For my faithful readers, this is the issue where we bring together the series of the last few months on LET’S MAKE SOME MONEY!

  • In July we looked at the choices for your money: lending it (fixed income with interest) or buying a piece of the business (equities or self-employment) and about striking the right balance for your comfort level with the risk and volatility trade-offs
  • Then in August we figured out how much you were going to need to provide you with financial independence, and how to trade off how long you would need with your balanced allocation of assets, and how you may need to start sooner or save more or take more risk if you are to achieve your target.
  • September started investing principles to keep your risks as low as possible while still reaching your independence target using diversification, across sectors and geographies.
  • October answered the age-old investment question of how to time the market, to buy low and sell high. The bad news was that you can’t. The good news was that you do not need to if you commit to consistent saving with dollar-cost-averaging so that you make money whether markets are going up or down.

Now in November we wrap up that advice by showing you a real live example of what a well-balanced, diversified portfolio with consistent additions can do for you.

Would you believe the Canada Pension Plan? (The CPP the government runs is a rip-off as I discussed last November. Here I am talking about the CPP Investment Board and how they manage our CPP funds.)

The CPP used to get lousy returns. Governments used it as easy money, where they could borrow your money at ridiculously low interest rates instead of raising your taxes directly. It was a big portion of government debt and another shell in the public finance shell game of how politicians use our money to bribe us with promises while getting their gold plated jobs with platinum defined benefit pension plans.

The former CPP investment portfolio in government bonds was not dissimilar to the average saver, approaching retirement, with their savings wasting away in GICs, slowly losing capital after taxes and inflation. Government realized that the CPP was going bankrupt long before most of us alive today would get to collect benefits. Typical of politicians, they created the CPP Investment Board to manage the CPP funds. Now if CPP went broke, it wouldn’t be their fault! The CPPIB have done very well with our money. Most of us need a similar plan, to reduce our low interest fixed income investments and get into balanced, blue chip, large cap, dividend paying equities, diversified across sectors and around the world.

How they are doing with our money? The last Annual Report for the year ended March 31st, 2017 showed the $316.7 billion fund earned 11.8%; the ten year average rate earned was 6.7%. And that included 2008/9 when the TSX was down 35.5% The CPPIB was only down 18.6%, half of the market’s downturn volatility, the downturn dampened by having the balance of fixed income assets. Balance in your portfolio means being content at 10%, when others are bragging about a 20% return, so that you can be consoled when they are “losing” half their fortune and you are only temporarily down a fraction of that.  The CPPIB asset allocation balance is down the middle with 55.4% in equities and 44.6% in fixed income and real estate.

Diversity is applied by the CPPIB geographically by only having 16.5% invested in Canadian assets while 83.5% is invested outside of Canada. And the CPPIB has its investments fully diversified across economic sectors as well.

With all working Canadians’ pay cheques being docked 4.95%, matched by their employers, every month, the CPPIB is investing a steady cash flow though all market cycles, using the power of dollar-cost-averaging effectively. You need to be sure your financial planning is working with a similar 10% of your cash flow.

There is only one problem, the CPP has not (yet) been opened up to allow you to make additional investments. In the meantime, what are your options for an affordable, well performing yet conservative, balanced investment? Select investment funds or ETFs that mirror the CPPIB. The Saskatchewan Pension Plan is a defined contribution plan (unlike CPP’s defined benefit) that allows contributions up to $2500 a year that are RRSP eligible. And CPP is not the only big game in town. Manulife has over $300 billion of assets under management.

A Globe and Mail column featured two actively managed balanced funds. One fund with a 60/40 balance of equities and bonds had an 8.5% average return over twenty years, through all the turmoil of the 21st century, after a very reasonable MER of 0.96%. Invest $50,000 at age 35 and your money would double four times as you approach 65 for an $800,000 retirement fund objective. So if “you don’t have the time or inclination for do-it-yourself investment” you can still “seek the comfort of knowing someone is at the helm”, at an affordable cost. This example may be out if date by the time you read this. That is why you might pay a financial planner (by the hour) to help you construct your own CPPIB.

Fredrick Petrie, B. Comm. (Hons.), author of “THE END OF WORK: financial planning for people with better things to do”, provides financial education at, reach him at  or call (204) 298-2900. You can get started at