2025 Market Recap - What a Year!

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Portfolio Management Comment

Here is a 2025 Year in Review from Brett Joyce, CFA, Chief Investment Strategist, BMO Private Wealth

2025 Year in Review: Resilience and Feedback

"Never confuse genius with luck and a bull market." - John "Jack" Bogle (1929 - 2019), American Investor, business magnate and philathropist, founds of the Vanguard Group

Resilience and feedback are two words that best sum up 2025. The year may also go down as the “t” year: tariffs, tensions, trade, TACO and Trump all featured prominently. However, “t” words also dominated the latter half of the year: turnaround, terrific and all-time highs. Most of the world’s stock market indices posted positive returns, some spectacular and surprising. Among the world’s top performers were benchmark stock indices in Canada (+28.3%), Mexico (+29.9%), and Korea (+75.6%), three countries that are heavily reliant on U.S. trade. In our opinion, the single most important development of the year was the crucial feedback the U.S. bond market delivered to the Trump administration, paving the way for a recalibration of its tariff policies.

Resilience

Resilience is the only way to describe households that continued to spend, and businesses that continued to invest despite all the change and widespread uncertainty in 2025. While the rewiring of trade and geopolitical relationships is challenging, it has set changes in motion that lean positive. Capital markets embraced the prospect of long overdue defence spending in Europe, Canada and elsewhere; an attitude shift toward government efficiency (the concept behind DOGE); and government spending increasingly used to stimulate productive investments (e.g., infrastructure and Canada’s nation-building initiatives).

Some of the resilience is genuinely amazing. Real GDP growth for the global economy is on track to reach 3.2% for the year. Growth is beating forecasts in numerous places – including, and forcefully, in Canada. Stunningly, world trade is estimated to grow roughly 5% in volume terms. That’s not only a solid outcome in a year of trade stress and uncertainty but also the best increase in four years. Globalization isn’t dead; it’s retooling. While trade with the U.S. is under renovation, the rest of the world carries on. Scores of nations are forging and strengthening trade ties with each other.

Feedback

Standing in the Rose Garden on the afternoon of April 2, President Donald Trump delivered the shock of the year, unveiling the first batch of his sweeping global tariffs that upended decades of U.S. trade policy. The plans gave the impression that they were hastily drafted, the clue being levies on obscure, uninhabited islands (aka penguin tariffs). Global stocks swooned by double digits; U.S. stocks saw the worst declines (-19% for the S&P 500 from its recent February peak).

Since governments don’t own stocks, equity market declines are tangential feedback and easier to dismiss. However, disturbances in currency and bond markets bring immediate and forceful consequences. Governments borrow money in the bond market – and the U.S. borrows a lot. In response to the tariff shock, U.S. bond yields rose sharply, which would directly affect government finances. The U.S. Dollar Index (DXY) plummeted, extending its 5% year-to-date decline to 10%. These market consequences forced the administration’s hand, and within 10 days the tariffs were paused. This set the stage for what pundits called the TACO trade (Trump Always Chickens Out) that became a reliable phenomenon for the remainder of the year.

Patience paid off

Through the uncertainty, we relied on our training and experience to think about what is achievable, sustainable and congruent with the laws of supply and demand in a modern capitalist system. We believed that crucial feedback loops would provide enough input to prod the U.S. administration into fine tuning its policies. Among these feedback loops are the checks and balances of Congress (the constitutional owners of revenue tools), the judiciary, public opinion and corporate lobbying. Many of these key voices were uncomfortably silent in the heat of the moment, but all have since begun to exert their influence. Feedback from the capital markets is unemotional and swift, and our view was quickly confirmed by the capital markets’ immediate and forceful response as rising borrowing costs, tumbling stock markets and the U.S. dollar motivated the course correction.

Throughout the rest of the year, investors became more adept at filtering out the noise. A shift in how business gets done is not the same as wondering whether business will get done at all. For shareholders and bondholders, the question of where and how corporations generate revenue is distinct from whether they will make a profit.

