational forms, institutions, and credit. Furthermore, it seems long-run development is layered, meaning that broad technological shifts (i.e., long waves) interact with shorter sectoral shifts. The overlay of these disparate waves can amplify or dampen economic outcomes.

Bringing together four influential strands in economic thought, we can attempt to sketch a cohesive framework that explains long-run growth, structural change, and financial instability as different facets of a single dynamic process: innovations drive new opportunities, which reshape the economy’s structure and distribution, while finance amplifies and sometimes destabilizes that process.

The four thinkers illuminate different angles of a single dynamic: innovation drives growth and structural transformation; the financial system amplifies this process but can sow instability; long-run waves reflect broad technological revolutions, while distributional changes concern who benefits.

A cohesive Dynamic Innovation–Structure–Finance framework captures how technology, sectoral change, credit, and policy interact across time to produce growth, inequality, and crises. It suggests a prescription of balanced policies that nurture innovation while guarding against financial fragility. The economy evolves through the interaction of four interdependent engines: Technology/Innovation, Structural Change, Finance, and Policy/Institutions.

Let’s look at the mechanisms and phases in more detail

Long Kondratiev Wave:

Each wave is anchored by a broad technological revolution (historical examples include steam/rail, electricity/chemicals, information/communication:  the latest is internet / AI). Each wave drives sustained investment, productivity gains, and demographic/urban changes.

Mid-cycle Kuznets Structural Shifts: Continue Reading…

Vanguard is cautious on behalf of Retirees

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Image coutesy MoneySense/Freepik

My latest MoneySense Retired Money column has just been published. Click on hypertext for full column: Why Vanguard’s ETF aimed at retirees is currently cautious in its asset allocation.

The column originated from a mid-January Vanguard Canada briefing with two of its economists held for the Canadian media in downtown Toronto. You can find at least two news stories on the web filed shortly after the event by Bloomberg News and Investment Executive.

While the general thrust of the press conference was on the opportunities for Canada in A.I. and materials stocks (chiefly gold and silver miners), the Q&A allowed me to probe Vanguard about something that has intrigued me for the past year: As a semi-retired investor who recently started a RRIF, I regard one particular Vanguard ETF as a big part of my core portfolio, along with low-volatility ETFs from BMO ETFs, and income-oriented ETFs from vendors you may see in blogs  on this site.

After the Liberation Day craziness of April 2025, I became more defensive, though my Asset Allocation is not (yet) to the point the Rule of Thumb that your age should equal your Fixed Income: that would suggest in my case I should have 28% in Equities and 72% Fixed Income.

One core fund for retirees is VRIF, the Vanguard Retirement Income Fund, which is one of several funds often mentioned by the Retirement Club (see this introductory blog on the Club co-founded by blogger Dale Roberts of  . ) It trades on the TSX under the ticker symbol VRIF.

The screenshot below from Vanguard’s brochure shows VRIF’s holdings of Vanguard ETFs and performance to the end of 2025.

 

I first started a position in VRIF soon after its launch in 2020.  At the time, its Asset Allocation seemed to be around 50% stocks to 50% bonds, spread around all geographies in the normal proportions.

However, as 2025 proceeded I noticed that VRIF had begun steadily to cut back on its equity exposure and raise its Fixed Income, almost to the point of 30/70.  I’ve also noticed various YouTube videos from Vanguard’s U.S. parent that suggest similar caution: a cutting back from the big US growth mega cap stocks and a move more to other developed and emerging economies around the world.

If you read the VRIF launch news release, it emphasizes the objective is to provide income-seeking investors with a “targeted 4% annual payout.” That happens to be in line with William Bengen’s famous 4% Rule, which is “fine with me,” as I quipped at the media briefing.

In response to my query, Vanguard Canada spokesman Matthew Gierasimczuk said VRIF’s asset allocation varies over time” but the goal is the targeted 4% Return: Vanguard sees a “more optimistic outlook on bonds and Fixed Income: better to lock in without risk of equities.”

Kevin Khang, Vanguard

Then Kevin Khang, Vanguard’s head of global economic research  [pictured left] reiterated that the ETF seeks to fund a “certain level of payout: bonds in our view can achieve the desired certain level of payout” and “the US stock market is pretty expensive for obvious reasons: the US is reasonably valued and bonds are very normally valued; which is a new thing.” From 2009 to  2022, since the Great Financial Crisis, bonds in general didn’t pay much, which upset people in 2022-223 when rates went up but now they are reasonably valued: relative to inflation they are paying a decent Real Return.”

