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US or Canadian – VOO or VFV?

Paul - The Wry Eye Guy Leave a comment
The Currency Balance

Which currency should we invest in, Canadian or US dollars?

In this example, we’ll compare Vanguard’s US listed & US dollar denominated ETF (VOO), against the Canadian listed & Canadian dollar denominated equivalent (VFV) from Vanguard Canada. Imagine investing $10k back in 2012 in each of these ETFs. Conveniently, the Loonie & the greenback were approximately equal back then. One Canadian dollar was worth one US dollar. That means the $10k investment was of equal value, regardless of the currency.

With all dividends reinvested, here’s what the performance has looked like since then …

VOO vs VFV 2012 to 2025

By March 2025, VOO grew from $10k to $52k, in American dollars. While VFV soared to about $73k, in Canadian dollars. VFV looks like the big winner. But it’s not.
Back then the currencies were at par. By the end of this chart, it costs $1.44 Canadian to buy one US dollar. If we sold off VFV at the end & converted the proceeds to US dollars, we’d have a bit less than $51k American. pretty close to the US dollar value of VOO. Similarly, if we sold all our VOO holdings & converted those US dollars to loonies, we’d have almost $75k Canadian. Bottom line is that they’re about the same. We’re only looking at about a fifteen hundred dollar (Canadian) difference in total return, with the American listed VOO coming out slightly ahead.

VOO should come out slightly ahead. There a few reasons for that, including the following …

1. It has the lower fund fee of 0.03%, compared to the 0.09% fee of VFV in Canada.
2. While it all happens inside the ETF, VFV loses a little of the dividend payout due to the 15% dividend withholding tax that the IRS (the US equivalent to the CRA) collects. This happens regardless of the account the Canadian listed ETF is held inside.
3. Though ETFs can do currency exchange at better rates than the typical DIY investor, there might be some additional currency exchange drag on VFV too.

If the fund fees were the same, if currency exchange didn’t have any fees, & if there were no dividend withholding taxes, the performance of the two ETFs would be practically identical. The apparent outperformance of VFV in the chart above is mainly due to the declining value of the Canadian dollar against the US dollar over that 12 year period. Both funds grew similarly in real value (as they should, since they both hold the same stocks). But VFV grew “extra” Canadian dollars over that time, in line with the increasing real value of the stocks inside the EFT. This compensated for the Canadian dollar falling in value against the US dollar. If the reverse had happened, & the Canadian dollar had gained strength against the US dollar over this time, VFV’s numbers would have lagged VOO on the chart. It would have “looked” worse. But, once you convert the currency in either direction, both would have looked pretty much the same again.
That said, there are some pros & cons with either choice.

If you have a bunch of US dollars already & you want to invest these greenbacks inside an RRSP account, VOO would be the better choice. It may not always be this way going forward but, under the current agreement between Canada & the US (& as it was over this timeline), the RRSP account shelters the investor from the dividend withholding tax that would otherwise apply to US based ETFs. On the flip side, if you don’t already have US dollars, you’ll have to pay currency conversion fees. Or learn the Norbert’s Gambit technique to minimise the currency conversion costs. If you want to avoid that currency conversion work, the outcome resulting from sticking with VFV is still pretty good. Particularly when investing outside a registered retirement account, where neither fund can avoid the withholding tax. That would bring the results a little closer together. It is worth noting that the bigger the investment, & the longer the time invested, the greater the potential impact. The $1,500 difference on this $10k investment example, would have been $15,000 on a 100k investment. You can do the math for a million dollar investment as your portfolio grows! And, for a more precise comparison, you’ll need to figure out the impact of currency exchange costs, back & forth, on the end result too.

I’ve ignored some other critically important tax wrinkles (there are some potentially significant exposures here) that come with foreign investing during the course of this comparison, so be sure to consult a tax specialist if you want to invest on exchanges outside of Canada. There are tax reporting requirements with the CRA above a certain value of foreign owned investments, for example. There are also potential IRS tax reporting requirements. And perhaps even US tax liabilities along the way. There’s a lot to learn. And if you don’t know, you’d be well advised to check with a professional advisor to help you figure out your US & foreign investing strategy. In addition, the outcomes may require the inclusion of more than just stocks, bonds, & ETFs. Any additional foreign property, like a holiday home outside Canada, for example, will impact your tax situation. Talk to an expert!

On the other hand, there is nothing wrong with investing in Canadian listed ETFs while you learn more about investing on foreign exchanges & in other currencies. It is a little less work to stick with the loonie. And the end result here was not too far behind the American equivalent. Many investors stick with Canadian listed ETFs, while still getting the necessary foreign exposure. There are also currency hedged ETFs that can help offset those currency fluctuations. But that’s a conversation for a another day.

Just remember that things would begin to reverse in the above chart, if the loonie were to gain in value against the US dollar going forward. In other words, VOO would then start looking better when charted against VFV. In the first 6 months of 2025, for example, VOO is up about 5%. While VFV is essentially flat. The real value of both is still close to the same. But the numbers are different due to a weakening US dollar this year, making VOO look better over this different timeline. This is more about how the numbers look, it’s not that the value is substantially different. Looks can be deceiving, eh!

If you want to learn more about saving & investing from the ground up, I’d like to suggest that you check out Double Double Your Money, available at your local Amazon store.

Important – this is not investing, tax or legal advice, it is for entertainment & conversation-provoking purposes only. Data may not be accurate. Check the current & historical data carefully at any company’s or provider’s website, particularly where a specific product, stock or fund is mentioned. Opinions are my own & I regularly get things wrong, so do your own due diligence & seek professional advice before investing your money.

Safe Withdrawal Rate in Retirement

Paul - The Wry Eye Guy 2 Comments
Take Care of those Pennies!

After a lifetime of saving for retirement, spending what we’ve saved can get pretty messy. Even a flock of pros would all come up with a different, at least slightly, spending plan for each of us. We don’t want to go broke too early. But we don’t want to make our retirement miserable by not spending enough either!

While it’s not actually a rule, the so-called “4% Rule” is often used as a guideline for determining a safe withdrawal rate over a 30 year retirement timeline. The rule suggests we can take out 4% the first year of retirement & take out inflation adjusted amounts (i.e. 4% + inflation adjustment) every year thereafter. And we can do that for 30 years, with a high degree of probability that the portfolio will make it all the way to the end. Bill Bengen originally used a portfolio of US stocks & bonds to develop this strategy. In recent years, he created a more diversified portfolio that he calculates allows a higher withdrawal rate of around 5%. Other experts point to the greater capability of an all-equity portfolio to deliver improved lifelong results. And still other experts in the space present models that suggested we might have to drop down closer to a 3% withdrawal rate to ensure portfolio survival. What gives?

There are a few things to consider here. The markets, particularly the US market, have produced great returns over the past decade & a half. An investor, convinced of the strength of the US market, who retired in 2010, might be looking like an investing genius today! Since 2010, a million dollar portfolio, all invested in the SPDR S&P 500 ETF Trust (SPY), being drawn down at an inflation-adjusted rate of 4%, would have a portfolio value of over $5m today. Not a typo. Using the 4% withdrawal methodology for more than 15 years, the portfolio would still have grown to a value of over five million dollars today. This retiree could have withdrawn a whopping 12% for year one. And, even after increasing that far bigger income by inflation every year, the portfolio would still be worth almost a million bucks today. That is an amazing outcome, eh?

Yeah, it is. But we can’t always take big withdrawal rates to the bank!

Let’s jump back another 10 years & look at a retiree who quit working in 2000. Exactly the same scenario as above. This retiree also has a million dollar portfolio & starts out with a $40k withdrawal the first year, or 4%. By today, the portfolio is only worth just under $340k. Even less in inflation adjusted value. What happened to the five million bucks from the previous scenario? The lost decade, including the dot-com crash & the great financial crisis, is what happened! Early poor returns damaged the future value of the portfolio.

If this “Year 2000 retiree” had used the 12% withdrawal rate from the other example, the Year 2000 portfolio would have gone to zero by 2006. Yes … zero. Nothing left after only 6 years. This is not a good outcome. In fact, just blindly following the 4% guideline in this example would have been a cause for worry by today. And withdrawing much more than an inflation-indexed 4% would almost certainly have resulted in a portfolio that died before the investor did!

