The Investment Approach involves taking moderate to higher risk, with 60% of the portfolio in equities and 40% in fixed income investments. There is considerable exposure to global stocks and an allocation to U.S. corporate bonds. Some of the foreign equity exposure is hedged back into Canadian dollars to help dampen the effects of a fluctuating Canadian dollar.

This is a Non-taxable Portfolio. We are assuming here that any interest income, dividends or capital gains are not taxed now. Only when you withdraw assets from your RRSP will you be taxed on them. Unlike dividends and capital gains, interest income is treated as regular income and not given any reduced tax treatment by the tax people at the CRA. Therefore, we have given greater exposure to bonds in this portfolio, where the interest income can be sheltered, than in a taxable portfolio of comparable-risk.

The Typical Investor for this type of portfolio is someone who is contributing to his or her RRSP. You are quite comfortable with taking on equity risk, realizing that because your have significant assets and a time frame of over 10 years, you can weather periods of both stellar and lackluster returns.

The Asset Mix for a medium-higher risk taxable portfolio, such as this one, appears below. It is intended as a broad guideline for your overall mix.

Medium-Higher Risk, Non-Taxable Portfolio (Risk Level 5)

The Potential Target Return for this portfolio falls into the range of 6-8% per year over the long run. Note that this is not an estimate for the next 12 months, or for any period in particular. Rather, this figure reflects the long-term (20-year) average returns of the different asset classes, based on a variety of assumptions. As we all know, what happened in the past may not happen again. And long-term statistics mask the agony and the ecstasy that investors experienced during shorter time periods along the way. Thus, any individual year will almost certainly have higher or lower returns, in some cases dramatically so.

Suggested holdings:

The bulk of the holdings are in Exchange Traded Funds, which provide broad asset class and sector exposure at low cost. In the case of Canadian equity growth exposure, we used a specialized Canadian equity growth fund. Of course, you may want to substitute your own particular funds or securities in place of the appropriate securities shown below.

The sample portfolio size is $100,000, allocated as follows:

$40,000 Fixed Income:

$60,000 Equities: