Building Wealth

For the first 30 or so years of working, saving and investing, you’ll be first in the mode of getting out of the hole (paying down debt), and then building your net worth (that’s wealth accumulation.). But don’t forget, wealth accumulation isn’t the ultimate goal. Decumulation is! (a separate category here at the Hub).

The defensive Canadian ETF portfolio, Gold and Schwab’s SCHD

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By Dale Roberts, CutTheCrap Investing, Retirement Club

Special to Financial Independence Hub 

Schwab’s SCHD is a popular U.S. dividend ETF that has been disappointing investors for a long time. Does that disappointment mean that the fund is going to shine when (if) the AI bubble bursts? And speaking of shining, we’ll take a look at gold. Can it go even higher? Plus, Canada’s most defensive sector ETF has a surprising history of outperformance.

What to expect from the U.S. stock market over the next 10 years? Not much.

Once again, having lived through it, and invested through it I remember:

The lost decade for U.S. stocks.

Here’s more on Howard Mark’s thoughts: Expensive but not nutty. Howard Marks on U.S. stocks and the one thing investors should be doing right now.

He pointed to a JPMorgan chart from late last year that looked at what an investor’s annual return on average over the next 10 years would be if they had bought S&P 500 at a given price/earnings ratio. The P/E was 23 at the time, meaning that average return would be 2% to minus 2%, he said.

Of course there are other lost decades, such as the Depression era and the stagflation era of the late 60s into the early 8’s. But don’t worry: it was all ‘easily handled by a balanced portfolio with some inflation protection. We call that an all-weather portfolio of course.

Even a 5% allocation to gold during the stagflation era would have allowed you to breeze through the period. Add in oil and gas stocks and yer laughing.

Inflation fighters worked their magic once again in the recent bout of high inflation in 2021 and 2022. Check out: Using defensive sector ETFs for the Canadian retirement portfolio.

That portfolio idea (not advice) uses defensive sectors in concert with dedicated inflation fighters.

Is SCHD well-positioned for a dot.com-like correction?

I’ve penned extensively on the concept that retirees might pay attention to valuation issues and hedge that risk with a U.S. value-oriented holding. We’d continue to hold some U.S. market or U.S. growth, but layer in a value holding. The Schwab Dividend ETF SCHD is a popular choice. What’s up with SCHD? Or what’s down might be the appropriate question.

I offered this post a year ago …

iShares U.S. Quality Dividend ETF is crushing SCHD in 2024.

I created a meaningful position in iShares Quality Dividend ETF XDU-T (Canadian Dollars) as a valuation slant. It outperformed SCHD in 2024 and that continues in 2025. In price terms SCHD was down 1.7% in 2025 while XDU-T was up 4.4% (at time of writing late in October 2025). We might attribute about 2% of that gain to the Canadian currency weakness vs the U.S. Dollar.

The S&P 500 was up 13.66% in 2025. The Nasdaq 100, QQQ was up 18.36%. Money continues to flow to growth-oriented stocks in the U.S.

This article on Seeking Alpha (sign up or sub required) suggests that SCHD might be well-positioned if we do get a major correction and rotation to value and quality.

SCHD: Your bet on a cooling AI narrative.

The top 3 sectors for SCHD were leading sectors when the dot com bubble burst …

That chart tracks Energy, Consumer Staples and Healthcare vs Tech.

Who knows, but SCHD’s stubborn decline might be creating even greater value. Here’s an interesting table on sectors and valuation.

worldperatio.com

In the search for value you might also consider small cap, or mid cap or a classic value index ETF such as iShares VLUE. As I wrote for Findependence Hub, these might be challenging times for recent retirees who do not pay attention to valuation. You’ll find more bubble-bursting ideas in that post 😉

Accumulators with decades to go might ignore the valuation “issue.”

I’m happy with XDU and some of my other U.S. value-oriented stocks. In my U.S. RRSP account, my individual U.S. stock portfolio was up 20.7% in 2025 (again, as of time of writing). The core stocks are still driving the bus.

How much could gold shine?

