Do You Need A Financial Navigator?

By Robb Engen | July 4, 2022 |

Do You Need A Financial Navigator?

I get really nervous when driving in strange places. The anxiety comes from my poor sense of direction – I could get lost in a phone booth. My wife, on the other hand, makes a fine navigator. She could be trapped in an underground cave and still tell which way is north.

We didn’t plan on renting a car during our trip to Scotland and Ireland. We thought we’d mostly get around by walking and taking public transit. That worked out well in a big city like Edinburgh, but after a few days in the Scottish Highlands it was clear that a car would give us more freedom to explore our surroundings.

It’s fair to say I was scared out of my mind, not only to navigate through a foreign land but also to drive for the first time on the opposite side of the road. Still, the prospect of discovering new sights and experiences was too great to pass up, so I steeled my nerves and hired a car from the Inverness airport. 

I gripped the wheel tightly, and with my wife deftly guiding us through roundabouts, across narrow roads, and underneath breathtaking viaducts, we discovered new castles, stone circles, and famous battlefields throughout the Scottish Highlands. It was a road trip to remember. 

Brimming with confidence, and a newfound sense of freedom, we thought nothing of hiring a car again in Ireland and driving across the country for two-days of sightseeing. 

If I were travelling solo, given my lack of navigational skills, I would’ve been forced to use technology to guide me through the journey. But GPS isn’t always fool-proof. Ask the countless number of drivers who’ve followed their car’s GPS directions only to end up in a lake.

Sure, my wife also used Google Maps to help guide us to our destinations. But instead of blindly following the voice commands (like I would do), she would use the satellite view and her keen sense of direction to keep us on course.

Having an expert navigator along for the ride gave me the confidence to do something I never thought I’d be able to do. I’ll be honest, driving in Scotland and Ireland was nerve-racking at times. But it was also a lot of fun, and I’m grateful for the experiences we had thanks to getting out of our comfort zone.

It’s because of those experiences that we had no qualms about renting a car in Italy when we visited in April. We picked up a car in Arezzo and drove to a little hilltop town in Tuscany to stay for a week. Like in the Scottish Highlands, we thought a car would be a must so we could explore all the medieval towns and villages in the region. Unlike in Scotland, we could drive on the right side of the road in Italy.

How Does This Apply To My Finances?

Some people are blessed with a strong sense of direction (like my wife). Others, like me, need help from technology and/or a trusty navigator to guide them to their destination.

When it comes to personal finance and investing, some people have a knack for it, while others need a helping hand.

Related: Your financial plan is a compass

Those with a strong financial compass understand exactly where their money goes, know how much to save, and have enough knowledge to invest on their own.

Unfortunately, some people either have no desire to learn about personal finance, or simply cannot comprehend how to make their money work for them. Like the poor traveller who’d get lost in a phone booth (me again!), those lacking in financial acumen likely need a trusted guide to help them reach their retirement destination, and navigate through all of life’s financial milestones along the way.

Most people, however, seem to fall somewhere in between. They know enough to nail the basics:

  1. Spend less than you earn
  2. Save a percentage of every paycheque
  3. Prioritize your financial goals
  4. Invest for the future

One solution for these in-betweeners is to pair technology – in this case a robo-advisor, with a navigator – in this case an unbiased fee-only financial planner

The robo-advisor acts as the GPS, automatically monitoring and even rebalancing your investments to ensure you meet your retirement goals. Robo-advisors aren’t perfect, so while they may not steer you into a lake, most charge a fee in the 0.50% range to take the wheel and manage your investments.

Alternatively, those with a little more confidence in their investing prowess can save money by opening a discount brokerage account and purchasing a single ETF (an asset allocation ETF). With this approach, investors can build a low cost, globally diversified, and mostly hands-off investment portfolio.

So that’s how to manage your investments, leveraging technology to save on fees and build a diversified portfolio. But your investments are really just a small part of your financial plan.

A Financial Navigator

The bigger picture means asking yourself questions like, what are my financial goals for the short and long term? When should I retire? When can I afford to retire? How much do I want to spend in retirement to allow me to live comfortably? Should I take CPP at 60, or wait until 65 or even 70? Do I want to sell my house at some point and downsize, or even rent in retirement?

For answers to these questions you might find comfort talking to an unbiased financial planner. Someone who charges you by the hour or by the project, not based on how much you invest with them.

This type of accountability relationship is a lot like having a trusted navigator by your side. Someone to point you to a potential shortcut, or to avoid the road construction ahead. Perhaps someone to point out when you’re about to turn into a lake.

Are you blessed with a clear sense of direction when it comes to your finances? Or do you need a financial navigator to help guide the way? 