Here’s the sector weightings for VRIF at the end of 2025:

Vanguard rates its volatility as “low.” Notice the weightings of certain sectors often overweighted in pure low-volatility ETFs (like those from BMO and Harvest): Health Care, Consumer Staples and Utilities. As you can see above, the weightings in more volatile sectors like Technology and Financials is much higher.

For the MoneySense column I was subsequently referred to Head of Product for Vanguard Canada, Aime Bwakira. The rationale for VRIF’s high fixed-income exposure appears to be one of not taking more risk than you need to take, a stance which is apt for the retirees VRIF caters to. Bwakira confirmed Vanguard “has been leaning more heavily toward bonds — particularly higher quality and corporate bonds — than in past years while staying within its equity guardrails” of a minimum 30% and maximum 60%.  This positioning “reflects the current environment and the results of our capital markets projections.”

3 reasons Vanguard is boosting Fixed Income in VRIF

The rationale is three-fold:

First is higher interest rates. Bonds — especially corporate bonds — are paying more than they did for many years post the 20008 Great Financial Crisis (GFC): “This makes them well‑suited to support VRIF’s 4% income target without taking on unnecessary stock-market risk. VRIF includes corporate bond exposure specifically to help enhance yield for investors.

Second, given today’s market outlook, the fund’s model has shifted toward fixed income because bonds “currently provide a more favourable balance of expected return and risk.”  I was also referred to  Vanguard’s current VCMM 10-year projections (VCMM = Vanguard Capital Markets Model) for various asset classes. It’s also published in the US for US investors Vanguard Capital Markets Model® forecasts | Vanguard.

Dated January 22, 2026, the document states that “Even at current stretched valuations, rising earnings growth could provide momentum for stocks in the near term. However, our conviction is growing stronger that long-term prospects for U.S. equities are subdued. Our model anticipates annualized returns of about 3.9% to 5.9% over the next 10 years.” It adds that “Our muted long-term return projection for U.S. equities is entirely consistent with our more bullish prospects for an AI-led U.S. economic boom.”

The third and most important point raised by Bwakira is that “a higher allocation to bonds helps VRIF deliver reliable cash flows, which is central to its mandate. Because income needs don’t disappear during market volatility, VRIF prioritizes stability and sustainability in its payout. VRIF aims to maintain the value of an investor’s initial investment over the long term. Tilting toward bonds during periods of elevated equity market uncertainty helps protect investors from large drawdowns while still supporting the payout.”

VRIF is one popular source of Retiree income at the new Retirement Club

This common-sense caution has not gone unnoticed by Canadian retirees seeking stable income. VRIF is a well-regarded ETF members of the Retirement Club, founded by Cutthecrapinvesting blogger Dale Roberts and partner Brent Schmidt. One of the club’s monthly Zoom presentations in the autumn of 2025 highlighted VRIF among several other income sources for retirees. Roberts has long championed VRIF, as in this blog on his site originally written after the launch, and subsequently updated: most recently in this version. Continue Reading…

Why your Grandparents’ Investment Strategy may no longer be enough

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Image by Unsplash

By Devin Partida

Special to Financial Independence Hub

The investment playbook has changed. It may have performed well for the last several generations, but finding financial stability is a different game in the 2020s. The best practices established by your grandparents have become obsolete. Therefore, you should look to new financial horizons to establish financial freedom in a way that is more accommodating to modern dynamism and volatility.

How traditional Investment Strategies fail to adapt

The contemporary investing landscape is different from that of the last several decades. The techniques of previous generations are less viable. While you may ask your parents or grandparents for investing advice, their strategies could minimize your wealth generation and financial opportunities.

Most of your grandparents likely maintained a portfolio that followed a simple framework:  the 60/40 rule. Place 60% of your money in reliable stocks or index funds and the rest in high-interest-rate bonds. Today, this is far from the portfolio diversity modern experts want to see. These kinds of portfolios are only growing 2.2% a year now, so professionals are recommending even more varied investments, including precious metals, collectibles, venture capital and private equity, to name a few.

Past portfolios worked alongside robust pensions that were once common in the workforce. It is less common now for this type of security to supplement a 60/40 portfolio. These factors, combined with lengthening lifespans, mean nest eggs are ill-equipped to make it through potential market downturns and the entire length of your retirement. If you are living in retirement longer than previous generations, then the money has to work for you longer.

