Weekend Reading – What to expect from the TSX in 2025?
Hey Everyone!
Welcome to a new Weekend Reading edition, including what you and I might expect from the TSX in 2025.
More on that in a bit!
First up, some recent posts on my site in case you missed them:
I reconciled these financial goals in 2024.
Given the start of a new year can equate to a new opportunity to contribute to your Tax Free Savings Account (TFSA) for wealth-building, I shared this updated post below. I’ll report back on my own TFSA purchases in the coming weeks…
Weekend Reading – What to expect from the TSX in 2025?
This headline and article from The Globe and Mail caught my eye this week (subscription), likely because it appears to be a nice follow-up from this post:
You might recall in that expert predictions post, Brian Belski, BMO’s chief investment strategist shared:
“We think Canada offers value and cyclicality and increase in stock picking, especially relative to the US.” His forecast puts the TSX at 28,500 by the end of 2025.
Will this happen in 2025? Will U.S. stocks and the TSX will jump that much?
I have no idea but there seems to be some expert consensus out there that the TSX could deliver more gains over the coming 12 months. History says so when you remain invested in Canadian stocks over many investing years…
From Norm Rothery’s article in The Globe:
I like this chart because it shows the real-return perspective, after inflation is accounted for, what you and I can expect from owning a basket of Canadian stocks over many investing years – in this case, 30-year rolling periods.
In looking at my own portfolio of DIY Canadian stocks that I keep readers updated with here, I can attest to these returns over many investing years although not quite 30-years. My mix of dividends earned + price growth is delivering about the same 5-6% after inflation since I became My Own Advisor in 2009, returns that should not only help my spending plans in semi-retirement in 2025 but also fight inflation in the decades ahead too.
From Norm:
“Adjusting for inflation, the market index gained an average of 5.4 per cent annually from the end of January, 1956, through to the end of November, 2024, which is still mighty fine all things considered. (The returns herein are based on monthly data from Bloomberg and include dividend reinvestment but not fund fees, taxes, commissions or other trading costs. The figures that follow are adjusted for inflation.)”
So:
“Overall, long-term investors should be encouraged by the historical record because buy-and-hold investors gained in the end.”
Indeed.
Related to inflation, I also liked what Ben Carlson from A Wealth of Common Sense mentioned last month:
“Sometimes the stock market struggles with a burst of inflation over the short to intermediate-term but stocks for the long run are still your best investment hedge against the silent killer of inflation.
Over the past 100 years or so the U.S. stock market has beaten the inflation rate by nearly 7% per year. Dividends have grown more than 2% faster than the annual inflation rate. Inflation-adjusted earnings growth has come in at around 3% per year.”
What do I personally expect, if I had to guess, what the TSX might deliver in 2025?
Well, I’ve already made a few fun predictions for 2025 like I did last year on Canadian Money Forum.
After winning that predictions contest in that Forum a few years ago, I finished middle-of-the-pack with my 2024 picks this past year:
Source: Canadian Money Forum.
Here is what I think could happen in 2025, just for fun:
- S&P 500: 6,500
- TSX: 27,000 (bullish for the TSX, I know!?)
- GOLD: $2,985
- OIL (Crude WTI for folks asking): $79
- CAD $$: $0.72 (again, probably a bit aggressive here…)
As always, time will reveal all and it will be interesting to report back. I hope you play along and do the same!
More Weekend Reading – Beyond what to expect from the TSX in 2025?
I learned this week if you are a EQ Bank (EQB) shareholder, like I am, they will be buying back shares in 2025. Great news.
Reader question of the week (adapted slightly for the site):
“Hi Mark,
I invest in XIU, XAW and VTI. My purchasing has been with these based on your blogs and some of my own research. I buy XIU in all my accounts. I keep XAW in my TFSA and VTI in my RRSPs.
Question: would you change or recommend anything different?
I know you re-evaluate investments over time and was wondering if this strategy that you mention in your newsletters is still a good plan.
I recall you had a chart that looks at the TFSA, RRSP, Unregistered and possible holdings. These were 3 ETFs that you mentioned and I implemented your chart with my investments. Thanks for your update!”
Thanks very much to this reader for his email and Happy New Year to you!
He is very much correct, I have listed those ETFs a few times in many newsletters and I keep a listing of some of my favourite low-cost ETFs on My ETFs page here – in table format – exactly what the reader is referring to.
First off, to address the question I wouldn’t change anything in those tables at this point. In fact, I eat my own cooking on this site.
For years, I’ve mentioned XIU is an excellent fund for Canadian stock investing and I still feel that way. I mean, if the largest 60 companies in Canada are not making money over time, then few are. I used to own XIU many years ago in fact but I’ve long since unbundled XIU to own many top XIU-listed stocks directly (i.e., financials, energy, and more), avoiding XIU money management fees in the process while remaining tax-efficient since I own most of those Canadian stocks in my taxable account (with both RRSPs and both TFSAs are out of available contribution room). More on that below.