Those examples are from the past. But the big lesson is that there is no guarantee that the future will be all rainbows & sunshine. We need a plan that handles grey skies & storms too. As we progress through retirement, financial plans must be reviewed & revised on a regular basis. To account for changes in the markets & in our lives. There may be the potential to increase our income for greater enjoyment during some years. Or there may be a requirement to reduce spending, to ensure we have income to the end of our days. Flexibility may be required en route.

And that’s what makes retirement planning so challenging. Financial planning is not a set it & forget it deal. As we saw above, we can’t depend on a financial plan that was created in 2000 or 2010 delivering the same results all the way to today. Modifications along the way are warranted. Similarly, if we were to start retirement this year, it is very unlikely that a financial plan created in 2025 will see us, cleanly & smoothly, all the way to the end. Will our asset allocation selections & portfolio choices allow us to spend way more than 4% every year? Or will we get trapped in a scenario where even 4% might be too aggressive? If we don’t use the 4% Rule, how do we handle the added burden of inflation through the years? There are a few challenges there, eh!

Some investors put their trust in dividend growth portfolios to sustain a growing income stream for a lifetime. And a plethora of new high income funds are proving very popular with investors who see early retirement calling via funds with huge distributions. Can these alternatives work? Some of these new funds offer distributions of 10 or 15%, some even more than that. Imagine you need a million dollar portfolio to produce 4%, or $40k, of annual income to retire on. If you’ve only got $400k saved, how about building an ETF portfolio yielding 10% & calling it quits? This might work. Or it might not. We’ll have to look at how we might compare, & perhaps even combine, these different strategies. However, that’s a whole other bunch of numbers & I’m getting grumpy now, so we’ll leave those questions for another day.

Meantime, take care out there & make sure you have an up-to-date financial plan.

If you want to learn more about saving & investing from the ground up, I’d like to suggest that you check out Double Double Your Money, available at your local Amazon store.

Important – this is not investing, tax or legal advice, it is for entertainment & conversation-provoking purposes only. Data may not be accurate. Check the current & historical data carefully at any company’s or provider’s website, particularly where a specific product, stock or fund is mentioned. Opinions are my own & I regularly get things wrong, so do your own due diligence & seek professional advice before investing your money.

No Tipping Down Under!

Paul - The Wry Eye Guy Leave a comment
Today’s tip … head down under for a holiday!

This is a departure from my usual subject matter, but I’m just back from a fantastic holiday in Brisbane, Australia. It was great because of the people I got to share the adventure with. And because Brisbane is such an amazing place. This city delivered lots of surprises. One such surprise was the most amazing transit system. Those Brisbane City Cats & Kitty Cats that zip up & down the meandering Brisbane River are an unbelievable treat. And you can go anywhere in southeast Queensland for 50 cents! Hey, I’m frugal, what can I say! That 50c fare had me smiling every time I tapped onto a bus, train, or river boat! And, for a change, I was not the designated holiday driver. I got to be a real tourist this trip! LOL

There was one other enjoyable thing that I didn’t even realise had any significance ’til I got back home. This was something simple. A thing that added a little extra joy to every dining experience down under. There is no tipping there!

I grew up in a country that only hinted at the occasional requirement for a small, token tip. And even that would require some very exceptional service. And maybe slight inebriation on the part of the tipper! For me, tipping was not the norm way back then. It was a bit of a culture shock when I first came to Canada. But after decades of living here, I am totally conditioned to providing the obligatory tip. Even when the food or service is pretty awful. In Australia, tipping is not the norm. And I think the Aussies might have it right!

For starters, the minimum wage in Oz is over $24 an hour. Servers get paid a reasonable wage, without having to generate some high-energy Hollywood charm to “earn” a decent tip. The Aussie system might be especially appreciated by servers who provide great service on days when the chef is having an off-day. Their paycheque is not negatively impacted by someone else screwing things up! Whilst there, I spoke with some people who have had experience in the service industry in both Canada & down under. While it’s too small a sample group to be of any value to make generalisations, they were unanimous in their preference for the Australian way of doing things. Especially the higher basic wage.