Why Economic Shifts demand a different Investment Approach

Interest rates have collapsed, and bond prices are mostly trending less than in previous decades, making them unsuitable for outpacing inflation. This reality is why people are seeking even more places to put their money.

The democratization of investments, such as the rise of cryptocurrencies, has also made market understanding more complex. Pair this with exchange-traded funds (ETFs), real estate investment trusts, non-fungible tokens and more, and you have the most enigmatic market history has ever seen: long gone are the days of just relying on blue-chip stocks.

Additionally, retirement savings have become more of a personal responsibility as the number of pension plans has decreased by millions since 1975. An IRA or a 401(k) is the more common route nowadays, as they are cheaper and less risky for employers. Now, many could view their investments as a replacement for what could have been a pension.

Ultimately, the set-it-and-forget-it model of your grandparents’ investment strategies is missing the wealth-generating opportunities you need to prepare for retirement in this climate. The rising cost of living, the financial influence of technological advancements and geopolitical tensions are only a few other factors that could shape how you divert your money.

Ways to Adapt to increase Risk Tolerance and Wealth

You can diversify while still embracing security. It will allow you to prepare for the unexpected. For example, your grandparents’ generation likely faced fewer natural disasters, as climate stressors have increased in recent years. In 2024, natural disasters caused at least $368 billion in economic damage worldwide, affecting people and their financial well-being.

These are the best ways to consider external factors outside of your control while taking advantage of how the investor market looks today.

Craft your Investment Goals

Many choose to work with a financial adviser, but you should start planning by identifying short-, medium- and long-term goals. These could involve buying a house, starting a business or building for retirement. Each goal has a time frame, allowing you to make informed decisions about your risk. At this stage, evaluating the stability of your job, debt and household expenses is critical. Continue Reading…

5 Leaders Share how they’re Adjusting Retirement Asset Allocation for the Rest of 2026

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Market volatility and shifting economic signals are forcing retirement savers to rethink their portfolios in real time. This article gathers practical strategies from five seasoned financial leaders who manage billions in retirement assets and are actively adjusting allocations right now. Their approaches range from bucketing time horizons to integrating global hedges, offering concrete tactics that advisors and individuals can apply immediately.

These experts were gathered by Featured.com, which has been supplying Findependence Hub with quality content for several years. It has changed its procedure so editors like myself can request input on particular topics we think will interest our readership. The sources are all on LinkedIn, as you can see by clicking on their profiles below.

  • Secure Core Needs via Indexed Annuities
  • Segment Time Buckets to Tame Sequence Risk
  • Shift Toward Global Breadth and Tangible Hedges
  • Favor Quality Income Plus Balanced Discipline
  • Blend Abroad Exposure for Safety Anchors

Secure Core Needs via Indexed Annuities

Given the trade and tariff noise, I start by securing essential lifestyle costs with Fixed Indexed Annuities that provide floors with index-linked upside to blunt sequence-of-returns risk.

I also require clients to keep separate emergency reserves and a growth sleeve because FIAs have surrender periods. We coordinate annuity design, laddering, and rider choices with Roth conversions and RMD planning to create a predictable income base before taking market risk.

Will Lane, Retirement & Estate Planning Advisor, Top Rank Advisors

Shift toward Global Breadth and Tangible Hedges

Looking ahead to the rest of 2026, portfolio concerns for individuals aged 65 and over, and those close to retirement (within 10 years), include risk management, purchasing power protection, and geopolitical and currency diversifications.

We are seeing a move away from traditional 60/40 or 70/30 portfolios and toward a more dynamic framework for asset allocation. U.S. stocks and high-grade Fixed Income are still foundational, but we are trying to avoid over-allocation to a particular market or macro scenario.

Some key themes for the future are greater geographic diversification, selective access into non-U.S. assets, and cautious hedging versus U.S. dollar declines. We are not making stark currency predictions, but geographical diversification outside of USD-focused assets is becoming sensible for increasing numbers of investors.

At the same time, there’s also been a reinforcement of allocations to hard assets like precious commodities and metals. The inclusion of crypto exposures is small and is based on suitability.

As such, it’s emphasized that there’s a focus on “resilience and adaptability, and positioning to withstand trade tensions, volatility in inflation, and policy uncertainties in a way that is independent of specific narratives.”

Peter Reagan, Financial Market Strategist, Birch Gold Group

Favor Quality Income plus Balanced Discipline

For investors in or approaching retirement, the balance of 2026 should be geared towards capital preservation, income stability, and inflation resilience as the primary objectives:  while still maintaining enough growth exposure to support long retirement horizons.

Retirees cannot afford to eliminate equities, especially with longer life expectancies and ongoing inflation risk. But favor high-quality cash-generating companies over speculative, momentum-driven stocks. Bonds should primarily reduce volatility and fund near-term spending. Real assets, alternatives can support diversification while improving returns, and investors could have a small exposure to this segment.

For retirees and near-retirees in 2026, the goal is not to time markets, but to construct a portfolio that:

  • Can withstand equity volatility
  • Generates dependable income
  • Preserves purchasing power over a multi-decade retirement

Asset allocation should be personalized, tied to spending needs, risk tolerance, and other income sources — but the overarching theme is balance, quality, and discipline. Not aggressive risk-taking or excessive conservatism.

Geetu Sharma, Founder and Chief Investment Officer, AlphasFuture LLC

Segment Time Buckets to Tame Sequence Risk  

For my pre-retiree clients, one of the biggest risk factors to a successful retirement is Sequence-of-Return risk, or the risk of experiencing poor market conditions at the start of retirement.

To help address this risk, I believe in holding a diversified portfolio that consists of several accounts that have different asset allocations and amounts. For example, funds needed in the first year of retirement would be allocated more conservatively than funds needed in the 15th year of retirement. This helps to reduce the impact of geopolitical risk or currency risk on their portfolio and thus their retirement. Additionally, having a portfolio that includes commodities like gold or international equities helps to balance the risk of a particular underperforming asset class throughout retirement as well.

Stu Evans, Wealth Advisor, Blackbridge Financial

Blend Global Exposure for Safety Anchors

For retirees and those within ten years of retirement, the ongoing tariff tensions and global trade uncertainties require a careful reassessment of asset allocation while maintaining a focus on capital preservation and income reliability. Traditional allocations, such as the 60/40 or 70/30 equity-to-bond mixes, still provide a strong foundation, but we are increasingly emphasizing diversification across geographies and asset types to manage both market and currency risks.

For U.S.-based investors approaching retirement, a modest increase in non-U.S. equities makes sense to capture growth opportunities abroad while reducing concentration risk in domestic markets that may be more exposed to trade disruptions.

We are also monitoring the U.S. dollar closely, and while we are not making aggressive currency bets, selective exposure to assets that historically hedge dollar weakness — such as precious metals and certain commodities — can provide a measure of protection and portfolio resilience.

We continue to stress bonds and cash equivalents for retirees, particularly high-quality, short- to intermediate-duration bonds that preserve capital while providing reliable income. However, in light of persistent inflation pressures and potential geopolitical shocks, we are selectively introducing alternatives, such as commodities, real assets, and limited exposure to crypto in small, highly managed positions: not as core holdings but as strategic diversifiers. The goal is not chasing yield or speculative gains, but rather enhancing portfolio resilience and smoothing volatility.

Overall, the guiding principle remains risk-adjusted diversification: maintaining sufficient equity exposure for growth, bonds for income and stability, and alternatives to hedge against systemic risks, while keeping allocations flexible and aligned with liquidity needs. Retirees should avoid over-concentration in any single market or asset type and prioritize investments that protect purchasing power, provide consistent income, and withstand trade or currency shocks over the remainder of 2026.

Andrew Izrailo, Senior Corporate and Fiduciary Manager, Astra Trust

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10 lessons I’ve learned from 25 years of investing

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Image courtesy Tawcan/Unsplash

By Bob Lai, Tawcan

Special to Financial Independence Hub

I started DIY investing while I was in university. Back then, I bought a few stocks based purely on recommendations. Honestly, I didn’t have a clue what I was doing. I didn’t know much about stock valuation, how to read quarterly and annual reports, or understand company fundamentals.
Since our financial epiphany, I have become far more knowledgeable about investing. Writing about investing and posting new articles on this blog is one way for me to demonstrate that I understand different investing concepts.

After 25 years of investing, here are 10 important lessons I have learned:

1.) Increase the savings gap

Investing is all about saving money, investing that money, and waiting for it to grow.

To save money, one needs to commit to saving money. Living below your means or spending less than you earn is a common concept in the Financial Independence Retire Early (FIRE) movement. But I believe it’s more than just spending less than you earn. It’s about committing to continue increasing your earning power (i.e. income) while decreasing or maintaining your spending.

The difference between your income and spending is what I call the savings gap, or some people call it the savings rate. The bigger the savings gap, the more money you can save and invest toward your investment portfolio.