Equity results in 2025 were solid because households and businesses showed resilience, and feedback tempered the administration’s actions. Thus, the world was able to absorb and adapt to new developments, and capital markets and economies soldiered on. Ultimately, the business of the world is doing business.

Earnings are everything

Many equity markets enjoyed double-digit earnings growth thanks to a variety of factors: stable-to-falling inflation leading to reasonable bond yields; accommodative central banks; steadying economic growth, which is slowing a bit in the U.S. (cooling from hot to a slight post-tariff chill); but better-than-expected growth in multiple other economies. Stock market gains can be attributed to earnings growth, valuation expansion (paying more for the same level of earnings) and dividends. Earnings growth accounts for most of the gains in U.S. markets – a normal and very welcome development that is commensurate with the 16.4% gain for the S&P 500 on the year. Equity markets that achieved exceptional gains did so because of a combination of earnings growth and valuation expansion as these markets re-rated higher from undervalued levels.

No need for elbows if you’re winning

Canada needed “elbows up” through the spring election period and the harshest trade rhetoric toward Canada. Tariffs and Trump’s threats galvanized and awakened us to the need for greater self-reliance in our defence and trading relationships. What followed was constructive debate over how we do business in this country. Currently, Canada has some of the most favourable access to U.S. markets. Future trade negotiations will require intense effort, but the conversations at home feel less panicked and more optimistic that we can move forward on measures designed to drive economic growth, investment and productivity.

Canada’s situation was reflected in our capital markets. Our currency strengthened (up 4.8% to US$0.729 from US$0.701) and the S&P/TSX Composite bested many markets, including the S&P 500. Ten out of 11 sectors posted gains; seven notched double-digit upswings. Earnings growth underpins much of the gain, but the showstopper was the 98% advance in the materials sector, which was driven by rising prices for precious metals. This standout performance created a challenging environment for active money management. The magnitude of the rally in precious metals skewed benchmark returns. Even though disciplined, top-tier portfolio managers delivered very solid results, their returns still lagged the index.

Medium and longer-term bond yields rose slightly, while short-term yields fell, driving the FTSE Canada Universe Bond Index to a modest 2.6% return. Longer yields were rising on inflation and fiscal spending largesse but also – importantly – thanks to an improving outlook for Canada’s economy.

Not so uninvestable after all

Earnings growth and valuation expansion account for the robust results in a lot of other markets. Outside the U.S., multiple equity markets entered 2025 undervalued relative to their historical averages. Heading into 2025, sentiment was reserved across markets because earnings growth had been sluggish in Europe, China’s economy had been struggling for several years and, of course, trepidation had mounted over potential changes the new U.S. administration might bring. These cheaper valuations, plus better-than-expected results on earnings growth (modest in Europe yet impressive in Japan), led international developed markets represented by the MSCI EAFE Index (Europe, Asia, Far East) to post a 27.9% gain.

Back in 2024, we talked about Chinese equities being cheap. Sentiment was so bad that investors began wondering whether China might become uninvestable. Classically, that talk marked the bottom for Chinese equities. The rally gained traction in January 2025 on the news that a Chinese company, DeepSeek, had built a decent AI model at a fraction of the cost of those built by Western tech giants. This artificial intelligence startup reminded investors that China’s tech companies had once been market darlings. U.S. trade antagonism toward China, while volatile, has landed less harshly than expected; ditto for the impact on Mexico. China is continuing its economic stimulus measures. Combined, these factors drove the MCSI China Index up 28.3% in 2025, and over 50% since September 2024. In turn, the MSCI Emerging Market Index (US$) climbed 30.6% in 2025.

The last word: Beware bull-market genius

“Are we in a bubble?” is a question that has been top of mind for us and for our clients over many months. Our BMO Nesbitt Burns 2026 Capital Markets Outlook addresses this topic in detail and outlines our constructive view on capital markets for the year ahead.

One area we have yet to address is the flip side of bubble fears: the emotional condition known as bull-market genius. In a prolonged bull market, rising prices reward risk-takers, making investors feel brilliant and leading them to believe risk has vanished. This self-deception can cause people to take on excessive risk. But when the situation sours, they suffer losses they cannot tolerate.