As a consumer, I learned something new about all this too. I had no idea there was so much subliminal stress involved in eating out in North America! I’m calling it subliminal because, day to day, I didn’t even notice it. Until I was subjected to the tip-free process down under. When it comes to paying the bill, you don’t even need to do any math in Oz. There are no tip calculations to consider!
My first meal out in Australia was a bit of a disaster. Not because of the quality of the meal, that was great. But because I was trying to tip a confused server. The machine didn’t prompt me for a tip & I had no idea how to handle that! 😜
I finally managed to get the tip into the machine, but I never mention tipping again for the rest of my stay.

Not having to tip means no there is no weighing up whether service was good or bad. If it was terrible, sure, you might complain. If it was amazing, you might flag the server’s efforts to the manager. But if it falls into that very broad band of acceptability, you just enjoy the parting exchange with another human being. The slightly horrible process of one human being sitting in judgement of another, while the amount of the tip is considered, is eliminated. And how about those times when the service is good, but the food is terrible? Should we reduce the tip? That’s punishing the server for the quality of the food & that wasn’t their responsibility. No fair, eh? In Australia, all that goes away.

The machines don’t arrive with the suggestion that tipping starts at 15% either! Wasn’t 10% a good tip way back when I first came to Canada? In Oz, they just show the final amount that you see on your bill. And this is for a dining in experience. Not having a tip suggested at a take-away (take-out!) counter was even better! And I never found myself having to supress a surge of anger towards any machine having the audacity to suggest that 20% was just a mediocre starting tip! All in all, finishing up the dining experience & paying for a meal is just a slightly nicer & better experience in Australia, compared to here.

While the consumer (me!) certainly benefits from the Aussie system, it feels like the bigger advantage of their non-tipping culture might be for the service staff. For starters, they are paid a decent wage. Canadian minimum wage levels are lower than the Australian rates. Canada doesn’t have any of the super-low hourly rates that apply to servers in some US states, but wages are still lower here than in Australia. Potentially, at the end of every meal, there are some slightly judgemental things that surround the whole tipping culture in North America. It may be subtle & almost insignificant, but they are there nonetheless. With worse potential for abuse are things like the tip-out practice. This requires servers to share their tips with other members of staff. So the chef that did a lousy job preparing the food still gets a cut of the tip from the server who provided great service. Even when the poor quality of the chef’s work triggered a tip reduction. In some places, I’m told the tip-out is calculated on the amount of the table bill. Even when the server gets no tip! So a server who provides great service, but delivers poorly prepared food might get no tip. And they have to pay a tip-out fee to the chef or other staff members who may have done the lousy job that encouraged the customer not to tip. Is this for real? The server could actually be financially penalised for the poor quality of someone else’s work!?! This feels like a really bad system to me. Dining out is supposed to be a pleasant & relaxing experience. Thinking about all this stuff is anything but! I really don’t know how the average server in Canada feels about all this, but I really enjoyed the Aussie experience as a consumer. And Aussie service staff seem to like it too.

I’m not sure if we can change anything for the better up here, but if there are there any Canadian restaurants that are boosting pay & prohibiting tipping, please let me know where. I’d certainly be willing to pay a little more to dine in that kind of environment. Assuming the chef wasn’t screwing up the food every time! LOL

It’ll be back to boring investing type stuff next time but, despite the horrendously long journey & the awful jet lag, I highly recommend a visit to Brisbane. It is a wonderful city, in an amazing country, with really nice people, & great weather. While I would probably try to avoid the heat of the Queensland summer (🥵), it’s definitely a worthwhile bucket-list destination & experience at other times of the year!

If you want to learn more about saving & investing from the ground up, I’d like to suggest that you check out Double Double Your Money, available at your local Amazon store.

Important – this is not investing, tax or legal advice, it is for entertainment & conversation-provoking purposes only. Data may not be accurate. Check the current & historical data carefully at any company’s or provider’s website, particularly where a specific product, stock or fund is mentioned. Opinions are my own & I regularly get things wrong, so do your own due diligence & seek professional advice before investing your money.

DIY Investing or Work With a Financial Advisor?

Paul - The Wry Eye Guy Leave a comment
Good old-fashioned financial advice.
But at what price?