Net Worth Update: 2022 Mid-Year Review

By Robb Engen | June 30, 2022 |


Net Worth Update_ 2022 Mid-Year Review

Stocks went down. Real estate went up. Yet I sold stocks to buy real estate. Welcome to 2022, where things no longer make sense.

That’s right, we made a big decision earlier this year to purchase a lot and build a new house. Once we decided we were serious about taking this step (as in, we found a lot, builder, and floor plan that we liked at a price we could comfortably afford), we sold all of the investments in our TFSAs and moved them to a high interest TFSA at EQ Bank.

We also secured financing so that we could meet the builder’s draw schedule without having to sell our existing house before the final draw. We’ll use a mix of our existing savings, plus a line of credit from our home equity.

The building process should take about 10 months. We haven’t done much yet, other than select our appliances (supply chain!), decide on exterior colours, and pick out windows. We’re eager to see more activity this summer and into the fall.

It has been a weird start to the year, with inflation soaring and stock and bond markets crashing. We’re focusing on what we can control – earning enough in our business to meet our spending and savings goals – and trying not to sweat the markets or the price of gas, avocados, and coffee.

Our business earned as much as we expected in the first six months of the year. We intentionally planned to earn a bit less this year due to our revenge travel tour that included trips to Maui, Italy, the U.K, and Paris. So far, so good.

I planned to invest about $40,000 in our corporate investment account this year, but I’ve front-loaded most of that to take advantage of lower stock prices. We’ve already contributed $32,000 so far this year.

We’re no longer contributing to our RRSPs (due to paying ourselves dividends for now), so those accounts are just sitting there taking a beating this year. 

Indeed, it turns out that selling stocks in January was fortuitous timing in our TFSAs because global stocks are down about 17% on the year.

Finally, we had our house appraised so we could increase our home equity line of credit. If you’ve followed these updates you’ll know I’ve kept our house value at around its purchase price for many years. Well, the Lethbridge market finally took off last year and our appraisal came in at $530,000. Comparable homes are selling in the $560,000 range.

I’m comfortable moving up our home value based on the appraised value, and that gives us some wiggle room in case home prices fall in the coming year.

Now, let’s look at the numbers.

Net worth update: 2022 mid-year review

Total Assets – $1,461,979

  • Chequing account – $5,000
  • Savings account – $60,000
  • Corporate investment account – $205,313
  • RRSPs – $250,705
  • LIRA – $166,225
  • TFSAs – $170,586
  • RESP – $74,150
  • Principal residence – $530,000

Total Liabilities – $164,712

  • Mortgage – $164,712

Net worth – $1,297,267

This report is going to look very different at the end of the year. Our draw schedules will begin soon, which will deplete our existing savings. We’ll end up with more debt due to carrying the line of credit for several months before we sell our house. Hopefully, by March 2023, we’ll end up with our “new normal”, which will be a more expensive principal residence, a bigger mortgage, and empty(ish) TFSAs.

Our 10-year plan is to stay in the new house while our kids finish school and decide where they want to go for their post-secondary education. We’re open to the possibility of moving to be closer to them, or to do our own thing. We’ll see when the time comes. In any case, the new house will better suit our needs and we’re excited for this next chapter of our lives to begin.

Now let’s answer a few questions about the way I calculate net worth:

Credit Cards, Banking, and Investments

We funnel all of our purchases onto a few different rewards credit cards to earn points on our everyday spending.

Our go-to card is the American Express Cobalt Card, which we use for non-Costco groceries and gas. I’m also using the HSBC World Elite MasterCard, which came with an incredible 100,000 point welcome bonus. Finally, we look for the best credit card sign-up bonuses and time our large annual spending (car and house insurance) around these offers. One I’m using currently is the American Express Aeroplan Reserve Card.

Our joint chequing account is held at TD, along with our mortgage and kids’ RESPs. My wife has her own chequing and savings accounts at Tangerine. Our high interest savings account is held at EQ Bank, which pays 1.65% interest.

My RRSP and TFSA is held at the zero-commission trading platform Wealthsimple Trade. My LIRA is held at TD Direct, and the corporate investment account is held at Questrade. My wife’s investments are held at Wealthsimple. You know all of this from my post about how I invest my own money.


The right way to calculate net worth is to use the same formula consistently over time to help track and achieve your financial goals.

My preferred method is to list the current value of my RRSP, LIRA, and RESP plans rather than discounting their future value to account for taxes and distributions.

I consider a net worth statement to be a snapshot of your current financial picture, so when it comes time to draw from my RRSP/LIRA and distribute the RESP to my kids, my net worth will decrease accordingly.

Principal Residence

We bought our home in 2011 for $424,000 and developed our basement a few years later, increasing its value to ~$450,000. The next year I bumped up the market value by 2% (which is still less than its city-assessed value), but the local real estate market has since flattened – with nothing selling in our price range – and so I’ve left the value at $459,000 for the past three years. As I explained, we recently had a property appraisal and I have increased the value to match that appraisal at $530,000.

