Global stocks continued the positive momentum from a strong performance in 2023 to deliver another banner year for investment returns in 2024.

The gap between the NASDAQ and the rest of the market shrank, but technology stocks once again led the charge, with the tech-heavy NASDAQ gaining 24.10% (XQQ). That mark was nearly equalled by the S&P 500 posting a 23.40% (XSP) gain of its own in 2024.

Not to be outdone, Canadian stocks rallied and delivered a 21.53% return (XIC), while emerging market stocks awoke from their slumber and returned an impressive 19.20% (VEE) in 2024.

International stocks were the laggard last year, posting a “measly” return of 12.58% (XEF).

On the fixed income side, Canadian aggregate bonds (VAB) were up a modest 4.00%, with most of that gain coming from higher bond yields. Short-term bonds (VSB) had a more impressive 5.50% return in 2024, from a more balanced mix of price growth and interest.

You know that I’m a big fan of asset allocation ETFs as a sensible way for many Canadians to invest. For around 20 basis points (0.20%) in fees, you get a globally diversified and automatically rebalancing portfolio that you can set and forget.

Indeed, if investing has largely been solved with low-cost index funds, then investing complexity has been solved with these asset allocation funds. They’re a true one-stop shop for your investing needs.

Investing passively through index funds allows investors to capture the aforementioned returns, minus a very small fee. That’s a surefire way to beat 90% of investors who invest more actively, incur higher fees and are prone to behavioural issues like performance chasing.

With that in mind, here are the 2024 investment returns for various asset allocation ETFs offered by Vanguard and iShares:

Vanguard Asset Allocation ETFs

Vanguard offers a suite of asset allocation ETFs ranging from 100% global equities (VEQT) to 20% equities and 80% bonds (VCIP).

I’m including the calendar year returns of VEQT, VGRO, VBAL, and VCNS to show the results from their most popular asset allocation ETFs:

ETF	2024	2023	2022	2021	2020
VEQT (100/0)	24.87%	16.95%	-10.92%	19.66%	11.25%
VGRO (80/20)	20.24%	14.86%	-11.21%	14.97%	10.83%
VBAL (60/40)	15.63%	12.69%	-11.45%	10.29%	10.20%
VCNS (40/60)	11.19%	10.55%	-11.78%	5.80%	9.36%

Interestingly, each step up the risk ladder earned you an extra return of about 4.5% last year, and about 2% in 2023. Even the traditionally conservative 40/60 portfolio posted double-digit gains again thanks to strong stock AND bond performances in 2023 and 2024.

iShares Asset Allocation ETFs

iShares offers a similar suite of asset allocation ETFs with ticker symbols of XEQT, XGRO, XBAL, and XCNS.

The differences between iShares and Vanguard are slight – iShares’ ETFs cost just 0.20% MER compared to Vanguard’s 0.24% MER, and iShares’ asset allocation ETFs come with a bit more US and International equity, while Vanguard’s asset allocation ETFs have more Canadian and emerging market representation.

Here are the five-year returns for iShares’ asset allocation ETFs:

ETF	2024	2023	2022	2021	2020
XEQT (100/0)	24.67%	17.05%	-10.93%	19.57%	11.71%
XGRO (80/20)	20.46%	14.92%	-11.00%	15.17%	11.42%
XBAL (60/40)	16.12%	12.78%	-11.08%	11.06%	10.58%
XCNS (40/60)	11.99%	10.56%	-11.19%	6.57%	10.33%

You can see the returns are nearly identical. XEQT enjoyed a slight performance advantage in 2023 due to its tilt towards the higher performing US and international markets, but VEQT had the edge in 2024 thanks to strong returns from Canadian and emerging market stocks.

Vanguard vs. iShares 3-5 Year Averages

Now that these asset allocation ETFs have been around for at least five years we can start to look at their three-and-five-year average returns for a better cumulative comparison.