DIY investing can drive you a little crazy. Do you like the crazy? Are you enjoying the work that comes with portfolio management? Some of us do! But it gets a little more challenging when we need to withdraw money during retirement. And will a surviving spouse be able to carry on with the crazy portfolio in the event the “money manager” departs first? Are you a good DIY investor? Or would you do better with an advisor?

There is an easy way to figure out if you should consider paying a fee to have a professional manage your portfolio & the retirement cashflow stream for you.
And it’s this …

Compare your DIY portfolio performance against an equivalent ETF. We all need a “benchmark” to check our portfolio against. If you’re 100% in globally diversified stocks, for example, compare your portfolio performance to that of one of the XEQT, ZEQT, VEQT all-equity ETFs. If you’re in a 60/40 stock & fixed income mix, compare your DIY portfolio performance against XBAL, ZBAL, or VBAL. Are you buying a mix of Canadian & US large-cap stocks? Then compare that to an appropriately allocated portfolio of VFV & XIU ETFs. A portfolio filled with way too many stocks & ETFs might also be usefully compared against one of the all-in-ones. If your portfolio performance lags its benchmark by 1% or more, you might want to consider handing it over to a financial manager.

As an aside, since some of these all-in-one funds are so new, you may need to break them down into their constituent ETFs to usefully use them for benchmarking over longer time periods. The longer the history, the more useful the insights.

I’m using 1% here because many financial advisors charge an annual 1% of portfolio value as a fee for managing a portfolio. Is that fee worth it? Get the advisor’s performance history & compare that to an equivalent benchmark ETF too. Their recommended portfolio should only lag the return performance of those ETFs by the 1% fee. If they meet that requirement and if your self-managed portfolio was lagging by more than 1%, you could be getting better results by paying the advisor the 1% fee. As a bonus, you’ll have less work & an advisor who will tell you that everything will be okay when the markets are imploding. Hand-holding is included in their fee! For retirees, the advisor may also plan the income strategy & tax-efficiently manage the cashflow for you, across all accounts. You might even get some estate planning advice along the way. If you have a good advisor, they can deliver a lot of value. Even if they underperform the market average by the amount of the fee they charge.

Can you find an advisor that will consistently beat, after fees, the market or benchmark returns? I don’t know, but be sure to review their data supporting this opinion very carefully. And not necessarily against the benchmark provided by the advisor.

Unfortunately, it can be pretty challenging to tell if an advisor is any good. And those investors who are most challenged by DIY investing will also be challenged by the process of choosing a good advisor. We all like to believe we have the best doctor taking care of our health. In reality, most of them will be closer to average than exceptional. Fortunately, there are minimum standards & qualifications that we hope will ensure an adequate level of service from these professionals. The same is only variably true for financial advisors. Because the qualifications for calling yourself a financial advisor in Canada are variable. Some advisors are closer to being a product salesperson. And while some feel or profess a fiduciary responsibility, it is not a legal duty or obligation for many. They cannot just take your money & head off to a beach somewhere, but they may be putting their own, or their company’s, interests just slightly ahead of yours when it comes to investment choices. Even if only subconsciously.

Of course, a good salesperson will make you feel better about the relationship you are getting into. And that’s not a bad thing. But you also need an advisor who can at least deliver average market returns for a broadly diversified portfolio. Minus the fees. And you do need to know exactly how much you’re paying for whatever services & products are being recommended! There may be advisory fees and product fees, check carefully.

If you are a balanced 60/40 style investor, what would you think of paying an advisor to put all your money into ZBAL? Or maybe 60% into XEQT, with the other 40% into a couple of bond & HISA-type ETFs? We sometimes resent paying for simplicity. Advisors know this & are less likely to present you with such a simple portfolio solution. After all, if things are that simple, why would we need an advisor!
Yet, in DIY mode, we sometimes struggle to follow the simple path ourselves. Instead, we prefer to work hard creating a portfolio that underperforms!

Of course, that simple solution might not be the ideal path for everyone. There may well be good reasons for some investors to pursue a lower volatility strategy, a higher income strategy, or whatever. But it is still useful to compare the total return on our own portfolios against those of low-cost, market index ETFs.

