Inflation

Inflation

Why your Portfolio needs more than Growth Stocks

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Nearing financial independence? Growth stocks alone may leave gaps. Find out how a broader, more diverse portfolio can support income and stability.

Adobe Stock: Kiattisak

By Dan Coconate

Special to Financial Independence Hub

As you move closer to financial independence, understanding why your portfolio needs more than just growth stocks can help you make clearer decisions.

Growth stocks often attract attention during strong markets because investors expect future earnings to increase over time.

While that potential can be valuable, these investments can also experience drastic declines when market conditions change. A portfolio that includes different sources of return may provide a steadier experience and help support your goals through a wider range of economic environments.

Growth Stocks do not always Lead

Growth stocks often perform well when investors are optimistic about the future and willing to pay more for expected earnings. The challenge is that market leadership shifts over time, and periods of strong growth-stock performance are often followed by stretches when other investments take the lead.

As you approach Financial Independence, relying too heavily on one investment style can increase your exposure to timing risk. If market conditions turn negative just as you begin making withdrawals, you may be forced to sell investments at lower prices than expected.

Income adds more Breathing Room

Many Canadians pursuing Financial Independence want their investments to do more than simply grow in value. They also want their portfolio to support everyday spending needs without requiring constant asset sales. Investments that generate income can play an important role in creating that flexibility.

Rather than depending entirely on future appreciation, a diversified portfolio can offer a combination of growth potential and ongoing cash flow. This approach may help you feel more comfortable during market downturns.

Inflation Changes the Picture

Inflation directly affects your lifestyle by gradually increasing the cost of living. Even modest inflation can reduce purchasing power over a long Financial Independence journey. For that reason, some investors explore additional ways to diversify their portfolios.

Discussions around real assets and investing in commodities often arise because these investments may respond differently to inflationary pressures. The goal is not to own everything, but to understand whether your portfolio has enough variety to handle changing economic conditions.

Risk feels Different near Financial Independence

Risk takes on a different meaning once you are no longer relying on employment income to support your financial goals. During your working years, market declines may feel temporary because new contributions continue to flow into your accounts.

Near Financial Independence, however, a significant downturn can have a larger impact because withdrawals may begin at the same time. A broader mix of investments can help reduce the influence of any single market trend and provide a more resilient foundation for the years ahead.

A Wider Mix builds more Confidence

You do not need a complicated investment strategy to make meaningful progress toward Financial Independence. In many cases, a simple and diversified portfolio can provide a stronger foundation than one built entirely around growth stocks. Understanding why your portfolio needs more than growth stocks encourages you to think beyond returns alone. A wider mix of assets can help stabilize your finances and make it easier to stay committed to your plan.

Dan Coconate is a local Chicagoland freelance writer who has been in the industry since graduating from college in 2019. He currently lives in the Chicagoland area where he is pursuing his multiple interests in journalism.

Inflation is Kryptonite to anything but Short-term Bonds

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By Dale Roberts, Retirement Club/Cutthecrapinvesting

Special to Financial Independence Hub

Bonds may be the adult in the room, but they are certainly afraid of inflation. Bonds usually do their thing: they go up when stock markets get hit hard. They provide ballast. During periods of expected high inflation, or during rising inflation bond prices go down. That can create and contribute negative returns. The bonds can contribute to a portfolio decline.

But not all bonds are the same. Ultra-short bonds carry no price risk, while long-term bonds can carry extreme price risk. It’s crucial that investors understand the ‘types of bonds.’ To intermediate- and long-term bonds, inflation is Kryptonite. How do we battle that force?

As always, the following is not advice.

As a refresher, be sure to have a read of:  Stocks are the unruly kids. Bonds are the adult in the room.

Too funny, a rare case when Cut The Crap Investing actually ranked high on search.

Inflation up. Bonds down.

Bond yields rise during inflation primarily because investors demand higher returns to compensate for the reduced purchasing power of future fixed interest payments. Furthermore, inflation often prompts central banks to raise interest rates, which directly drives up yields, while existing bond prices fall to align with new, higher-yielding securities.

As interest rates rise due to inflation, new bonds are issued with higher coupon rates to attract investors. Existing bonds, which pay lower interest rates, become less attractive and must drop in price to remain competitive, which simultaneously increases their yield.

Join us at Retirement Club

We’ve had some recent experience with the inflation scare of 2021 and into 2022. The bond market (XBB-T) experienced one of its worst performances in 2022, losing around 11% or more as inflation surged, reversing a four-decade bull market in fixed income.

In the above chart we see that bonds provided no ballast. Quite the opposite. That said, we have to keep in mind that bonds have done their thing in every major recession. They stink the joint out, one time, and investors turn on them.

Traditional global stock and bond portfolios have delivered wonderful returns …

Asset Allocation ETF Page – to the end of December 2025

Inflation fighters and the all-weather portfolio

In mid-March we had a refresher on what works during inflation with:  How do we defend against stagflation?

If you have dedicated inflation fighters in the portfolio you’re not too worried about bonds delivering negative returns. We know that stocks don’t always go up. It’s the same for bonds.

In the following chart, we’ll start in 2021. Markets think ahead, of course, and enough investors loaded up on inflation-fighting assets as inflation storms gathered in 2021. The Purpose Real Asset ETF (PRA-T) is a nice one-stop inflation-fighting shop.

PRA-T was up 23.5% in 2021 and 15.9% in 2022.

Add 20% PRA-T to 80% XBAL-T and we have annual returns over 10% with no negative years from 2021 through 2023.

Continue on into 2026 and it gets even better. PRA-T is up almost 16% in 2026.