After two years of stellar returns, we may have forgotten exactly how bad returns were in 2022, especially for more conservative portfolios. That’s why looking at average annual returns over multiple years can give us a more realistic look at a typical investor’s experience (ideally we have data from 10+ years but here we are).

Vanguard asset allocation ETF 3-and-5-year averages:

ETF	1-year	3-year	5-year	Inception
VEQT (100/0)	24.87%	9.16%	11.61%	12.37%
VGRO (80/20)	20.24%	7.04%	9.34%	8.29%
VBAL (60/40)	15.63%	4.89%	7.80%	6.52%
VCNS (40/60)	11.19%	2.74%	4.64%	4.74%

These five-year average annual returns are still well above the return assumptions I use in my financial planning assumptions for clients (6.10% for global equities, after fees).

You could say that we’ve pulled forward a few years worth of expected returns. That means we should probably lower our expectations for future returns so that the 10-year average will look more like the 6.10% assumption.

iShares’ asset allocation ETF 3-and-5-year averages:

ETF	1-year	3-year	5-year	Inception
XEQT (100/0)	24.67%	9.13%	11.66%	12.46%
XGRO (80/20)	20.46%	7.04%	9.59%	n/a
XBAL (60/40)	16.12%	5.21%	7.42%	n/a
XCNS (40/60)	11.99%	3.22%	5.27%	5.46%

*Note that XGRO and XBAL were different ETFs with different mandates prior to 2019 and so the “since inception” returns are not a true representation of the new asset allocation mix. 

If you can’t decide between the two, hedge your bets by putting a Vanguard asset allocation ETF in one account type, and an iShares asset allocation ETF in another (or have one spouse pick Vanguard and one spouse pick iShares for a little friendly competition).

Whatever you do, don’t drive yourself crazy switching back and forth between the two chasing past performance.

My Investment Returns for 2024

I’ve been investing in Vanguard’s all-equity ETF (VEQT) since March 2019. It’s a perfect solution for someone like me who wants to buy the entire market for as cheap as possible and move on with my life.

I hold VEQT inside my RRSP, LIRA, TFSA, and corporate investing account. I did not make a contribution to my RRSP (or LIRA, of course) in 2024, but I did actively contribute to my TFSA and our corporate investing account.

As you know, the timing (and amount) of your own contributions will affect your own personal rate of return. So, while I expect my RRSP and LIRA to have a nearly identical return to VEQT’s 2024 calendar year return of 24.87%, the returns on the corporate account and TFSA may be different due to the timing of contributions. Let’s check it out:

• Corporate = 27.05%
• RRSP = 24.80%
• LIRA = 24.80%
• TFSA = 10.86%

Indeed, the corporate account benefited from significant contributions early in the year, while I didn’t start contributing to my TFSA until May.

I switched up the kids’ RESP account at the beginning of 2024 to be more conservative as they enter their age 15 and 12 years. I added short-term bonds and changed the overall mix to about 35% equities and 65% bonds.

We contributed $7,500 to the account in January to catch-up on one year of missing grants for our oldest child.

• RESP = 11.38%

Not bad for going conservative with this portfolio in 2024.

Final Thoughts on 2024 Investment Returns

Most Canadians still invest in actively managed mutual funds through their bank or another investment firm. These funds have a huge hurdle to overcome – their high fees – to match (let alone beat) a passively managed portfolio of index funds.

Your job this month is to pull up your investment statement and look at last year’s returns, along with the returns over the past five years, and see if your portfolio is keeping pace with the returns of an asset allocation ETF.

Make sure you’re comparing apples-to-apples, that is you’re matching up your portfolio’s asset allocation with the returns from a similar asset allocation ETF (i.e. 60/40 to 60/40) to get the full story. No sense comparing your 60/40 portfolio to the NASDAQ 100. It likely wouldn’t be appropriate to invest in 100% tech stocks.

If you’ve reviewed your investment statement and find your returns aren’t measuring up, it might be worth switching to a self-directed investing platform and buying a risk appropriate asset allocation ETF.