Here’s a fascinating Tweet from Charlie … Continue Reading…

QQQ vs. S&P 500 vs. TSX: Investing in The Index for Canadians

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AlainGuillot.com

By Alain Guillot

Special to Financial Independence Hub

For years, I have been telling friends: “Just buy the market, don’t waste your time with individual stocks.”

The problem is that most of them don’t know what I am talking about, and to be honest, sometimes I don’t know what I am talking about either. Because not all “markets” are created equal. They don’t behave the same way, and they aren’t all appropriate for every investor.

Today, I will talk about the three primary markets people discuss, how each one behaves, and how a regular Canadian can choose between them. Those three markets are:

  • QQQ, the
  • S&P 500, and the
  • TSX index.

Once you understand the differences, you will be able to judge which is a better fit for your portfolio and where they should be placed.

Higher Returns always come with Higher Risk

If we stack our three indexes on a risk-return basis, this is what we get:

  • QQQ has the highest returns and the highest risk.
  • The S&P 500 is less risky and has lower returns than QQQ.
  • The TSX has lower returns than the S&P 500 but offers different sector exposure.

My preferred ETFs to buy these indexes are:

  • For QQQ: I like an ETF called QQQM.
  • For the S&P 500: I like VOO.
  • For the Canadian TSX: I like XIU.

For your information, there are different ETF which cover the same indexes. I like the above mentioned because they have low management fees, they are highly liquid, and they have a good reputation.

To give you an idea of the difference in total returns for these three investments over the past 10 years (approximate):

But don’t be seduced by higher returns if you cannot withstand drops of 30–35%.

What’s Inside these Different Investments?

These indexes put a magnifying glass on different parts of the economy.

QQQM: The Growth Machine

QQQM is a concentrated bet on technology and innovation.

  • Heavy in tech (Apple, Microsoft, Nvidia).
  • Minimal exposure to banks or energy.
  • Low dividends, high reinvestment.

This is why the returns are high; most of these companies’ business models are scalable globally. But be careful: in a single year, the QQQ was down 32.58%. You need a strong stomach to tolerate a drop of that magnitude.

VOO: The S&P 500 Standard

The S&P 500 is composed of the 500 largest corporations in the U.S. The risk is lower than QQQM because it is diversified across many industrial sectors.

  • Annualized return: About 14%.
  • Highest annual return: About 31%.
  • Lowest annual return: About -18%.

XIU: The TSX for Canadian Patriots

XIU is composed of the 60 biggest Canadian companies.

  • Dominated by banks, oil, and mining.
  • Higher dividend yield than the U.S. indexes.
  • Lower long-term growth potential.

Risk vs. Reward Table

Index Returns Risk Role
QQQ Highest Highest Aggressive Growth
S&P 500 Strong Moderate Core Portfolio
TSX Lower Cyclical Income & Diversification

Summary: QQQ makes you rich faster (and scares you more); the S&P 500 makes you rich steadily; the TSX pays you while you wait.

How should a Canadian Investor use this Information?

In Canada, we have three main investment “buckets” treated differently for tax reasons: TFSA, RRSP, and Non-registered accounts.

1. TFSA (Tax-Free Savings Account)

Everything in this account grows tax-free. This is the place for your highest-return investments. If you make a 100% return, it is 100% tax-free.

  • Best for: QQQM or high-growth individual stocks. You keep all capital gains; $0 goes to the government.

2. RRSP (Registered Retirement Savings Plan)

Capital gains and dividend income are tax-deferred until you withdraw the money. Furthermore, there is no U.S. withholding tax on dividends in an RRSP. Normally, the IRS imposes a 15% tax on dividends paid to non-residents, but the Canada-U.S. tax treaty waives this for the RRSP.

  • Best for: VOO (S&P 500) or any U.S. dividend-paying stocks.

3. Non-Registered Account (Taxable)

Once you hit your TFSA and RRSP contribution limits, you use a regular investment account. In Canada, domestic dividends receive favorable tax treatment through the Dividend Tax Credit.

  • Best for: XIU (TSX Index) or Canadian bank stocks that pay regular quarterly dividends

Summary

  • TFSA → QQQ / Growth stocks (Maximize tax-free gains).
  • RRSP → S&P 500 / U.S. equities (Avoid U.S. withholding tax).
  • Non-registered → Canadian dividend stocks (Utilize Dividend Tax Credit).