Robo-advisors are trying to bridge the gap between the advisory space & DIY, typically for about a 0.5% fee premium, in addition to ETF fees. I love the idea but it feels like you’re paying the added fee for the robo to pick the same ETFs that are in the all-in-one ETFs. Like some human services, they can fancy it up with one or two more esoteric picks. So you feel like you’re getting something extra for your money. But you generally won’t get the more valuable hand-holding that comes with the more expensive advisory services. Maybe AI will help with this down the road. But AI has been around for a lot longer than current market noise suggests & it hasn’t happened yet. Some robo-services do include human phone support. That might develop & grow into something more valuable going forward.

Isn’t there scope for fee reduction on the human advisory side too? Or for a service with a far more rapidly declining tiered fee-structure for larger portfolios? Are there any low-cost advisors out there? Shouldn’t there be more advisors competing with the 0.5% fees of the robo-advisors. Simpler portfolio advice & management should come with lower fees, no? I’m okay with portfolios constructed with low cost index funds. For some investors, the greater value may be more in managing asset location (what ETF goes in which account) & retirement cashflow. Some advisors include financial planning, a valuable service too. But can it be done for a 0.5% fee? Or less?

I realise that someone else’s job always looks easier than it really is from the outside. But I think financial advisory (& real estate) fees are very expensive in Canada. Particularly for the cookie-cutter portfolios offered by some companies. I’m totally okay with the right cookie-cutter portfolio, I just don’t want to pay through the nose for it. High fees are an ignorance premium being levied on a population that didn’t get this kind of knowledge coming through our educational system. And our schools still don’t prepare kids for the digital environment that now makes it far easier for the DIY investor to learn things the hard way. Fees will likely drop over time, as education & AI combine to work at improving the competitive landscape. Though in traditional Canadian fashion, it’ll probably drag out for a long time yet. And some of us older folk might not live long enough to benefit! 🤪

Regardless of the path we choose, it’s worth occasionally benchmarking our portfolio performance against a low-cost, well-diversified, ETF portfolio. One that approximately matches our portfolio’s asset allocation. Benchmarking can provide insight on how decent a job we’re doing with our investing strategy. And if we’re not doing such a good job ourselves, it may be worth talking to a financial advisor. But if you still find the idea of paying an advisor distasteful, then you’d better figure out how to learn to do it better on your own. Or maybe just use the benchmark ETFs instead!

If you want to learn more about saving & investing from the ground up, I’d like to suggest that you check out Double Double Your Money, available at your local Amazon store.

Important – this is not investing, tax or legal advice, it is for entertainment & conversation-provoking purposes only. Data may not be accurate. Check the current & historical data carefully at any company’s or provider’s website, particularly where a specific product, stock or fund is mentioned. Opinions are my own & I regularly get things wrong, so do your own due diligence & seek professional advice before investing your money.

Getting Started with Investing

Paul - The Wry Eye Guy Leave a comment
The Right Basket of Market Index Funds!

We needed to choose some wall & floor tiles when we bought our last new house. The builder worked with a local tile shop & we were sent there to make our selections. We spent several hours driving ourselves nuts. We were totally frustrated & depressed when we left. After three hours, the staff were relieved to see us go. And we still hadn’t chosen anything! Worse, we’d left the store in a mess. Tiles were spread across half the showroom floor. There were so many to choose from, we just couldn’t make up our minds. I called the store next morning & asked them to lay out about a dozen choices that were mainly black & charcoal. We went back & made our selections from the samples laid out. And we were on our way within ten minutes. Job done. Once we’d decided on a general colour theme, limiting the choices made it far easier to choose.

Investing can be a bit like that for new investors. There are too many choices. Should you invest in stocks or ETFs? For just about all beginning investors, the better choice is ETFs. But, on the Canadian exchange, I think there are more ETFs than stocks now. So which ETFs should you invest in? There are actively managed funds & those that passively track market indices or broad markets. Since, after fees, most professionals can’t beat broad market & index funds, most of the time, the correct answer for most of us is broad market or index funds. Now you are down to the black & charcoal tile scenario! All you’ve got left to do now is figure out which market funds to go with. Fortunately, the fund providers have made this easy for us these days. Not only have they reduced the selection of tiles we need to look at, they’ve put them all in one shopping cart for us.