I truly believe that pairing low-cost index investing with on-demand financial planning advice at key life stages can lead to successful outcomes for many Canadians. Put that on your New Year’s resolution list for 2025.

Welcome to the end of the year and another net worth update. 2024 has been a banner year for both professional and financial growth.

On the business side, we saw revenues increase by an incredible 35%. More and more of you reach out for unbiased financial advice each year, and my wife and I absolutely love our little work-from-home practice.

Financially, the stock market was on fire again and our global stock portfolio will finish up somewhere in the neighbourhood of 25% this year.

One of my pet peeves is reading net worth or dividend income reports with no mention of how much money was contributed. It’s an important part of the equation.

So, in the name of full transparency, our increased business revenue allowed us to pay ourselves more to help meet our personal spending and savings goals, and still shovel a bunch of money into our corporate investments. 

Also, when the capital gains inclusion rate changed for corporations, we triggered a capital gain of $68,000 inside our corporation (selling all of our VEQT shares and then immediately buying them back – and before you ask, there is no superficial gain rule so this is perfectly fine in CRAs eyes).

This created a $34,000 tax-free surplus inside of our Capital Dividend Account – which allowed us to personally withdraw a “capital dividend” of $17,000 each, tax-free.

I recognize that might sound like complete gibberish to many of you, but basically the extra $34,000 helped us contribute the following to our accounts this year:

• TFSAs – $48,000 ($24k each as part of our TFSA snowball strategy)
• RESP – $7,500 (including an extra $2,500 catch-up contribution to fully max out a year of missing CESG for our oldest daughter)
• Corporate – $55,000 in new contributions

When the market is up 25% and you make new contributions of $110,500 across various accounts, well that’s a pretty good recipe for net worth growth.

What’s in store for 2025? As I’ve written previously, we have six financial goals for the new year:

1. Contribute $28,000 each to our TFSAs
2. Contribute $5,000 to our kids’ RESP in January and rebalance the portfolio for their age 16 and 13 years.
3. Take three trips (Cancun in February, Italy in April, and England/Scotland/possibly Finland in the summer).
4. Earn enough business revenue to meet our personal income needs (same as 2024) and contribute $80,000 to our corporate investments.
5. Pay for bi-weekly cleaning, summer lawn care, and winter snow removal to allow more time for work, leisure, and family.
6. Reach the $2M net worth milestone (a stretch goal that is only possible with another strong year of market returns).

With that out of the way, here’s how our net worth looks at the end of 2024:

	2024	2023	2022	% Change
Assets
Chequing account	$12,000	$12,000	$5,000	0.00%
Corporate cash balance	$55,000	$75,000	$56,100	-26.67%
Corporate investment account	$444,117	$305,617	$216,053	45.32%
RRSP	$378,600	$302,411	$259,499	25.19%
LIRA	$251,172	$204,231	$175,908	22.98%
TFSA	$52,297	$0	$165,173	5229700.00%
RESP	$122,293	$100,796	$84,896	21.33%
Principal Residence	$976,000	$976,000	$555,000	0.00%
Total assets	$2,291,479	$1,976,055	$1,517,629	15.96%
—
Debt
Mortgage	$481,077	$500,155	$160,927	-3.81%
Total debt	$481,077	$500,155	$160,927	-3.81%
—
Net Worth	$1,810,402	$1,475,900	$1,356,702	22.66%

I’ve had a big hairy audacious goal of reaching the $2M net worth mark by the end of 2025. After a stellar 2024, that milestone is now within striking distance if markets perform reasonably well next year. 

Indeed, we only need a net worth increase of 10.5% to reach a net worth of $2M. Savings contributions and regular mortgage payments will do most of the heavy lifting, but we’ll need a bit of stock market growth to put us over the top. Fingers crossed!

Now let’s answer a few questions about the way I calculate our 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 groceries, dining, and gas. We also look for the best credit card sign-up bonuses and time our large annual spending (trip bookings, car and house insurance premiums, etc.) around these offers.