Final Thought: Stop looking for the “Best” Index

There is no single “best” index. There is only the one that matches your risk tolerance, time horizon, and emotional discipline. QQQ will outperform until it doesn’t. The TSX will lag until commodities surge. The S&P 500 will quietly compound in the background. The real edge isn’t picking the winner—it’s understanding why each one wins at different times and positioning yourself accordingly.

Frequently Asked Questions (FAQ)

Which is better for Canadians: VOO or XIU? It depends on your goal. VOO (S&P 500) offers higher historical growth and U.S. tech exposure, while XIU (TSX 60) offers higher dividends and stability through Canadian banks and energy.

Why should I hold U.S. stocks in my RRSP instead of my TFSA? While both are great, the RRSP is uniquely exempt from the 15% U.S. withholding tax on dividends. If you hold a U.S. dividend-payer in a TFSA, the IRS takes 15% before you see it.

Is QQQM the same as QQQ? Essentially, yes. They track the same index (Nasdaq-100), but QQQM has a lower management fee, making it better for long-term “buy and hold” investors.

What is the “Dividend Tax Credit” for Canadians? It is a tax incentive that reduces the amount of tax you pay on dividends received from taxable Canadian corporations, making the TSX very attractive for non-registered accounts.

Alain Guillot is a part time event photographer, part time Salsa teacher, and part time personal finance blogger. He came to Quebec as an immigrant from Colombia. Due to his mediocre French he was never able to find a suitable job, so he opened a Salsa/Tango dance school and started his entrepreneurship journey. Entrepreneurship got him started into personal finance and eventually into blogging. Now he lives a Lean FIRE lifestyle and shares his thoughts in his blog AlainGuillot.com. This blog appeared first on his blog and is republished here with permission.  

Lessons from Tuchman

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Image courtesy BMO ETFs/Getty Images

Second Quarter 2026 BMO Macro Regime Model – Strategy Report

By Bipan Rai, BMO ETF & Structured Solutions

(Sponsor Blog)

Upon reflecting on the current state of markets, we’re reminded of the lessons from Barbara Tuchman’s The Guns of August, which illustrates how hubris and rigid systems can override rational decision-making.

While we are not drawing direct parallels to the current situation in the Middle East, the book offers important lessons for investors as they navigate portfolio construction in the months ahead.

As an example, periods of higher inflation generally increase the co-movement between U.S. stocks and interest rates, requiring a more pragmatic approach to diversification. This often leads to greater interest in real assets like gold, as we’ve seen in recent years.

But what happens when even gold fails to provide adequate diversification during a geopolitical shock? Tuchman’s work reminds us of the importance of stress-testing assumptions before a crisis unfolds. When correlation structures break down and traditional hedges falter, investors who have considered tail risks in advance are better positioned.

With that in mind, let’s consider the present environment. Even if the Middle East conflict is resolved quickly, the economic and market consequences will likely persist. Inflation risks are no longer symmetrically distributed, and price pressures appear likely to rise. Damage to energy-related infrastructure points to a prolonged period of crude oil and LNG supply disruption, pushing prices higher for longer. This affects refined products (such as gasoline, jet fuel, and kerosene), fertilizer production, and the supply of helium: complicating central bank messaging. Markets have responded by pricing out expected Federal Reserve rate cuts and pricing in aggressive hikes for other developed-market central banks (Chart 1).

Chart 1 – Markets Have Priced in Tighter Central Bank Policy by End-2026

Source: BMO Global Asset Management, as of March 27, 2026.

At the same time, growth risks are shifting in the opposite direction. Higher input costs act as a tax on consumers and weigh on corporate margins. The speed at which rising energy prices feed into slower growth depends largely on a country’s economic slack, which explains why some central banks have recently acknowledged growth risks more explicitly than they did in early 2022.