From 2016 in fact, very relevant today and I will update this post in 2025:
Have you considered unbundling your Canadian ETF for income?
Moving on, XAW an excellent ex-Canada fund to own a world of global stocks, which I started buying small portions of in 2016, but I really accelerated buying more of this ETF in subsequent years. I like XAW inside registered accounts like the RRSP and TFSA in particular and I invest this way myself.
When it comes to VTI, again, an excellent fund to own for the reader today this ETF focuses on the total U.S. stock market vs. a global mix of stocks that XAW owns – so in owning both XAW and VTI, there is some overlap to be mindful of. That said, VTI is a great choice in the RRSP/RIRF, or LIRA/LIF since you avoid any 15% foreign withholding taxes by owning U.S. stocks or U.S.-listed ETFs inside those registered accounts. It remains a great way to ride broad U.S. stock market returns without too much thought – just stay invested in it.
Asset location and asset allocation are important investing principles when it comes to constructing and maintaining your portfolio. While I cannot make any direct suggestions for you, I would suggest you read up on those principles and see what further adjustments you might want to make, if any.
At the end of the day, when it comes to those principles I tend to invest this way for my equities…but your mileage may vary!
- Non-Registered = Canadian dividend paying stocks.
- TFSAs = Canadian dividend paying stocks + XAW for broader global diversification.
- RRSPs + my LIRA = Canadian dividend paying stocks + U.S. stocks + low-cost ETFs.
I hope that provides a solid update to help kickstart your investing new year and do write back and share in the comments too, any further thoughts you might have.
I would appreciate it if other experienced DIY investors have similar or different thoughts on asset location or asset allocation depending on their investment goals, time horizon and related retirement income planning objectives. Comment away!
In other reading/finds, congrats to my friend Dividend Daddy. Just wow on the saving, investing and income compounding progress:
Source: https://x.com/DividendDaddy1/status/1874811243783139565
Dividend Growth Investor shared an impressive list of U.S. Dividend Aristocrats, a list that includes S&P 500 companies which have managed to increase dividends for at least 25 consecutive years. He compiled the dividend increases for 2024 for this list, along with relevant other information, such as valuation (forward P/E and dividend yield), 5 year annualized dividend growth and dividend payout ratio. You can also see the streak and dividend increase for 2024 as well. Nicely done.
I’ll be back next week with more new content including a final tally of our 2024 annual dividend income earned from a few key investment accounts. Excited for that already!
Have a great weekend and happy investing to you in 2025.
Mark
Hi Mark,
Happy New Year! Just wanted to say I appreciate the good quality of your site, it has a lot of valuable information. Love to read about ETFs and such. I don’t comment often because I usually see someone else’s comment or question reflecting my own. I’m often tempted to veer off course with my dividend investing plan, and I do, in small ways (“just not fast enough”, -that’s the devil on my shoulder), but when I see your success it puts me back on track. So thank you and keep up the good work!
Great stuff, Christine – Happy New Year to you. Comment away as much or as little as you wish, all good with me.
Ya, I’m biased to my hybrid approach since I continue to feel I get the best of both worlds – income and some growth from the stocks + global, lazy growth from the ETFs I own including some tech growth from QQQ in particular.
So far, so good with the approach and I will keep you and others posted in 2025. 🙂
Mark
A question about the charts. Who designs them? They look terrible.
Text in columns should be aligned to the left, numbers to the right. Only heading should be centered. That would make charts look a lot more professional and readable. Thanks.
Hey Div, which charts? Potentially if something I created I can improve. 🙂
Mark
Gotcha on the CMF / Canadian Money Forum table! Ya, I have no idea who does those!
(I agree, a bit busy and not aligned to the left.)
Cheers.
HI; Mark I have a TFSA account for a 32-year-old child with xiu in it. Could you please tell me whether to set up dividends in this account and then invest them, or use cash to buy other stocks? thank you very much！
min
I think don’t fix what isn’t broken, re: if you are comfortable with XIU then stay with XIU inside your TFSA and keep investing in it. XIU has returned over 7% annualized for the last 30+ years. Likely to do the same in the next 30 years.
The only thing you need to do to reinvest dividends inside the TFSA is call your brokerage and tell them you want to set-up a Dividend Revinestment Plan (DRIP) for the entire TFSA account. That’s it. Should be free to do so…
Happy investing!
Mark
Thank you very much for your reply!
You bet!
Every year I go through a mind exercise trying to establish what might concern me most. It usually comes down to three basic issues.
In no particular order…
A) FOMO. Keeping around 60% of all savings/investable assets in equities ought to cover this one. At our age it is also less of a concern.
B) Protection of Principle. 40% of the investable assets in guaranteed products ought to allay this issue.
C) Sustainable Yields. There is no way to sugar coat this one. All one can possibly go by is historical data and we all should know one does not go all in on that. Will there be so much economic/political turmoil that widespread cuts to dividends becomes reality? I kinda doubt it. Maybe some, but if it gets so bad that this comes to pass I’d probably have greater threats than loss of income.
So all in all, 2025 might be more than interesting but I hope I have enough bases covered so that it doesn’t become a major headache. Fingers crossed anyways.
As an aside, OAS will begin in the early summer and the company pension loses its CPP integration factor. Don’t know the exact number for that yet.
Well, I recall your portfolio has XEI so you have a nice mix of income and growth there.
XEI was up 15+% in 2024 = pretty darn good.
Once OAS sets in, I suspect you are “set” with your dependable income streams.
Yes, happens to many pensions related to CPP integration but OAS should more than make up for that if you decide to take at age 65, no?
OAS for most individuals with residency in Canada is about $8,400+ per year.
Happy New Year, Lloyd – best wishes for 2025.
Mark
“OAS should more than make up for that if you decide to take at age 65, no?”
Absolutely. The integration is just one very minor unknown for this year. The wife’s unknowns kicks in in the fall of ’26 and includes the same integration issue as well as the DCPP to CPP conversion. I don’t expect either to be earth shattering. Her loss of the wage replacement payments will be substantial but the number is known….goes to zero at 65. 😉
Take care.
Ah, good stuff. Keep me posted on the changes. Would be interesting to know if you change your (investing) approach at all with that new (OAS) guaranteed, inflation-protected income flowing in. 😉 Then again, don’t fix what is not broken!
Mark
We’ve been lucky in retirement in that so far the only account we’re slowly winding down are the RRIF’s. All in ZBAL to hopefully slow things down a little no matter which direction the markets decide to take over the next few years.
Both the TFSA’s and the non-registered accounts continue to get built up year after year.
Great stuff.
My parents RRIFs are in VBAL, same as you/ZBAL and they are slowly selling some VBAL every few years now to make their RRIF-cash withdrawals each January.
Easy.
Will be interesting to see what the coming year holds!
Happy New Year to you and family.
Mark
By the way Mark did you happen to see the youtube interview from about three weeks ago on Robin Speziale’s channel with Derek Foster? I could be wrong, but I personally thought it was really well worth watching. Never a dull moment.
,,,,,,,,,,,,,,,and to you and your family have a great 2025 as well Mark, and same to all your followers.
I didn’t! I should check that out. Derek lives in Ottawa still and we’ve had lunch a few times in the past, many years ago.
Thanks for the kind words. Stay in touch often in 2025!
Mark
On the subject of asset allocation and location, I think one of the most complicated things to manage – especially in decumulation – is putting your investments into the most tax efficient accounts AND maintaining the assett allocation desired overall. For a couple considering TFSA, RRSP/RIFF, and some taxable accounts and the puzzle becomes complex.
Many investors might be better off not worrying about location and holdiing the same allocation in each account. Expecially if you want to use a one fund ETF like VBAL or VEQT etc. I am trying to plan for this now so what are your thoughts for clients starting to draw down? I am leaning to giving up some tax efficiency for simplisticy.
This is a great question. Likely more achievable in the TFSA/RRSP where there are not the same tax implications for moving from dividend paying stocks to and all in one EFT. For a non-registered account you have the downside of likely having capital gains as you first sell and then rebuy. With that said we don’t intend to withdraw from the TFSA for many years so likely less of an issue.
The other thing that we are contemplating the implecations of moving from simply withdrawing dividends from the RRSP to having to likely sell shares if we moved to an all-in-one EFT as the yields tend to be MUCH smaller.
Thanks, Rod. Indeed. You can always make your own dividends and distributions from ETFs but those yields are lower and you’ll need to time those asset sales since you don’t want to sell ETFs when prices are low, a double-whammy: 1. selling low and 2. reducing your capital balance for potential, future withdrawals. See sequence of returns risks.
Fair points, Peter, but not too sure that decumulation is too complex to be honest.
Non-Reg = Canadian dividend stocks, or stocks that pay little to no dividends.
Otherwise, RRSPs/RRIFs, LIRAs/LIFs, etc. are tax-deferred so only when money comes out is it taxed. So, put all the VEQT, XAW, XBAL, etc. in those accounts as much as you wish. TFSAs = tax-free = no issues. 🙂
For folks like me and clients I help on the verge of drawdowns, I think knowing where your income coming from is the most important part, being tax-efficient is secondary.
Thoughts? I share more here:
https://www.myownadvisor.ca/your-free-playbook-to-retirement-income-planning/
Mark
Mark, I’ve found the decumulation phase to be notably more complex then the accumulation phase, but I suspect that’s mostly my own doing in my attempt to achieve perfection!
I could withdraw from just one RRIF/LIF/Spousal RRIF each year, and withdraw it all in one lump sum. Instead, I withdraw from 6 to 7 accounts, and in some cases several times in the year. The simple option would result in CRA holding a substantial amount of our money vs the complex option, where we hold just under $6K of CRA’s money. For now, I choose the complex path, but as other pension streams come online, and the RRIFs run dry, things will for sure get simpler.
My projections suggest that in 2030 we’ll have 13 income streams! From there, things will start to get simpler.
I really like simple. But converting our accounts to ETF’s is not in the plan. We will continue to hold the same stocks and withdraw dividends from RRIF’s (2) and unregistered accounts. TFSA’s will be left alone other than adding the allowable contributions. We are trying to draw down our RRIF’s by taking some additional amounts each year.
What is going to be new in 2025 is that I am turning 70 and have applied for CPP and OAS. More taxable issues to manage.
Congrats on holding out on the CPP and OAS until age 70. I think that is quite rare.
Indeed, seems ideal if you can pull that off!
Mark
My goodness, that’s a LOT!
Yep, here’s the full list, albeit ‘only’ 13 will be active at any one time:
– Ad hoc consulting work
– RRIFs x 2 (his and hers)
– RRSP GICs
– Preferred RRIF
– Spousal RRIF
– LIF
– Non-registered dividends x 2
– Employer pension
– CPP x 2
– OAS x 2
– Foreign pension x 2
– There were two foreign RRSPs, but they were emptied in the past few years
– Also two TFSAs, but we have no plans for using them yet.
That’s quite the list! I thought mine was long!
Now I understand, nothing you can merge I don’t think…I was thinking you could merge spousual RRIFs and your personal RRIFs but I don’t think there is much account simplification there…
I assume your plan is to take down registered assets sooner than later?
– RRIFs x 2 (his and hers)
– RRSP GICs
– Preferred RRIF
– Spousal RRIF
Getting that tax-deferred $$ out to TFSA every year would be a good start if you haven’t already done that given other income streams.
Cheers,
Mark
Ha, yes, it can be complex but it can be simplified based on cashflow needs (i.e., living off dividends), # of accounts (1 or 2 vs. many), and asset allocation I find (i.e., heavy bias to stocks).
Is there an option/opportunity for your to combine your RRIF accounts; simplify?
Cheers,
Mark
The only obvious option for combining accounts would be to merge the RRSP GICs into one of the RRIFs, but the GICs will just be cashed out when the time comes (2028 and 2029), so there no hassle anyway. I’m not sure any of the other account types can be combined. I can look into the possibility and consider the benefits of doing so.
I could simplify things if I really wanted to by systematically draining one plan at a time instead of chipping away at them concurrently.
It could be worse, we could have no investments to juggle!
Ya, was just reading that…I was thinking of merging as much as possible with your RRIFs for sure.
Lots of accounts but good problems overall to your point; opportunity to take down/drawdown many accounts over the coming years and simplify.
Mark
Hi Mark, if I were to only invest in equities as you do if I recall, then that makes it simplier, no Bonds or GICs to manage in the mix. And of course if did not have the legacy of investments in my taxable accounts to sell. I have a holding in VIU and VUN in taxable accounts with unrealized gain. So my plan will be to hold VBAL in RRSPs, VEQT in TFSA and keep what I have in taxable for now. Then as I draw down I will look for chances to reduce the VIU and VUN in a tax efficient way. Mostly I am planning to drawon large RRSP accounts till 65 or 70 when CPP/OAS will kick in. Overall my balance is about 75/25 equity to fixed income.
I started investing 35 years ago if only we had the options we have today back then!
Nice to hear from you, Peter! HNY!
Ya, I own no bonds, no personal GICs, no Bitcoin, etc.
My focus is largely equities via dividend paying stocks + low-cost ETFs. I hold cash/cash equivalents via cash ETFs + MMFs (Money Market Funds) earning 3% or so given lower interest rates.
I think VIU and VUN are great funds…and given bond element, yes, smart to own VBAL or related “BAL” funds in RRSPs/RRIFs, TFSAs, etc. vs. taxable investing.
I will be living off dividends/selling stocks and ETFs in particular inside our RRSPs/RRIFs before age 70 I think. Just makes sense for us.
That leaves taxable accounts + TFSAs + other income streams for later in life (CPP, OAS, my workplace pension).
The most successful investors I know, can and try to defer CPP and OAS until later in life to help smooth out taxation like you seem to be trying to do… So well done. 🙂
Stay in touch and keep me posted in 2025!
Mark