One I’m using currently is the American Express Aeroplan Reserve Card.

Our joint chequing account and the kids’ RESPs are held at TD. My wife has her own chequing and savings accounts at Tangerine for guilt-free spending money.

Our RRSPs, TFSAs, and my LIRA are held at the zero-commission trading platform Wealthsimple Trade. Our corporate investment account is held (for now) at Questrade. I plan on moving this to Wealthsimple in the new year.

You know all of this from my post about how I invest my own money.

RRSP / LIRA / RESP

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 last year for $976,000, so that’s the price I’m using for our net worth calculation. I typically adjust the purchase price by inflation each year but I’ll likely keep listing it at the purchase price for a few years.

Astute readers will notice that the price of our previous home went from $459,000 to $555,000 from 2021 to 2022. That ended up being the sale price, so you can see that I was pretty conservative with the house value over the years.

Final Thoughts

I think it’s important to acknowledge our tremendous privilege. We work from home – a dream house we had built last year – in a profitable and thriving business that we love. I get a great deal of satisfaction from the work I do with my clients.

We have the money, health, and flexibility to travel several times a year to visit our favourite places (and discover new ones).

I really do believe we’ve cracked the code to living the good life, and I don’t take that for granted for one second.

I also want readers to understand why our net worth has increased so quickly. It’s not just from strong market returns (although that has certainly helped) but the growth is also driven by substantial savings contributions.

Those contributions would not be possible if our income hadn’t increased significantly over the past few years since quitting my day job and working on our business full-time.

We’re not saving 50% of our income and living the Mustachian life either. Our savings rate is more like 15-20%. Indeed, we’re trying to strike the appropriate balance between enjoying life now and saving for the future.

I say all of this to acknowledge that the secret sauce to our net worth growth is simply this: we’re making a lot more money, we continue to save a reasonable percentage of that income, and we invest aggressively in global equities that have grown by about 77% over the last five years.

In closing, 2024 was a great year and we’re hoping for more of the same in 2025.

How did your year shape up? Let me know in the comments below.

A Registered Retirement Income Fund (RRIF) is like an RRSP’s responsible older sibling. Once you hit retirement, the RRIF takes over where the RRSP leaves off – turning your savings into retirement income.

Indeed, if RRSPs are the workhorse of your savings years, RRIFs are your retirement MVP. They take all that tax-deferred money you’ve been squirreling away and turn it into an income stream for your golden years.

But RRIFs aren’t just about taking the money and running; they’re about strategy, timing, and (hopefully) avoiding big mistakes. Let’s dive into everything you need to know to master the RRIF game. 

So, buckle up for the most comprehensive RRIF guide you’ve ever read (this can be true if you’ve never read one before, stay with me).

Let’s dive into everything you need to know – from opening a RRIF to what happens when you kick the bucket (yes, we’re going there). 

What is a RRIF?

Think of a RRIF as an extension of your RRSP – just with some rules about withdrawals.

While your RRSP is all about accumulating savings, your RRIF is where you start spending that money.

Here’s the kicker: your RRIF continues to grow tax-deferred, but the government requires you to withdraw a minimum amount every year. 

Key RRIF Rules at a Glance:

By the end of the year you turn 71, you must convert your RRSP into a RRIF, purchase an annuity, or withdraw the funds as a lump sum. Many opt for a RRIF due to its flexibility and continued tax-deferred growth.

You can open a RRIF earlier if desired. Once established, contributions are not permitted, but you can hold multiple RRIFs and manage them similarly to self-directed RRSPs.

• You must convert your RRSP to a RRIF by the end of the year you turn 71.
• Minimum withdrawals begin the year after you set up the RRIF.
• Contributions are not allowed (your RRSP days are over).

Simple enough, right? But this is just the beginning. 

When Can You Open a RRIF?

Here’s a fun fact: you can open a RRIF at any age. There’s no rule saying you have to wait until 71—or even 55, as the internet often claims.

Early retirees or anyone looking for tax strategies might want to open a RRIF earlier for several reasons: 

• Income smoothing: If you retire in your 50s, withdrawing from a RRIF in small amounts can help keep your taxable income lower over time.
• Pension income tax credit: Starting at age 65, you can claim this credit on the first $2,000 of RRIF withdrawals.
• Flexibility: A RRIF gives you predictable income while letting the rest of your investments grow tax-deferred.

How Are RRIF Minimum Withdrawals Calculated?

Starting the year after you open a RRIF, you must withdraw a minimum amount annually.

The formula is: 

Minimum Withdrawal = Fair Market Value × [1 ÷ (90 – age)]

Translation: The percentage you’re required to withdraw increases as you age. For example, at age 65, your minimum withdrawal is 4%, but by 80, it’s 6.82%, and at 95, it’s a whopping 20%!

Here’s a handy chart:

Age	Withdrawal %
50	2.50%
55	2.86%
60	3.33%
65	4.00%
70	5.00%
75	5.82%
80	6.82%
85	8.51%
90	11.92%
95	20.00%

Pro Tip: Base your withdrawals on a younger spouse’s age if you want to keep the percentages lower. 

Why the increasing percentages?

The government designed these rules to ensure RRIF funds don’t sit untouched indefinitely. After all, tax-deferred savings were meant for retirement spending – not hoarding for the next generation (the CRA is not a fan of that idea).

Tax Implications

Withdrawals from a RRIF are considered taxable income. While the minimum RRIF withdrawal isn’t subject to withholding tax, any amount exceeding this minimum will have withholding tax applied.

It’s crucial to account for these withdrawals in your annual tax planning to avoid unexpected liabilities.

Investment Options Within a RRIF

It’s important to note that you can hold the exact same investment portfolio inside your RRIF as you held inside your RRSP. Think of it as simply a different container with different rules, but the contents inside that container can remain the same.

 RRIFs can hold a variety of investments, including:

• Cash
• Guaranteed Investment Certificates (GICs)
• Bonds
• Mutual funds
• Exchange-traded funds (ETFs)
• Individual stocks

This diversity allows you to tailor your investment strategy to your retirement income needs and risk tolerance. DIY investors can consider my easy two-fund solution for investing in retirement.

Strategies for RRIF Withdrawals

1). Melt Down Your RRSP/RRIF Early

Consider withdrawing aggressively in your 60s to delay taking CPP and OAS. Why? Because waiting until 70 to claim CPP means up to 42% more income, guaranteed for life. 

2). Maximize the Pension Income Tax Credit

If you’re 65 or older, the first $2,000 of RRIF withdrawals qualifies for a tax credit—easy money in your pocket. 

3). Pension Income Splitting

Got a partner? RRIF withdrawals at 65 and older qualify as eligible pension income, which means you can split up to 50% with your spouse to reduce your overall tax bill. 

4). Minimize Estate Taxes

Large RRIFs left untouched can become a tax nightmare for your beneficiaries. By withdrawing earlier, you can reduce the size of your estate and the CRA’s cut. 

Melting Down a RRIF Early for Bigger CPP and OAS Benefits

Here’s the deal: the longer you delay taking CPP and OAS, the bigger your monthly cheques. (I’m talking up to 42% more CPP if you wait until 70.)

To make this delay work, some retirees choose to “melt down” their RRIF early – making aggressive withdrawals in their 60s to bridge the income gap. 

The strategy has its perks: 

Higher government benefits: CPP and OAS are inflation-adjusted and guaranteed for life – benefits no investment portfolio can match. 

Lower (or smoother) lifetime taxes: By draining your RRIF more significantly in early retirement, you could reduce your taxable estate later and avoid higher tax brackets (and potential OAS clawbacks) as mandatory withdrawals ramp up. 