Bull-market genius at the individual level is one thing, but bubbles and manias require crowds of investors to pile in recklessly. On an individual level, we work together with our clients to avoid complacency and keep risk exposures in line with expectations. As for the broader crowd, it’s encouraging that the question of bubbles is so prevalent. Manias require a blindness of faith that prices will forever go up with no limits. Everywhere I go – from TV studio to Ubers, Bay Street to Main Street – people ask me if we’re in a bubble. That’s a good thing – it means that investors are aware of a potential bubble and are on guard against the dangers of that happening.

And it isn’t just about asking the question. The price action in equity markets also points to healthy discipline. If the Magnificent Seven stocks in the S&P 500 are the centrepiece of the bubble talk, recall that, as a group, they have endured two sharp selloffs (17% and 28%) over the last 18 months. Individually, investors cut Tesla shares in half in early 2025. Shares of all the others (except Microsoft) have experienced drawdowns of 30% or more in 2025 alone. It’s sensible – not mania or bull-market genius behaviour – to question debt levels and circular financing arrangements within AI-related businesses.

Lastly, yes, the bull market has broadened out, but we don’t see this as a sign o f mania. It’s a healthy development if the broadening is supported by solid earnings growth – which it is. Annual earnings growth expectations for 2026 across the major equity market indices of Canada, the U.S., Europe, Japan and emerging markets range between a solid 12% and 16%. We haven’t seen that level of uniform strength for at least five years.

How can you defend against bull-market genius? As Jack Bogle points out, recognizing it exists is the first step. Investing godfather Benjamin Graham also offers some sound advice: “The essence of investment management is the management of risks, not the management of returns.” The investment style we employ at BMO Private Wealth is built to deliver prudent, risk-adjusted, high-quality, well-diversified solutions that will stand the test of time.

To you, our clients, we offer heartfelt thanks for your faith and trust in us, allowing us the privilege of working on your behalf. Our responsibility to you always comes first.

Best wishes for 2026.

The following article from Lance Roberts at Real Investment Advices examines what could happen if the growth projections fail:

The Market Risk in 2026, if Growth Projections Fail

By Lance Roberts | Dec. 29, 2025

There is a rising market risk in 2026 that is largely overlooked as we wrap up this year. As discussed in the “Fed’s Soft Landing Narrative,” optimism about 2026 is running high. Currently, investors are pricing in strong economic growth, robust earnings, and a smooth path of disinflation. Notably, Wall Street estimates suggest a significant acceleration in corporate profits, particularly among cyclical stocks and small- to mid-cap sectors. To wit:

“Wall Street currently expects the bottom 493 stocks to contribute more to earnings in 2026 than they have in the past 3 years. This is notable in that, over the past three years, the average growth rate for the bottom 493 stocks was less than 3%. Yet over the next 2 years, that earnings growth is expected to average above 11%.”

“Furthermore, the outlook is even more exuberant for the most economically sensitive stocks. Small and mid-cap companies struggled to produce earnings growth during the previous three years of robust economic growth, driven by monetary and fiscal stimulus. However, next year, even if the Fed’s soft landing narrative is valid, they are expected to see a surge in earnings growth rates of nearly 60%.”

There is nothing wrong with having an optimistic outlook when it comes to investing; however, “outlooks can change rapidly,” which is a significant market risk, particularly when expectations and valuations are elevated.

Notably, these forecasts rest on an assumption that the economy will not only avoid recession but reaccelerate in the face of waning inflation. As noted, equity markets have responded by pushing valuations higher across major indexes, with price-to-earnings ratios well above historical medians. Simultaneously, investors have rewarded narratives built on the idea of a soft landing and a return to pre-pandemic trends.

However, this narrative appears to overlook the trends in recent economic data. Inflation expectations have moderated, not because of increased demand, but due to weaker consumption and cooling labor dynamics. As recent economic data indicate, disinflation has accompanied slower GDP growth and a decline in personal consumption momentum. If the economy were indeed set to reaccelerate, these trends should be increasing rather than returning to historical averages.