Indeed, our own proprietary macro regime model is signaling that we are transitioning from a ‘reflation’ backdrop to a more stagflation-like regime (Chart 2).1 This emerging stagflation regime need not mirror the 1970s, but we are still positioning our portfolios to be more robust and resilient. We’re broadening our commodity exposure to provide a more direct hedge against supply shocks. In an environment where inflation surprises are more likely to be positive, this type of convexity is valuable.2

We are also allocating to front-end TIPS (Treasury Inflation-Protected Securities) as a hedge against inflation pressures. While breakevens3 have moderated with recent disinflation progress, they do not fully reflect a sustained energy shock. TIPS offer a cleaner way to express inflation risk without requiring a strong view on nominal growth.

Within equities, we are tilting toward quality and low volatility. If growth slows while cost pressures persist, companies with strong balance sheets, durable margins, and stable cash flows should outperform more cyclical or highly leveraged peers. Low-volatility exposures can also help reduce drawdowns during headline-driven market swings.

History teaches us that conflict does not guarantee crisis. But periods of stress often reveal underlying fragilities. Our role as stewards of capital is not to forecast every geopolitical development, but to recognize that the distribution of macro outcomes is tilting toward a stagflation-like environment: and to position portfolios accordingly.

Chart 2 – Broad Commodity Exposure is Now a Better Diversification Strategy than Just Relying on Metals

Source: BMO Global Asset Management, Bloomberg. Daily returns from February 27 to March 27.

Asset Allocation

  • Relative to the Q1 edition, we’re making some modest changes to our asset allocation splits. The most notable shifts are that we are paring our positions in the equity and alternative sleeves and reallocating them towards fixed income. Of course, these aren’t big changes: as we still remain underweight fixed income and overweight both equities (slightly) and alts.
  • Our macro regime model suggests that we are in the midst of a transition from reflation to stagflation: characterized by low growth and high inflation. This is still consistent with the late cycle feel of the macroeconomic backdrop.
  • Despite the challenging backdrop, the underlying fundamentals remain sound enough to maintain a neutral/slightly overweight broad equity position for now. Ahead of the conflict, we did see earnings growth across several sectors in the U.S. and Canada. At the same time, the situation in the Middle East remains fluid, which requires us to be nimbler and more flexible.
  • In the fixed-income sleeve, the increase in weight reflects our view that the Canadian yield curve4 provides better value and that we feel U.S. TIPS should outperform in the months ahead. For the alts sleeve, the reduction in weight reflects our shift away from gold and towards a broader set of diversifiers in the commodity and infrastructure spaces.
  • Importantly, we are bullish on the U.S. dollar (USD) for the coming months. This means that our preference is to keep our U.S. exposure unhedged on a tactical basis. The main reasons for this view are the following:
    • We expect the CAD swaps market to price out rate hikes for the Bank of Canada in 2026.
    • We expect USD upside as net long positioning remains relatively light.

Equities

  • We are increasing our allocation to ZCN (BMO S&P/TSX Capped Composite Index ETF) as Canada remains well positioned as a commodity and energy producer. With energy prices supported by ongoing geopolitical uncertainty, the Canadian equity market should continue to benefit, though outcomes will remain sensitive to the duration of the conflict in the Middle East.
  • For our U.S. position, we are adding ZLU (BMO Low Volatility US Equity ETF) to complement our existing exposure through ZUQ (BMO MSCI USA High Quality Index ETF) . This combination reflects a preference for defensive characteristics and earnings resilience during a period whereby investors remain selective on valuation and fundamentals.

Fixed Income

Alts/Hybrids

  • The most notable change we’ve made in Alts/Hybrids is adding a tactical allocation to ZCOM (BMO Broad Commodity ETF) to broaden our inflation and geopolitical hedge. Energy has led performance on a year‑to‑date basis, but a persistent risk premium can support a wider set of commodities, which improves diversification if equity volatility picks up.
  • We’ve also upgraded the weight for BGIF (BMO Global Infrastructure Fund ETF) as we continue to constructive on infrastructure, including electric grids, and engineering/construction projects.

Chart 3 – Q2 2026 Regional Exposure

Source: BMO Global Asset Management, as of March 31, 2026.

Chart 4 – Global Equity Sector Breakdown

Source: BMO Global Asset Management, as of March 31, 2026.

