TheAnswerIs.ca
Model Portfolio
TheAnswerIs.ca Inc. Model Portfolio Performance Update (Q4 2021)
TheAnswerIs.ca Inc. announces a total return for the Model Portfolio from inception October 26, 2016, to December 31, 2021 of 72.36%.
The corresponding total return for the Toronto Stock Exchange (TSX), as represented by the ETF XIC, is 67.71%. TheAnswerIs.ca Model Portfolio return is higher than the TSX return, due to its broader economic sector diversification.
The annualized return for the TheAnswerIs.ca Model Portfolio for the 5.18 years since inception is 11.08% per year.
The trailing 3-month total return for TheAnswerIs.ca Model Portfolio was 5.64%. The trailing 12-month total return for TheAnswerIs.ca Model Portfolio is 21.07%.
Past returns are not indicative of future returns.
Due to the onset of COVID, between February 20, 2020, and March 23, 2020, the TSX, (and most global stock markets), dropped by approximately 35%. Yes, a drop of 35% in just over one month.
Since then, global stock markets have rebounded, and are now near their all-time highs, notwithstanding the disruption caused by the emergence of Omicron. In other words, in the history of the world, stock markets have never ever been this high. That does not mean they are about to drop. Stock markets tend to rise "farther than they should", and also fall "further than they should", reflecting human greed and fear, respectively.
I have no idea if the stock market will be higher or lower in the short term, and quite frankly no one else does either. However, it is likely that in the long term, i.e., 10 years or longer, global stock markets will be higher than they are today.
With the emergence of increased inflation, transitory or not, it is clear current Fixed Income returns from GICs, bank accounts and Bonds, will result in negative real returns, (a real return is the nominal return you get from say a 2% GIC, less inflation of say 4.5%, equals a real return of negative 2.5%). Thus, for a long-term investor, it is clear that not investing in equities, is not an option.
The key to investment success is to make sure any money invested in the stock market can be left untouched for a minimum of 10 years, and preferably much longer. Not selling into a stock market downturn will ensure time for a portfolio to recover and provide potentially attractive long-term average equity returns. Five years before one slows down working, and begins to draw money from their portfolio, one should move a significant portion of their portfolio into Fixed Income.
Invest long-term and prosper.