The soft landing thesis posits a benign cycle in which inflation declines, growth remains stable, and earnings increase. Yet, that outcome would be historically rare. When inflation falls this quickly, it typically reflects a slowdown in demand rather than policy success. Additionally, the strong relationship between economic growth and earnings should not be dismissed. That disconnect exposes investors to market risk if growth does not materialize as expected and valuations are reconsidered.

With analysts expecting strong revenue growth and margin expansion despite rising input costs, global uncertainty, and declining employment, a market priced for perfection leaves little room for earnings misses or growth shocks. If those optimistic assumptions fail, market risk could rise abruptly.

Let’s dig in.

Structural Headwinds

As noted above, earnings growth is fundamentally tied to economic growth. When demand exceeds supply, companies expand output, raise prices, and increase profits. As discussed recently, this is why, without inflation, there can not be economic growth, increasing wages, and an improving standard of living. In other words, for there to be stronger economic growth and rising prosperity, prices must increase over time. Such is why the Fed targets a 2% inflation rate, thereby supporting 2% economic growth and stable employment levels.

However, the employment data over the last year doesn’t tell a story of substantial employment, rising wages, or a trend suggesting a more robust economic outlook. Instead, the latest data confirmed a deceleration in economic activity, as full-time employment (as a percentage of the population) declined.

The importance of full-time employment should not be readily dismissed. Full-time employment pays higher wages, provides family benefits, and allows for an expansion of consumption. The decline in full-time employment currently is normally associated with recessions rather than expansions. Economic growth, inflation, and personal consumption are trending lower, given that employment, particularly full-time employment, supports economic supply and demand.

Furthermore, economic growth relies heavily on consumer spending, which accounts for nearly 70% of U.S. GDP. For that consumption to persist or grow, consumers must have rising incomes, which come from employment and wage growth. Without job creation or real wage increases, consumption growth stagnates, and the earnings narrative breaks down. As shown, when economic growth declines, so do earnings growth rates.

Recent employment data show cracks in this cycle. While headline job numbers suggest continued hiring, the quality and composition of those jobs are weakening. Today we see part-time workers filling full-time positions, often with lower pay and fewer benefits. Labor force participation remains below pre-pandemic levels, and many prime-age workers are not returning. Most notably, the negative revision of every monthly employment report in 2025 further undermines the “strong economy” narrative.

Even where wages are rising nominally, inflation-adjusted wages tell a different story. Real wage growth has been flat or negative in several key sectors. As housing, energy, and service prices remain high, the squeeze of disposable income increases. As such, consumers compensate by drawing down savings or using credit, both of which are unsustainable long-term strategies.

The market risk in 2026, is that for corporate earnings to accelerate and meet Wall Street’s expectations, the consumer must be healthy. That means rising real wages and broad-based job creation. Without those pillars, top-line revenue growth slows, and margin pressures increase. Analysts projecting double-digit earnings growth into 2026 are assuming a demand-driven economy without the income growth needed to support it. That assumption is increasingly fragile. Without real economic growth, earnings become a product of financial engineering or cost-cutting, not organic expansion. Markets are pricing in a demand surge that the employment data do not confirm.

If this disconnect persists, Wall Street will revise earnings expectations lower.

Valuation Fragility

That last sentence is the most crucial. With valuations near cycle highs, (the S&P 500 trades at over 22x times forward earnings, which is well above its long-term average), such assume strong earnings growth and low discount rates. Yet both assumptions are vulnerable. If economic growth undershoots, earnings revisions will follow. Historically, earnings have tended to lag behind the economic cycle. As consumption softens, revenue growth stalls. Margins then compress, especially for companies with high labor or financing costs, and with narrow market breadth and concentration in mega-cap names, the market risk is a sudden repricing of those expectations.