Standard Performance Data

 

Continue Reading…

There are no Guarantees in Retirement

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By Billy and Akaisha Kaderli

Special to Financial Independence Hub

Akaisha and Billy playing tennis in Arizona: RetireEarlyLifestyle.com

People often tell us they are going to wait a few more years to retire.

They point out that by waiting, they will have health care provided for life and a pension that will let them afford the same lifestyle to which they’ve become accustomed. They won’t have to scale back on spending or make awkward choices concerning their budgets. Not only will they not need to relocate to a city or state that is more affordable, they will be able to own two houses: one at home with their country club membership, and another on a lake, near a beach, or in a foreign country.

Sounds great

These people have worked their entire lives for this remarkable retirement plan.

They have made personal sacrifices throughout the years such as spending time away from the family, not pursuing their hobbies, and not taking long sabbaticals. They have made these choices because in doing so, their retirement plan will be fully guaranteed.

After investing 35 or 40 years of their working lives, saving their money, raising children, and putting their own personal wants on the back burner, they now look forward to that day when they can relax and finally enjoy the life they deserve.

No tough decision making, no cutting back on their consumer habits.

Or at least, that’s how they think it’ll be.

There are no guarantees

What we have learned in our three decades of financial independence is that the perfect time for retirement simply doesn’t exist. Things change, and sometimes radically.

Perhaps your personal plan for retirement was to take big amounts of equity out of your home. But then the housing market takes a dive or your home or is affected by something out of your control. Oops.

Natural disasters can come up, affecting your lifestyle and investments. Forest fires, floods, hurricanes, earthquakes, drought can all threaten your home whether you have insurance or not. What an upheaval! It’s a financial and emotional storm no one wants to go through.

Financial markets have their earthquakes too. While the market over the years has performed at about a 10% annual return including dividends since we retired in 1991, those of us who are older now and receiving Social Security might not have the time to recover from something drastic.

Health challenges

We have a myriad of friends who, as they worked and aged, have had health problems affect either them or their spouses. One man wanted to travel through Europe, but now has developed claustrophobia (due to an earlier trauma he suffered) and can no longer fly, or take a cruise in a tiny cabin, far from shore.

What if you or your spouse find yourselves with a medical condition that doesn’t allow you the freedom you fought so hard to achieve? What if your grandchild has special needs and requires assistance, time, or your financial help?

Where can you look for comfort in circumstances such as these?

Reap reward from your self-reliance

If you have learned to live below your means, have kept your monthly expenses reasonably low, and have not loaded up with huge amounts of consumer debt, the above scenarios could be an uncomfortable bump in the road, but not a life-defining event.

If you find yourself awash in a financial storm and the days down the road seem dark and menacing or if your retirement dreams seem to be permanently shelved, try some of the following steps to regroup:

Stay calm.

People retire every day, in good times and bad. Like deciding to have a child, it’s never the perfect time. Realize that it’s normal in life for unforeseen events to rattle your confidence level, so try not to let it faze you. Above all, do not make a reflexive emotional decision about the rest of your life by making a bad trade, or an impulsive decision about your home.

Be independent.

Make your own retirement investments independent of your employer’s plan. Don’t rely solely on your employer for your retirement, whether it’s through a traditional pension or with company stock in a 401(k). This way, if your company goes under for reasons you cannot see today, you’ll still be in control of your future.

Know where you stand.

Get support from your past good behaviour. If you have been tracking your spending and living below your means, you know exactly where you are financially. The confidence and discipline of controlling spending should give you great self-assurance that you can weather any storm. And you will know exactly where to make spending changes if need be. Look for buying opportunities.

It’s always a good time to review your portfolio to see whether you have been over-concentrated in one stock or in one particular sector. We recommend no more than 4% in any one particular stock, and that includes the companies you worked for. A balanced portfolio with roughly 60% equities to 40% cash/bonds and equivalents for those in or nearing retirement is a good approach.

Invest in no-load ETFs (Exchange Traded Index Funds) such as VTI, Vanguard Total Market Fund or SPY, S&P 500 Index, that you can buy or sell in real time, instead of the market price at the day’s end and use weakness in the market to add to your positions.

