June 2, 2019
Introduction
It is my portfolio idea just to borrow from the article Canada retirement guide using three ETF (VFU, VDU, VAB). The blog is related to invest in 60% stocks and 40% bonds.
Case study
I like to look into the argument and see some statistics related to return.
Our portfolio invests in 60% stocks and 40% bonds because the returns are significantly more stable over the long-term. This was especially true during the 2008 global financial crisis. The table below compares the yearly performance between a Balanced Portfolio vs Stock Portfolio during that volatile period.
Balanced Portfolio = 60% stocks and 40% bonds
Stock Portfolio = 100% stocks and 0% bonds
2007 to 2010
Cumulative return of Balanced Portfolio: +11.4%
Cumulative return of Stock Portfolio: –3.6%
Balanced Portfolio = 60% stocks and 40% bonds
Stock Portfolio = 100% stocks and 0% bonds
2007 to 2010
Cumulative return of Balanced Portfolio: +11.4%
Cumulative return of Stock Portfolio: –3.6%
2007
|
2008
|
2009
|
2010
| |
Balanced Portfolio
|
6.8%
|
–22.0%
|
21.0%
|
10.4%
|
Stock Portfolio
|
9.1%
|
–40.7%
|
31.6%
|
13.1%
|
Note: Balanced Portfolio = 30% VFV / 30% VDU / 40% VAB. Stock Portfolio = 50% VFV / 50% VDU.
Sources: Vanguard Investments Canada, S&P Dow Jones Indices, and FTSE Russell index fact sheets.
Sources: Vanguard Investments Canada, S&P Dow Jones Indices, and FTSE Russell index fact sheets.
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