Final Thoughts

I’ve been warning readers for several years that we should probably lower our expectations for future returns. Trees don’t grow to the sky, as they say. That’s why I’m not surprised at all to see global markets fall this year after three years of exceptional returns.

Focus on things you can control, like your savings rate. Your investment portfolio and net worth will fluctuate up and down in the short-term, but what you want (at least in your accumulation years) is to keep the needle moving forward over the long-term.

Money invested today has a higher expected return than it would have 6-12 months ago. Take comfort in that. I know I do.

We’ll continue following our plan, investing what we can in our corporate investment account while preserving cash on our personal side of the ledger for upcoming house expenses. We want to put a sizeable down payment onto the new house and have money left over to do the landscaping, etc. Then we’ll transition into that new chapter, with a new (larger) mortgage payment, and start to fill up our TFSAs again. 

What’s Up?

By Robb Engen | June 20, 2022 |

What's Up (With Your Investments)_

No, I’m not asking how you’re doing (sorry, I know everything sucks right now!). I’m talking about your investments. Active managers love to tout their ability to capture all of the upside of the market while deftly avoiding the downside. We know empirically that is not the case (the SPIVA scorecard shows that more than 90% of equity funds underperform their benchmark over 10-year periods) but individual investors still buy this sales pitch hook, line, and sinker.

Global stock and bond markets are down significantly this year. Could a skilled investor have safely steered his portfolio through these choppy waters to avoid major losses? Could he have even made money? Let’s take a look at year-to-date market returns across different countries, sectors, and asset classes to see what’s up with your investments, if anything.

Stocks by region

Canadian stocks have held up fairly well compared to the rest of global markets. That’s mainly due to the performance of energy stocks, which we’ll get to later. Still, the broad Canadian stock market (represented by XIC – iShares Core S&P/TSX Capped Composite Index ETF) is down 9.67% year-to-date.

U.S. stocks had an incredible run from 2009 to 2021, which prompted many investors to change their equity allocation to only include U.S. stocks. Unfortunately, this year has not been kind to U.S. equities, and the S&P 500 (as represented by XUS – iShares Core S&P 500 Index ETF) is down 19.70% year-to-date. 

International stock returns have largely trailed Canadian and US stock returns over the past five years. This year, so far, international stocks (represented by XEF – iShares Core MSCI EAFE IMI Index ETF) are down 18.32%. 

Finally, emerging market stock returns have arguably been the weakest amongst all other equity markets. This year is not much better, as emerging markets (represented by XEM – iShares MSCI Emerging Markets Index ETF) are down 15.34% year-to-date.

RegionETF SymbolYTD Performance (June 20)
United StatesXUS-19.70%
Emerging MarketsXEM-15.34%

Stocks by Sector

One active investing strategy involves rotating the investment portfolio in and out of different sectors. The idea being that one could correctly time the movement out of a falling sector (like technology) and into a rising sector (like energy). Let’s take a look at the year-to-date performance of different sectors and styles to see this in action:

Speaking of technology, these stocks were all the rage since at least 2019. The famous FAANG stocks led the way, but other tech stocks also emerged as the NASDAQ returned 37%, 45%, and 27% respectively over the past three years. 

But all good things must come to an end, and tech stocks have been absolutely crushed this year. The iShares NASDAQ 100 Index ETF (XQQ) is down 31.43% so far this year, which has contributed to the overall drag on the U.S. stock market. Even in Canada, Shopify briefly became the most valuable company in the country before its share price plummeted nearly 73% this year.

Canadians love investing in big banks as they are seen as safe, blue-chip, profit churning, dividend generating stocks. The iShares S&P/TSX Capped Financials Index ETF (XFN) holds 29 of Canada’s largest banks and insurance companies. It’s currently down 11.14% year-to-date, so it has underperformed the broad Canadian market by about 1.5%.

What about utilities? We all need to heat our homes and keep the lights on. The iShares S&P/TSX Capped Utilities Index ETF (XUT) holds 16 of Canada’s largest utility companies. It is currently down just 2.85% year-to-date, which is nearly 7% better than the broad Canadian stock market.

Energy stocks had a rough 2020 – remember when the price of oil briefly went negative for the first time in history? Energy stocks lost nearly 35% in 2020 before rebounding in a big way in 2021 – rising by an incredible 83%. So far this year, energy stocks have continued their strong performance with a return of 43.69%. That outperformance has started to slip, though:

XEG price chart

It’s a reminder of the highly volatile nature of energy stocks. From June 2008 to April 2020, energy stocks were down a whopping 89.61%.

