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The strong performance in the stock markets this year has left many investors overexposed to equities. This is of special concern for older investors, whose time horizon may not be long enough to wait out the impact of a deep bear market.
According to IG Wealth Management, the S&P 500 took almost six years to fully recover from the crashes of 2000 (the dot-com bubble) and 2008 (the global financial crisis). The S&P/TSX experienced similar timelines when recovering from those two crashes in the 2000s.
That’s why it’s a good idea to make sure your portfolio balance is in line with your objectives and risk tolerance. The classic mix is 60%/40% between stocks and bonds/cash, but this will vary in individual cases.
The important thing is to ensure you’re on target. Since we’re coming up to year-end, this is a good time to review your portfolio and make adjustments if needed.
As a guide, you can use the Balanced Portfolio that we developed for readers several years ago, in September 2011, for my Income Investor newsletter. It offers a conservative mix of stocks, fixed-income securities, and cash. Normally, this type of portfolio tends to underperform when stock markets are strong but reduces risk when bear markets emerge.
The portfolio had an initial valuation of $25,027.75. The goal was to achieve a return that at least matched the best available five-year GIC rate plus two percentage points.
That means the target varies with the rise and fall of interest rates. The best five-year rate right now is 3.95% from MCAN Wealth, which would make our current target 5.95%. We’re doing better than that.
Here’s a summary of the securities we currently hold and how they performed over the period since I last reviewed this portfolio in June. Prices are as of the afternoon of Nov. 21.
iShares US High Yield Bond Index ETF (TSX: XHY). This ETF invests in a portfolio of U.S. high-yield (junk) bonds. It tends to generate above-average returns for a bond fund, but with greater risk. We added it to the portfolio in June and have a gain to date of 4.9%.
iShares Core Canadian Universe Bond Index ETF (TSX: XBB). The units are up seven cents since the last review, and we received six monthly distributions that totaled $0.479 per unit.
iShares US IG Corporate Bond Index ETF (CDN-hedged) (TSX: XIG). This corporate bond fund posted a small gain as the price rose $0.22. We received six monthly distributions that totaled $0.728 per unit.
iShares Core Canadian Short Term Corporate Bond Index ETF (TSX: XSH). We added this short-term bond fund to the portfolio last June. It’s mainly a defensive position, but we received a modest total return of 2.3% in the latest six months.
Canadian Apartment Properties REIT (TSX: CAR.UN). This REIT invests in apartment units across Canada. It has not been doing well, losing $5.59 in the latest period. We received monthly distributions totaling $0.64585 per unit.
Pembina Pipeline Corp. (TSX: PPL). Pembina moved higher in the latest period, with the shares up $2.36. We received two quarterly payments for a total per-share cash flow of $1.42.
Brookfield Infrastructure Limited Partnership (TSX: BIP.UN). This Brookfield partnership invests in infrastructure projects worldwide: railroads, ports, transmission lines, toll roads, etc. The units gained $4.88 in the latest period. Due to timing, we received one quarterly distribution totalling $0.606 per unit.
BCE Inc. (TSX: BCE). Finally, BCE shares are showing a spark of life, gaining $2.81 in the latest period. It’s not a lot, but hopefully the long decline is over. We received one quarterly dividend of $0.4375.
Bank of Montreal (TSX: BMO). The financial sector continues to perform well, and BMO shares gained $26.03 during the latest period. The bank pays a quarterly dividend of $1.63 a share.
Fortis Inc. (TSX: FTS). This utility stock gained $8.04 in the latest period, and we received two dividends totaling $1.255 per share.
Cash. We had cash and retained earnings of $4,023.40. These funds were deposited in a savings account at EQ Bank, which was paying 3.5%. We earned $70.41.
Here’s how the portfolio stands now. Commissions have not been factored in.
The portfolio recorded a decent gain of 6.85% in the latest period. It is now valued at $61,020.04.
The cumulative gain since inception 14 years ago is 143.8%. That works out to an average annual compound growth rate of 6.57%. That’s better than our target.
Our position in Canadian Apartment REIT is not performing as we expected. It’s a well-managed business and will recover, but I’d like more diversity in this portfolio. Therefore, we will sell our units for a total of $3,788.71 (including retained earnings). We’ll use the money to buy 65 units of the BMO Low Volatility Canadian Equity ETF (TSX: ZLB), for a cost of $3,724.50. We’ll add the remaining $64.21 to cash.
We’ll use some of our retained income as follows:
iShares US High Yield Bond Index ETF (TSX: XHY) – We’ll buy 10 units at a cost of $165.40. We now have 460 shares, with retained earnings of $60.50.
iShares US IG Corporate Bond Index ETF (CDN-hedged) (TSX: XIG) – We’ll buy another 15 units for a cost of $298.05. We now own 215 units and have retained earnings of $31.85.well-managed business t
Fortis Inc. (TSX: FTS) – We’ll add five shares at $72.66 for a total investment of $363.30. We now own 50 shares and have $153.76 remaining in retained earnings.
We have cash and retained earnings of $3,496.34. Steinbach Credit Union is currently running a promotion that pays 4.6% for the first 121 days and 1.5% thereafter so we’ll deposit the money there.
Here is the revised portfolio. I will review it again in six months in my Income Investor newsletter.
Gordon Pape is one of Canada’s best-known personal finance commentators and investment experts. He is the publisher of The Internet Wealth Builder and The Income Investor newsletters, which are available through the Building Wealth website.
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Notes and Disclaimer
Content © 2025 by Gordon Pape Enterprises. All rights reserved. Reprinted with permission. The foregoing is for general information purposes only and is the opinion of the writer. Securities mentioned carry risk of loss, and no guarantee of performance is made or implied. This information is not intended to provide specific personalized advice including, without limitation, investment, financial, legal, accounting, or tax advice. Always seek advice from your own financial advisor before making investment decisions.
Image: iStock.com/ADDRicky
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