Go short and clip the inflation price risk

Ultra-short-term government bonds (CBIL-T) do not carry price risk: they are cash-like. In fact, they will provide greater and greater income as inflation expectations and yields rise. Continue Reading…

Vanguard Canada launches two new Dividend ETFs

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ETF TSX Symbol Management Fee1
Vanguard Developed ex-North America Dividend Appreciation ETF VIGG 0.28%
Vanguard U.S. High Dividend Yield Index ETF (CAD-Hedged) VUDH 0.28%

On Monday (June 1),  Vanguard Investments Canada Inc. announced two new income-focused Dividend ETFs. The same day, they started trading on the Toronto Stock Exchange (TSX):  Vanguard Developed ex-North America Dividend Appreciation Index ETF (TSX: VIGG) and Vanguard U.S. High Dividend Yield Index ETF (CAD-Hedged) (TSX: VUDH).

The two new funds are focused on high-dividend yield and dividend growth respectively, said Sal D’Angelo, Head of Product and Marketing, Vanguard Canada, in a press release.   VIGG tracks  a market cap-weighted index focused on companies located in developed markets excluding Canada and the U.S., with a history of increasing dividends over time.  Management fee is 0.28%. The Vanguard fact sheet describes VIGG as being medium risk.

VUDH tracks a market cap-weighted index focused on common stocks of U.S. companies with higher-than-average dividend yields, hedged to Canadian dollars; management fee is 0.28%. It is also rated medium risk.

In March, Vanguard also launched the Vanguard U.S. High Dividend Yield Index ETF  (VUDV, TSX).

In a backgrounder released with the ETFs, Vanguard said Dividend Income ETFs account for $42 billion or 5.4% of total ETF assets in the Canadian market. They include passive funds, fully active mandates and covered call options.

Dividend-focused ETFs have historically shown resilience across many market environments, the document says: “They can also provide stability in uncertain and inflationary environments through reliable cash flows which can partially offset inflation. The companies included in these portfolios tend to be more defensive during periods of market volatility, supported by steady earnings and stronger balance sheets.”

The backgrounder focuses on two main types of Dividend ETFs: those that generate high Dividend Yield, and those that grow their Dividends over time.

High-Dividend Yield ETFs

Vanguard says High-Dividend Yield ETFs are best suited for “investors looking for more immediate income including retirees drawing from their portfolios or those supplementing current cash flow.”  Higher starting yields provide more immediate income as the portfolio invests in mature, stable and value-oriented companies, with a higher allocation to sectors like energy, utilities and financials. Continue Reading…

Can Millennials become Financially Independent?

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Image Pixabay/iStock

By Billy and Akaisha Kaderli

Special to Financial Independence Hub

Millennials, those born roughly between 1980 and the year 2000, face a different future than Baby Boomers did at their same age. In terms of Wealth Building and saving for Retirement their challenges are wage stagnation, unemployment, underemployment and a seeming sense of entitlement. Because they came of age during the Great Recession, their faith in brokerage firms, Wall Street and global banks has been bruised.

Being optimists, we believe the financial future of this generation can still be bright, but with loads of student debt and lack of investment understanding they need to get started learning about finances and money management now.

Time is on your side and is your greatest asset

One thing Millennials have today that Boomers don’t is great stretches of time before Retirement. It is their greatest resource and this fact needs to be made clear to them. Time cannot be replaced, and if you are a Millennial, then knowing about the power of compounding will change your financial life. $10,000 – the cost of a used car – invested today in the S&P 500 Index and based on market historical returns from 1950 to March 2023 could grow to US$1,000,000 or more throughout your career, thereby building a solid foundation for your retirement needs. This return is without adding another dollar to your investment.

S&P Market Return Chart

If you do nothing else for your retirement, scrape and scrap to make this investment into SPY (S&P 500 Index ETF) or VTI (Vanguard Total Stock Market ETF) and you will be handsomely rewarded, since you have this time on your side.

Just get Started

A new investor with limited funds can utilize an online, no-frills brokerage account and — depending on which brokerage you pick —  you can open an account with less than $1,000. Not every house requires initial investments of more than $2,500, and as of this writing, Fidelity is offering a no minimum for opening an account. Continue Reading…

When to Sell your Precious Metals for Financial Benefits

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Find out when selling gold, silver, and other assets makes financial sense, and how timing, market conditions, and personal goals can shape better decisions.

Image courtesy Adobe Stock/Photographer: DragonImages

By Dan Coconate

Special to Financial Independence Hub

Selling gold or silver can support a stronger financial plan when the timing fits both market conditions and personal needs. The best decision often comes from balancing price trends, tax impact, and short-term cash goals instead of reacting to headlines.

Many households hold metals as a hedge, a store of value, or part of an inheritance. Knowing when to sell precious metals can help turn those holdings into funds for debt repayment, emergency savings, or major life expenses.

Start with the Reason for Selling

A clear purpose should guide the decision before any item goes on the market. Selling to cover high-interest debt or build a cash reserve often creates more financial benefit than holding metals during a period of flat prices.

Selling also makes sense when an asset no longer fits a broader plan. A collection that sits unused may offer more value as liquid funds than as a long-term holding with no clear role.

Watch Market Prices and Economic Conditions

Precious metal prices often move with inflation concerns, interest rates, and investor sentiment. A strong price run can create a good exit point, especially when gains meet a specific financial target.

Timing should still rest on more than the market alone. A solid sale happens when favorable pricing lines up with a real financial need or a planned shift in asset allocation.

Understand what you Own before Setting a Price

Not every item should sell based only on melt value. Coins, flatware, and older pieces may carry collectible or historical value that changes the right selling strategy. Continue Reading…