Last week I made the case that a single fund can hold your entire portfolio. What that fund can't decide for you is the ratio printed on its label. XEQT is 100% stocks. XGRO is 80/20. XBAL is 60/40, and the ladder keeps going down from there. The gap between the top of that ladder and the bottom will do more to your results than which company you buy from, and nobody hands you the number.
What you're trading
The split between stocks and bonds is a trade between growth and steadiness, and you can't have both at full strength. Stocks have delivered the returns that make a portfolio worth owning over decades, and they have also fallen 30% or more several times along the way. Bonds earn less and move less, so their job is to keep the whole thing from swinging as hard. Adding bonds lowers your expected return, and steadiness is what you get for it.
Start with when you'll need the money
Money you'll need within about five years shouldn't be riding the stock market. Stocks have spent long stretches down, sometimes taking more than five years to climb back to where they started, and a goal with a date on it can't wait that out. Money you won't touch for 25 years is the opposite situation, where a drop is something you'll be around to sit through, and holding a heavy bond position that whole time costs you real growth to insure against a risk time already handles.
You probably have more than one timeline running at once. Retirement might be 30 years out while a vehicle replacement is three years out, and those two pots of money have no business sharing a mix. Answer the question once per goal instead of once per person.
Could you hold it at the bottom?
In 2022 XEQT lost 10.93%, so $50,000 in it became roughly $44,500 over a single calendar year, with no shortage of people saying the worst wasn't over. The question isn't whether that's survivable on paper. It's whether you'd have kept your contribution going that November.
The gap between what a fund returns and what its investors return is measurable, and Morningstar's 2025 Mind the Gap study puts it at about 1.2 percentage points a year, lost to buying and selling at the wrong moments. A 60/40 investor who never sells can end up ahead of a 100% stock investor who bails at the bottom. If you're torn between two mixes, take the more conservative one and treat the giveback in expected return as the cost of staying in your seat.
What about "100 minus your age"?
The old rule of subtracting your age from 100 gets you a starting nudge and not much more. A 35-year-old buying a house next spring and a 35-year-old with a workplace pension and thirty years to go have nothing in common, and that rule hands them the same number. Age is standing in as a rough proxy for timeline, so use the timeline itself. A risk questionnaire will get you closer in about ten minutes, and there are two good ones linked on my asset allocation page.
When to change your number
Whatever markets did last month is not a reason to change your number. What does justify a change is your timeline moving, or a real drop teaching you something about yourself you didn't know before. My FHSA is the example I keep coming back to, since we're looking at buying in about five years. I've moved that account twice as the purchase has come closer, and both times the calendar was what moved. Most of it now sits in a short-term bond fund, which is a strange holding for someone who writes about long-run equity returns, and it's the right answer for money with a date attached.
Which account the money sits in decides what a switch costs you. Inside a TFSA, RRSP, or FHSA, selling one fund to buy another costs nothing beyond the trade itself. In a non-registered account that same switch is a sale, so any gain you've built up becomes a taxable capital gain in the year you make it. A big rebalance there is worth planning around rather than doing on a whim.
Where to start
Take one of the risk questionnaires, then hold its answer up against your own timeline and adjust from there. Where the two disagree, the timeline wins. My asset allocation page has both questionnaires, every one-ticket fund from 100% stocks down to 20%, and a walkthrough for buying one at each major Canadian brokerage.
What's next
Knowing your number and owning the fund are two different things, and the second one is where people stall out. Next week we'll go through buying your first index fund, from opening the account to what to type into the order screen so you don't get a surprise price. That one is coming soon.
This is general financial education, not individual advice. I personally hold some of the funds mentioned, and fund fees and holdings change over time, so confirm the current figures on the provider's page before you buy. For advice specific to you, talk to a qualified professional.
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