The downside? You’ll pay more taxes on withdrawals now. But if you’ve done your math (or hired a pro), the long-term benefits often outweigh the short-term sting. 

Pension Income Splitting: A Tax-Saving Power Move

If you’re 65 or older, RRIF withdrawals qualify as pension income for tax purposes. That means you can split up to 50% of your RRIF income with your partner, potentially saving thousands in taxes if one of you is in a lower tax bracket. 

For example, say you’re withdrawing $40,000 a year from your RRIF, but your spouse only has $10,000 in taxable income.

No money actually changes hands, but when you file your tax returns the higher income spouse can elect to transfer $15,000 of their RRIF income to the lower income spouse so they each have taxable income of $25,000.

By splitting the RRIF income, you reduce your overall household tax bill. 

RRIF vs. RRSP Withdrawals

If you’re still holding onto your RRSP, you might wonder, “Why not just withdraw from it instead?”

Good question! Here’s the difference: 

Withholding Tax: RRSP withdrawals face withholding tax of up to 30% (depending on the amount withdrawn), while RRIF withdrawals only count as taxable income, without immediate withholding for amounts at or below the minimum. 

Partial Deregistration Fees: Many financial institutions charge a fee – often $35 to $50 – for each withdrawal directly from an RRSP. These partial deregistration fees can add up quickly if you’re making frequent withdrawals. RRIFs, on the other hand, typically don’t have these fees, especially if withdrawals are set up as scheduled payments. 

Regular Income: We know retirees have a hard time spending their money. RRIFs are designed to provide predictable income, with minimum withdrawal amounts calculated annually. This makes them ideal for retirees looking for a steady cash flow. 

Flexibility: While RRIFs impose minimum withdrawals, you can always withdraw more if needed (though additional amounts are subject to withholding tax). RRSPs, in contrast, allow total flexibility but at a potential administrative cost (see those pesky fees above). 

Pro Tip: If you plan to make several withdrawals, converting your RRSP to a RRIF could save you from partial deregistration fees, while also setting you up for a tax-efficient retirement income strategy. 

What Happens to a RRIF When You Die?

Estate planning isn’t fun, but it’s essential. If you die with a RRIF: 

With a spouse: The RRIF rolls over tax-free to your spouse, who continues the withdrawals. 

Without a spouse: The entire RRIF balance is taxed in the year of your death, often at the highest marginal rate. Your beneficiaries will receive what’s left after taxes, but depending on the size of your RRIF, that could be a big hit. 

Make sure to designate beneficiaries on your RRIF account and consider strategies like charitable giving or early withdrawals to reduce the size of your RRIF balance and, ultimately, the CRA’s bite out of your final estate.

RRIF Pitfalls to Avoid

Even the savviest retirees make mistakes. Here are the big ones to avoid: 

1). Withdrawing too much, too soon: Nothing says “oops” like running out of money in your 80s. 

2). Forgetting about taxes: Every dollar withdrawn is taxable, so plan ahead. 

3). Converting an RRSP to a RRIF incorrectly: Believe it or not, some people accidentally withdraw their entire RRSP while trying to convert it to a RRIF. Yes, this has really happened, and yes, the CRA will happily take their cut. Don’t be that person – get professional advice.

Finally, this is more of an FYI than a pitfall to avoid:

If you transfer a RRIF from one financial institution to another then the mandatory minimum withdrawal must be made before the transfer can be completed.

Final Thoughts

A RRIF isn’t just about following government rules; it’s about using those rules to your advantage. By understanding the ins and outs of RRIFs, you can maximize your retirement income, minimize taxes, and avoid common mistakes.

Whether you’re an early retiree strategizing withdrawals or just trying to figure out what happens to your RRIF after you’re gone, the key is to plan ahead. 

And hey, if you’re not sure where to start, an advice-only financial planner can help you nail down a strategy – no hidden agendas, no sales pitch, just smart advice tailored to your goals. 

Here’s to a retirement that’s as smooth (and predictable) as your RRIF withdrawals!