When you are starting on your investment journey, you really need to rely on injecting fresh capital into your investment portfolio for it to grow. The compounding effect won’t really pick up until your investment portfolio becomes sizable (say $100k or more). This is like rolling a snowball down the hill. If you start with a tiny snowball, it will take longer to increase the size and the speed of the snowball. If you start with a bigger snowball and can add more snow to the snowball as it rolls down the hill, you can increase the size and speed faster.

So increasing your savings gap will drastically propel the growth of your investment portfolio. Work hard on increasing the savings gap without depriving yourself.

2.) Learn to automate

Over the years, I have learned that the less I get myself in the way of our saving & investing journey, the better. Therefore, I focus on automating as many things as possible.

Whenever we receive a paycheque, a certain percentage is automatically moved to our financial freedom account and it is used for investing. We also automate how much money is moved to the different investment accounts each month.

On the other hand, we also automatically move different percentages of money to the different accounts like Play, Give, and Long Terms Savings for Spending. 

To take advantage of the power of compounding, we enroll in both synthetic and fractional drips with our online brokers so dividends are reinvested and additional shares are purchased automatically.

Some investors I know automate the buying and rebalancing process as well. For example, they would auto-purchase ETFs or stocks every second week or every month. Some use Passiv to auto-rebalance their portfolio until the desired allocation is met (note: we don’t auto purchase or auto rebalance but it’s a worthwhile automation).

3.) Ignore the noise

Nowadays, it’s easy to find news and stock analysis on the internet. Doomsday predictions are everywhere, so it’s easy to react and sell your investment on emotion. Similarly, you can get sucked into hype and fads easily and invest a significant amount of money when you get excited about an idea.

More than ever, it’s important to ignore the noise.

Remember, the stock market is like a roller coaster. It has its ups and its downs. Please do not freak out about the recent pops or drops. We can’t control the market, so why pay attention to all the noise and react to emotion or feeling stressed out about the news? The market is cyclical, bull markets come and go, so do bear markets. There are always ups and there are always downs, too. There’s no other way around it.

The key thing to remember is that the stock market has a tendency to go up over the long term. In fact, a historical long term return is 10% without accounting for inflation.

So ignore the noise and focus on your long-term investing strategy.

4.) Keep it simple

I used to trade on technical and chart analysis. The moving averages, channel breakouts, support & resistance, seasonality, stochastic, and head and shoulders are some of the technical analysis tools I have learned and used over the years. When using these analytical tools to trade stocks, things can often get complicated and it could take time to decide whether to buy or sell. These technical analyses typically require regular monitoring of the stock market, which can be very time consuming.

Over time, I learned that it is best to keep it simple. The idea of hedging your consumption became one of the fundamental pillars of our investing strategy: invest in companies that produce products that we use daily. The harder it is to switch and replace that product, the better. Or the more we and others complain about the product, but find it nearly impossible to find an alternative, the better.

I also learned not to focus overly on the quarter-over-quarter performance. Rather than looking at the micro trends and quarterly performances, we keep it simple by focusing on the macro environment. Are people still buying new iPhones and finding it hard to switch to Android? Are more and more people using credit cards for purchasing rather than cash? Are people relying more and more on their phones and data plans for their everyday tasks?

While technical and chart analysis are still helpful, I learned it is far more important to focus on the simple things like company fundamentals, profitability and product pipelines to understand whether it makes sense to continue investing in the said stocks or not.

Another way to keep things even simpler would be investing in one of the all-in-one ETFs like XEQT or VEQT. This way, you don’t even need to do any research on the companies you own. You simply buy shares of these all-in-one ETFs regularly and dollar-cost-average over time.

5.) Having the right expectations

Unfortunately, many investors believe they can make big profits and multi-baggers in a very short term. They like excitement and if they don’t trade regularly, their hands get “itchy” from lack of action.

This is where having the right expectations is extremely important.

The reality is, investing should be as boring as it can be. There shouldn’t be any excitement at all. It takes years for a stock or an ETF to compound and provide a solid return. Therefore, it’s vital to have the right expectations. You probably aren’t going to get a +100% return every single year. Tracking the historical average, between 8-10%, is totally OK. But don’t forget that the market goes up and down, so you will have a bad year occasionally.

6.) Best investment to buy

What is the best investment to buy? Yes, I have written about the best investment in the world and the best way to invest. In reality, there’s no such thing.

Dividend investing is not the best investment strategy in the world. Dividend investing is also not the best way to invest.

Index investing is also not the best investment strategy in the world. Index investing is also not the best way to invest. Continue Reading…