SectorETF SymbolYTD Performance (June 20)


Canadians also love their dividends. But how have dividend stocks held up in this market environment? In Canada, about the same. The iShares Canadian Select Dividend Index ETF (XDV) holds 30 of the highest yielding companies in Canada. It is down 9.22% so far this year.

iShares S&P/TSX Canadian Dividend Aristocrats Index ETF (CDZ) holds about 94 Canadian companies that have increased dividends for at least the past five years. CDZ has performed better than the overall market, but is still down 6.93% year-to-date.

On the U.S. side of the border, iShares US Dividend Growers Index ETF (CUD) holds 118 high yielding U.S. stocks that have increased dividends for at least 20 consecutive years. CUD is down 11.23% so far this year, which is about 8.5% better than the S&P 500.

Even better, the iShares U.S. High Dividend Equity Index ETF (XHD), which holds 75 high dividend yielding U.S. stocks, is down just 3.42% on the year.

Dividend StyleETF SymbolYTD Performance (June 20)
CDN High YieldXDV-9.22%
CDN Dividend GrowthCDZ-6.93%
U.S. Dividend GrowthCUD-11.23%
U.S. High YieldXHD-3.42%


Rising interest rates have smacked bond prices in the face, leading to double-digit losses over the past 6-12 months. 

Short-duration bonds are less sensitive to interest rate movements and held up better than aggregate bonds and long-duration bonds. 

Indeed, the iShares Core Canadian Short Term Bond Index ETF (XSB) is down just 5.02% year-to-date. XSB has a weighted average maturity of 3.27 years.

Moving up the curve we have the iShares Core Canadian Universe Bond Index ETF (XBB), which was a weighted average maturity of 10.2 years. XBB is down 13.53% so far this year.

Finally, the iShares Core Canadian Long Term Bond Index ETF (XLB), with a weighted average maturity of 22.73 years, is not surprisingly the worst performer of the bunch and is down a painful 24.10% this year.

BondsETF SymbolYTD Performance (June 20)
Canadian Short-termXSB-5.02%
Canadian AggregateXBB-13.53%
Canadian Long-termXLB-24.1%


Other asset classes, like REITs and gold, have long been thought of as inflation hedges and may have been considered as part of a diversified portfolio. But how have these alternatives to stocks and bonds held up this year? The results are mixed.

The iShares S&P/TSX Capped REIT Index ETF (XRE) holds 19 Canadian REITs. The fund had a banner year in 2021, returning 34.2%, but has struggled so far in 2022 and posted a negative return of 20.28%.

The iShares S&P/TSX Global Gold Index ETF (XGD) holds about 47 gold producing companies. The fund is roughly flat on the year, down 0.36% as of June 20, 2022.

AlternativesETF SymbolYTD Performance (June 20)

Final Thoughts

One of the dangers of looking at past performance is that we fall victim to performance chasing. That’s what led people to abandon perfectly sensible globally diversified portfolios to invest solely in U.S. stocks, or to add an extra dash of technology stocks to their holdings, or to dabble in crypto and other individual stocks throughout the pandemic.

Listen, we can’t go back in time and capture past returns. All we can do is invest with future returns in mind. Do you know which regions, sectors, asset classes, or individual stocks will outperform in the future? I don’t. That’s why I hold a small slice of them all by investing in Vanguard’s All Equity ETF (VEQT).

Related: Exactly How I Invest My Money

Here are my takeaways from looking at what’s up with your investments:

  1. Past performance tells us very little about expected future returns
  2. Stock returns are mostly random
  3. Cycling in and out of regions, sectors, and asset classes is a guessing game. Good luck predicting which investments will outperform over the next 6-12 months

Even worse is trying to time the markets in general by selling everything and moving to cash. The typical argument is that you’re going to wait until things “settle down”, but when is a market of risky assets that are priced daily truly calm and settled?

Don’t fall into the greed and fear trap:

Fear and Greed index

In 2020 and 2021, this was characterized by investors plowing money into technology stocks. Now that tech stocks are getting crushed, investors are looking for the next thing. Today, that looks like energy stocks. But energy stocks are already up big (an incredible 425% from March 2020 to June 2022). Do you think your experience with energy stocks will be similar if you buy in today?

Manage your expectations. Vanguard’s VBAL posted double-digit returns in 2019, 2020, and 2021. It’s currently posting a negative double-digit return for 2022. The annual return since inception is 4.53%, which is pretty much exactly the expected return I use for a balanced portfolio in financial planning projections.

Similarly, Vanguard’s All Equity ETF (VEQT) posted double-digit returns in 2019, 2020, and 2021. It’s currently down double-digits in 2022. The annual return since inception is 10.21%, which is still much higher than the 6% expected return I use for an all-equity portfolio in financial planning projections.

What’s up with your portfolio this year?

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