Credit risk premiums remain compressed across all asset classes, from high-yield to investment-grade, which reflects a belief in Fed control and continued monetary easing. If those beliefs are shaken, volatility will return. Market participants are not expecting a scenario where all risk assets decline simultaneously, including stocks, crypto, precious metals, and international markets.

Implications for Investors

The market risk for investors is not a 2008-style collapse. However, a far more likely scenario is a long period of underperformance. That underperformance will likely be a function of earnings disappointment, weak growth, and multiple compression. Market analysts are currently pricing the market for acceleration. But those views may struggle is stagnation, and the “path of least resistance,” shifts from upward momentum to sideways drift or correction.

As such investors should continually monitor and assess the risk they are taking in portfolios.

• Reassess exposure to high-multiple equities and overconcentrated sectors. While technology drives index performance, valuations are high and if growth expectations are too high, tech earnings will likely fail to meet them. The same applies to consumer discretionary stocks tied to fragile spending.
• Consider a more defensive position, focusing on free cash flow, balance sheet strength, dividends, and pricing power.
• Add bonds to your portfolio to protect principal and create income. Furthermore, in the event of a risk-off rotation, investors will seek the safety of bonds to reduce portfolio risk. Being there before the correction occurs can be beneficial to outcomes.
• Liquidity should always be a priority. If risk aversion returns, liquidity conditions can tighten quickly. Investors consider a scenario where risk assets (stocks, commodities, metals, and cryptocurrencies) decline sharply as risk resets

A prudent approach is to reduce exposure to narrative-driven assets and increase allocations to quality. Investors should favor sectors with consistent earnings, low leverage, and stable dividends. Cash remains underappreciated as a strategic tool, and with real yields positive and volatility likely to rise, liquidity is a source of optionality.

The next two years will test the soft landing thesis. If growth falls short, earnings disappoint, or inflation returns, markets will face a reset. That reset may not be dramatic, but it will be painful for those overexposed to the current consensus.

The best defense is valuation discipline, risk awareness, and a willingness to question the prevailing narrative.

Our Portfolio Management Approach

Hopefully you've had a chance to listen to our Podcasts: The Financial 15 and Why Do We Do That?

We are fundamental investors that use technical analysis to manage short-term market risks. We believe that risk management is not a choice, but a necessity. While we cannot control how much downside the market provides during a correction, we can control how much of the downside your account receives. We aim to avoid 60% or more of the decline in any significant downturn. Without our process, there is a good chance you will experience 100% of the downside from the market. We will help you navigate the risks and rewards of the market so that you can stop worrying about your money and start living your life.

Transactions

The following is chronological list of our trades:

A tactical position was added in all accounts. A 5% position in ZQQ and a 5% position in SPY were added to the accounts. When the positions hit our targets, they will be sold.

No other transaction took place.

Returns on our 60/40, 70/30 & 80/20 Portfolios, before fees:

Interesting Charts

 

Technical Comment

Market Overview: S&P 500 E-mini Futures

The market formed a monthly E-mini sideways trading range in the last couple of months. Bulls want a resumption of the bull trend, with targets at the 7,200 round number and a 7,400 measured move based on the height of the recent trading range. Bears want a reversal from a large wedge top (July 27, December 6, and October 29) and a small double top (October 29 and December 26).

• The December monthly E-mini candlestick was a bull doji closing around the middle of its range, with prominent tails.
• Last month, we said traders would watch whether bulls could create a retest and breakout above the October 29 high with follow-through buying, or whether the market would stall around the October 29 area and retest the November low.
• The market traded slightly higher to retest near the October 29 high but did not break above it.
• Previously, bulls had a tight bull channel from the April 7 low, showing persistent buying pressure.
• Bulls expected at least a small sideways-to-up leg to retest the trend extreme high (October 29), which occurred (December 26).
• They want a resumption of the bull trend, with targets at the 7,200 round number and a 7,400 measured move based on the height of the recent trading range.
• Bulls need a strong breakout above the October 29 high with sustained follow-through buying to resume the trend.
• If the market trades lower, bulls want the November low to act as support, forming a higher low and a double bottom bull flag.
• Bears want a reversal from a large wedge top (July 27, December 6, and October 29) and a small double top (October 29 and December 26).
• Bears see the rally as climactic and overbought.
• The lack of strong bear bars with follow-through selling remains a problem for the bears.
• The long tail below November’s candlestick further indicates bears are not yet strong.
• Bears need consecutive strong bear bars closing near their lows to show they are regaining control.
• If the market trades higher, bears want any breakout above the all-time high to be weak, resulting in a failed breakout.
• The move up from the April 7 low remains strong, with a tight bull channel and consecutive bull bars closing near their highs.
• The market is Always In Long.
• While the rally looks climactic and overbought, traders will only sell aggressively once bears produce strong bars with sustained follow-through.
• For now, traders will watch whether bulls can break above the October 29 high with follow-through buying, or whether the market continues to stall and retest the November low.

