The Investment Approach involves taking moderately low risk, with 30% of the portfolio in equities and 70% in fixed income investments. There is a diversified range of both bonds and large-capitalization equities in the portfolio. The portfolio is primarily invested in Canadian assets, with some global equity exposure that is partially hedged back into Canadian dollars to help dampen the effects of a fluctuating Canadian dollar.

This is a Taxable Portfolio. We are assuming here that these assets are not sheltered from tax: any interest income, dividends or capital gains are taxable as you realize them. Because dividends and capital gains are treated more favourably by the tax people at the CRA, there is a greater exposure to equities in this portfolio than in a non-taxable portfolio of comparable-risk. As well, the indexed Exchange Traded Funds (ETF’s) in the portfolio are tax-efficient, as turnover within index funds is relatively low, which defers capital gains.

The Typical Investor for this type of portfolio is someone who has savings that are there for the long term but who may want to access some of the money from time to time. Perhaps you are saving for you children's education or these to supplement your retirement. You are probably quite conservative financially and not very comfortable with the fluctuations of the markets, but you do realize that with a time frame of over 10 years you have enough time to weather periods of both stellar and lackluster returns.

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

Medium-Lower Risk, Taxable Portfolio (Risk Level 2)

The Potential Target Return for this portfolio falls into the range of 5.5% to 7.5% 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 holdings are in ETF’s, which provide broad asset class and sector exposure at low cost. 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:

$60,000 Fixed Income:

$40,000 Equities: