Be boring, follow the Canada Pension Plan

Recently I read about our Canada Pension Plan (CPP) reaching $200-billion mark in assets for the first time.  As one of the 10-largest retirement funds in the world, it’s a financial behemoth.  Here’s how our money is invested by region:

Canada Pension Plan

Here it is by sector:

Canada Pension Plan

Here are my quick takeaways from how CPP invests and what we can easily copy in our portfolios:

The boring and simple CPP investing approach has allowed this massive fund to reach record-highs and earn an annual rate of return of about 5% over the last ten years after inflation is factored in.  Most investors would be more than pleased with these results over the same investment period.

Any lessons learned here for your portfolio?

My name is Mark Seed and I'm the founder, editor and owner of My Own Advisor. As my own DIY financial advisor, I've grown our portfolio to over $700,000 now - but there's more work to do! Our next big goal is to own a $1 million investment portfolio for an early retirement. Subscribe and join the journey!

14 Responses to "Be boring, follow the Canada Pension Plan"

  1. Interesting that real estate only makes up around 10% of the portfolio. I’d say for most people real estate makes up 40% or more of their net assets. As you said it looks like diversification is important and this portfolio is an example of how a diversified portfolio can still have respectable returns

    Reply
    1. Hey Dan,

      Yes, which I think is a lesson for all of us. I hope to have my house only as a small percentage of my assets; definitely not worth the majority. I have to live somewhere after all. This would be better diversification don’t you think?

      Reply
    1. I think boring and steady will win the race, my portfolio is banking on it 🙂

      That was point exactly, a home is great (real estate) but it shouldn’t be most of your portfolio value. Just my opinion.

      Reply
  2. Great lessons!

    I personally am not keen to buy directly outside of North America. Even in an index as I find they are way too exposed to economic and political events that I cannot keep up with. When I was younger, I followed this model that you should go international but it was not a very good experience for my portfolio.

    Instead, I prefer to invest in large US conglomerates that have a large business portion in those international countries or are looking to take position. Those companies are much better setup to be successful than I am.

    Reply
    1. Thanks!

      I own one ETF that invests internationally, over 90% outside of U.S. That’s it.

      Everything else is in the U.S. and U.S. multinationals that sell products around the world.

      I’m not sure you can avoid any economic and political events in your portfolio, but I get your point about understanding enough individual international stocks to invest in. As for the U.S. conglomerates, I’d like to own a few more but need to save more money to do so.

      Thanks for the comment!

      Reply

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