Consider other work possibilities.

If the idea of fully retiring frightens you, consider working part time, cutting back the hours at your current job, doing consulting work, or starting a second career. You’ll still earn income, but you may not have the same work demands that your current job makes of you.

Get creative.

Consider other alternatives for the expression of your retirement life. Perhaps you now have the incentive to think about relocating to a smaller home, a more affordable city, or to own one vehicle instead of two. You don’t need to shelve your future plans entirely. Find other ways of scaling down pressure and moving toward fun, relaxation, and new ways of self-expression.

Join a free forum.

You are not alone. If you find yourself in a financial or health challenge, there are others who are facing something similar. They may have an answer for you, share some tips or point you in the right direction to receive the help you are looking for.

No matter what your circumstances, there are always opportunities, there are always options. Be open to them and make the most of where you are!

Billy and Akaisha Kaderli are recognized retirement experts and internationally published authors on topics of finance, medical tourism and world travel. With the wealth of information they share on their award winning website RetireEarlyLifestyle.com, they have been helping people achieve their own retirement dreams since 1991. They wrote the popular books, The Adventurer’s Guide to Early Retirement and Your Retirement Dream IS Possible available on their website bookstore or on Amazon.com. This blog first appeared at RetireEarlyLifestyle.com and is republished on Findependence Hub with their permission. 

7 ways to tell if a stock pays a solid Dividend and will keep doing so

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TSInetwork.ca

We believe investors will profit most, and do so with the least risk, by buying shares of well-established, dividend-paying stocks with strong business prospects.

That then raises the question, how to tell if a stock pays a solid dividend? How to find out if a stock pays dividends is an important skill for investors.

The best companies to invest in for dividends have strong positions in healthy industries. They also incorporate strong management that makes the right moves to remain competitive in changing marketplaces.

How to tell if a stock pays a sustainable dividend?

These types of stocks give investors an additional measure of safety in today’s volatile markets. And the best ones offer an attractive combination of moderate p/e’s (the ratio of a stock’s price to its per-share earnings), steady or rising dividend yields (annual dividend divided by the share price), and promising growth prospects.

Today we’re going to look at how to tell if a stock pays a dividend and — more important — if it’s likely to keep paying it. You’ll want to recognize these stocks when they are available. Learning how to find out if a stock pays dividends can help you make informed investment decisions.

But first, let’s quickly recap the value of dividends and dividend-paying stocks by looking at some reasons for investing in them.

Why invest in dividend stocks?

1.) Growth and income. The best dividend-paying stocks offer both capital-gains growth potential and regular income from dividend payments.

2.) Dividends can grow. Stock prices rise and fall, so capital losses can follow capital gains, at least temporarily. Interest on a bond or GIC holds steady, at best. But top-quality dividend-paying stocks like to ratchet their dividends upward: hold them steady in a bad year, raise them in a good one. That gives you a hedge against inflation.

3.) Dividends are a sign of investment quality. Some good companies reinvest profit to spur growth instead of paying dividends. But fraudulent and failing companies are hardly ever dividend-paying stocks. So if you only buy stocks that pay dividends, you’ll automatically stay out of almost all the market’s worst stocks.
For a true measure of stability, focus on those companies that have maintained or raised their dividends during a recession or stock-market downturn. That’s because these firms leave themselves enough room to handle periods of earnings volatility. By continually rewarding investors, and retaining enough cash to finance their businesses, they also provide an attractive mix of safety, income and growth.

4.) Dividend income gets favourable tax treatment. Taxpayers who hold Canadian dividend-paying stocks get an additional bonus. Their dividends are eligible for the dividend tax credit in Canada. This means that dividend income will be taxed at a lower rate than the same amount of interest income (investors in the highest tax bracket pay tax of about 25% on dividends, compared to about 54% on interest income). Investors in the highest tax bracket will now pay tax on capital gains at a rate of roughly 27%.

The 7 suggestions

1.)  How to tell if a stock pays a dividend? Look for companies with long-term success. These companies are the most likely to keep paying and increasing their dividends. Continue Reading…