Millennial Minute

Happy New Year everyone! I hope you all had a relaxing and wonderful holiday season filled with time spent with friends, family and loved ones. 

I always enjoy the new year. Though the magic of Christmas wears off, we now have 12 months of possibility ahead! However, the last few years I admit have gotten a little harder to get excited about, given the way the world seems so crazy lately.

So, when you feel like the world is out of control and you can feel it affecting you, how do you deal with it?

Check out this month's article for a quick read about what you can control when everything else seems out of control.

Click here to read now!

Planning Article

Strategies for Your Retirement Savings Plan

A formalized savings plan that uses a registered plan, such as a Registered Retirement Savings Plan (“RRSP”), Tax-Free Savings Account (“TFSA”) or a Registered Retirement Income Fund (“RRIF”), is one of the soundest ways to realize your retirement goals. Here are some strategies you can use to maximize the benefits of your RRSP, TFSA and RRIF.

Grow your savings with a TFSA

A TFSA is a multi-purpose, tax-efficient savings account that complements your existing retirement savings plan. Your TFSA contributions grow tax-free and can also be withdrawn on a tax-free basis at any time, and used for any purpose (i.e., a new car purchase, renovating your home, starting a small business, helping fund a child’s education or saving for retirement). TFSAs have now become one of the most important personal savings vehicles since the introduction of the RRSP.

TFSAs also provide income splitting opportunities. If you have maximized contributions to your TFSA and have excess funds to invest, you can give money to your spouse, partner or adult children to make a contribution to their own TFSA. This strategy allows you to help family members build assets, without having to worry about the income being attributed back to you.

RRSP contribution options

An RRSP is a tax-deferred plan designed to help you save for retirement. With an RRSP contributions are tax deductible, and once in the plan continue to grow on a tax-deferred basis until the funds are withdrawn. Any money withdrawn from the RRSP is taxed in the year of the withdrawal. At retirement, the money in the plan may be rolled into any of the available RRSP maturity options, where they continue to be tax sheltered, except for withdrawals made from the plan each year – which are treated as income.

Make an “in-kind” contribution – If you don’t have enough cash to make your RRSP contribution, consider contributing qualified securities that you already own, rather than selling the securities and contributing the cash proceeds. Please note that you will be responsible for paying the tax on any accrued gains on the securities at the time of the contribution (except if made from a TFSA). In addition, it is generally not recommended to contribute securities that will trigger a capital loss, as the eligible offset towards a capital gain will be disallowed.

Consider an RRSP loan – If you do not have enough money to make your full RRSP contribution this year, or you want to take advantage of any unused RRSP contribution room, consider an RRSP loan. By applying the tax refund generated by your RRSP contribution to the balance of the loan, you should be able to pay off the entire loan within the year. Since interest on the loan is not tax-deductible, paying off the loan as quickly as possible should be a priority.

TFSA vs. RRSP

The timing of your RRSP contributions is important. If you’re younger or are just starting out in your career, consider delaying your RRSP contributions until you’re in a higher tax bracket. Instead, contribute to a TFSA for tax-free growth. Later, when you are subject to a higher tax bracket, consider withdrawing funds from your TFSA to make your RRSP contribution. This way, you’re able to capitalize on the tax deduction and can use your income tax refund to replenish your TFSA.