Many fund providers in Canada offer a globally diversified basket of market index funds that cover the US, Canadian, developed, & emerging markets. The big three providers in Canada, Blackrock, BMO, & Vanguard, offer XEQT, ZEQT, & VEQT, respectively, for this very purpose. You still have to choose one. But the good news is that it doesn’t matter which one you choose, they’re virtually identical. If you want to feel better about it, choose one for your TFSA & a different one in your RRSP. Draw your choices out of a hat, if you like. You are now invested in broad market index funds across the globe. Make your initial investment in these funds & continue to add to them with every paycheque. Job done!

The online noise might suggest you do something differently. For example, the S&P 500® funds, like Vanguard’s VFV, have done phenomenally well for the past decade or more. The American market has crushed the competition. Investors are drawn towards whatever is doing well. That drives the price up. To be fair, there are worse things you could do than get into the US market. AI has a lot of allure these days, for example. However, it is worth remembering the lessons of history. If you’d invested in an S&P 500® fund back in 2000, you’d find yourself with about the same amount in your portfolio after ten years. Yes, today’s hot index created no wealth for a full decade back then. While the Canadian index about doubled over that same period. The Japanese market tumbled from its all time high in 1989. It took 34 years to get back to that high. Even “good” broad market indices can sometimes hurt if you take a narrow focus. Especially over shorter timelines. These global equity funds have all the markets. Including an overweight to the American market. You’re not missing out on what the American market offers, you are just diversifying more. The American market may continue to outperform. But that is still a narrow bet, with an uncertain outcome. Warren Buffett has the confidence & skill to go in harder on more winners than losers. And he loves the American market. But he tends to think in far longer investing timelines than the rest of us. These equity funds are globally diversifed. Diversification is considered the only free lunch in the investing world. And this global approach is a good investing appetiser for a novice investor.

Look, you might not shoot the lights out with one of the above funds. Or at least, not quickly. But you might have a decent chance of growing your wealth over time. Start out this way until you learn more. And when you learn more, you might even decide this is still the best approach for you. Trying to pick the winners, either stocks or narrowly focused ETFs, or trying to pick next year’s winning market, depends more on luck. And good luck with that!

If you invest in one of these funds, & if you continue to add to your investment with a little piece of every paycheque, you’re still not out of the woods. Because your investment will tumble anyway. It’ll go down 5% regularly, but it can also crash 10 or 20%, from time to time. Maybe even 50% or more on rare occasions. What will you do when that happens? What you should do is keep on investing your regular contributions. Buying more of the good stuff when it’s on sale will help grow your long-term wealth even more. Those periodic tumbles are a natural part of the process. Investing is a long game. If you are 30 today, you have 35 years to go to retirement at 65. You might have another 30 years of retirement to get through. That’s a 65 year investing timeline. Historically, the longer the investing timeline, the lower the risk of loss. But the risk of volatility is always with us on the journey. And it’s tough to weather short-term volatility. That’ll be one of the most challenging lessons to learn along the way. While past performance has no bearing on what the future might hold, it’s all we’ve got to go on. Markets have always recovered & gone on to new highs. And if we ever reach a point where global markets fail to grow over time, we’ll have a whole other set of problems that our investments likely won’t fix. Instead of an emergency fund, we’ll need a farm in the wilderness!

Investing is tough, but these globally diversified funds make it easier to get started. And for young investors, getting started early is important. The best education comes from having something invested. And with these funds, you won’t be paralysed trying to choose something from everything available. Because you’ll have a little bit of everything in your shopping cart.

The tiles turned out great, btw!

If you want to learn more about saving & investing from the ground up, I’d like to suggest that you check out Double Double Your Money, available at your local Amazon store.

Important – this is not investing, tax or legal advice, it is for entertainment & conversation-provoking purposes only. Data may not be accurate. Check the current & historical data carefully at any company’s or provider’s website, particularly where a specific product, stock or fund is mentioned. Opinions are my own & I regularly get things wrong, so do your own due diligence & seek professional advice before investing your money