For Canadians in the top marginal tax bracket, it’s important to maximize your RRSP contributions. If you do not have enough funds to make both an RRSP and TFSA contribution, consider maximizing your RRSP contribution each year to take advantage of the income tax savings, and then use your tax refund to make a TFSA contribution for additional tax-free growth.

Tax-deferred savings options when retired

Stay in control with a RRIF – When it’s time to mature your RRSP, a RRIF is your best choice if you want to continue to manage your investments and give yourself maximum flexibility in terms of structuring your retirement income. You are required to withdraw a minimum amount each year and can choose when and how your withdrawals are paid. If you do not need the required minimum withdrawal amount for everyday spending, consider contributing the required withdrawal to a TFSA to continue sheltering future investment earnings from tax.

Contribute after age 71 – If you have earned income after age 71, and have a spouse who is still eligible to have an RRSP, you may want to contribute to a Spousal RRSP and continue to take the tax deduction for your contributions. If your spouse no longer has an RRSP, there is a one-time opportunity to make an additional RRSP contribution in the year you turn 71. Further, you may also contribute to a TFSA after you are no longer eligible to make RRSP contributions.

Investment strategies for your registered accounts

Expand your investment choices – With your RRSP, TFSA or RRIF, your investment choices go beyond Guaranteed Investment Certificates (“GICs”). Qualified investment options include mutual funds, exchange traded funds (“ETFs”), stocks, bonds and GICs. By examining all of your investment alternatives, you can often increase your return by one or two percentage points with only a marginal increase in risk. A $5,000 annual contribution that grows at six per cent, rather than four per cent, is worth over $40,000 more after 20 years.

Consider international investments – Canada represents less than three per cent of the world’s capitalization. Investing in foreign securities can reduce risk and increase returns in your portfolio.

Pay yourself first – It can sometimes be difficult to come up with one large, lump sum RRSP contribution. By setting up a pre-authorized contribution plan and making monthly or quarterly contributions, saving for retirement will be easier. A systematic contribution plan lets you take advantage of dollar cost averaging, allowing you to buy more units/ shares when the price falls and fewer when it rises – averaging the cost over time.

Hold interest bearing investments in registered plans – Since interest income is taxed at your highest marginal tax rate, consider holding interest bearing securities in your registered accounts, where they grow tax deferred (RRSP, RRIF) or tax-free (TFSA).

 

 

DISCLAIMER:

The opinions, estimates and projections contained herein are those of the author as of the date hereof and are subject to change without notice and may not reflect those of BMO Nesbitt Burns Inc. (\"BMO NBI\"). Every effort has been made to ensure that the contents have been compiled or derived from sources believed to be reliable and contain information and opinions that are accurate and complete. Information may be available to BMO NBI or its affiliates that is not reflected herein. However, neither the author nor BMO NBI makes any representation or warranty, express or implied, in respect thereof, takes any responsibility for any errors or omissions which may be contained herein or accepts any liability whatsoever for any loss arising from any use of or reliance on this report or its contents. This report is not to be construed as an offer to sell or a solicitation for or an offer to buy any securities. BMO NBI, its affiliates and/or their respective officers, directors or employees may from time to time acquire, hold or sell securities mentioned herein as principal or agent. BMO NBI -will buy from or sell to customers securities of issuers mentioned herein on a principal basis. BMO NBI, its affiliates, officers, directors or employees may have a long or short position in the securities discussed herein, related securities or in options, futures or other derivative instruments based thereon. BMO NBI or its affiliates may act as financial advisor and/or underwriter for the issuers mentioned herein and may receive remuneration for same. A significant lending relationship may exist between Bank of Montreal, or its affiliates, and certain of the issuers mentioned herein. BMO NBI is a wholly owned subsidiary of Bank of Montreal. Any U.S. person wishing to effect transactions in any security discussed herein should do so through BMO Nesbitt Burns Corp. Member-Canadian Investor Protection Fund.

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