The Average Canadian Portfolio vs XEQT: What Most People Get Wrong

A few years ago, I was at a family barbecue and the topic of money came up — as it always eventually does at family barbecues. My cousin, who is in his late 30s, mentioned that he had “about $120,000 saved up.” I asked where it was invested. His answer was a masterclass in everything the average Canadian does wrong with their money.

He had roughly $50,000 in a savings account earning 1.5%. Another $35,000 was in a TD Comfort Balanced Growth mutual fund inside an RRSP — a fund with a 2.09% MER. The remaining $35,000 was split between Royal Bank stock, Enbridge, and a “cannabis ETF” he had bought in 2018 and never sold (it was down about 70%). He did not have a TFSA because he “hadn’t gotten around to it.”

My cousin is not financially illiterate. He has a good job, he saves money, and he thinks about his future. He is doing better than most Canadians. But his portfolio was costing him tens of thousands of dollars in missed growth, excessive fees, and poor diversification — and he had no idea.

This post is about the gap between how the average Canadian actually invests and what a simple, one-ETF strategy with XEQT delivers. The numbers are not close. And the best part is that fixing the problem takes about 15 minutes.

1. What the Average Canadian Portfolio Actually Looks Like

Let’s start with reality. Based on data from Statistics Canada, the Bank of Canada, and industry reports from the Investment Funds Institute of Canada (IFIC), here is what the typical Canadian household’s financial assets look like:

Average Canadian Financial Asset Allocation

A few things jump out immediately.

Too much cash. A third of the average Canadian’s financial wealth is sitting in savings accounts earning barely above inflation. After accounting for inflation at 2-3%, the real return on cash is approximately zero — and in high-inflation years, it is actually negative. Your money is losing purchasing power while sitting in the bank.

Dominated by high-fee mutual funds. The average MER on Canadian mutual funds is approximately 2.0-2.2%. On a $100,000 portfolio, that is $2,000-2,200 per year in fees — paid regardless of whether the fund makes or loses money. Over 25 years, those fees consume a staggering portion of your returns.

Severe home country bias. When Canadians do invest in stocks (either through mutual funds or directly), the allocation is overwhelmingly Canadian. The average Canadian investor has 50-60% of their equity holdings in Canadian stocks, despite Canada representing only about 3% of global market capitalization. This means the average Canadian is making a massive bet on a small number of companies in a small economy.

Almost no ETFs. Despite years of media coverage about the benefits of low-cost index investing, ETFs still represent a small fraction of the average Canadian’s portfolio. The mutual fund industry — backed by the Canadian banks and their army of financial advisors — still dominates.

2. What an XEQT Portfolio Looks Like by Comparison

Now let’s look at what happens when you replace the average Canadian portfolio with a simple XEQT strategy:

XEQT Portfolio Allocation

Side-by-Side Comparison

That “estimated blended return” row is the killer. When you blend the low returns from excess cash, the fee-dragged returns from mutual funds, and the concentrated returns from a handful of Canadian stocks, the average Canadian’s actual investment return is dramatically lower than what global markets deliver.

3. The Four Mistakes That Define the Average Canadian Portfolio

Mistake #1: Holding Too Much Cash

I understand why people hold cash. It feels safe. You can see the number in your bank account, it never goes down, and it is available instantly. The problem is that “safe” is an illusion when inflation is eating your purchasing power.

$50,000 in a savings account at 2.5% vs. $50,000 in XEQT at 8% over 25 years:

A quarter of a million dollars. That is the cost of keeping $50,000 in a savings account instead of XEQT over 25 years. Adjusted for inflation, the savings account barely grows at all in real terms. The XEQT portfolio builds genuine, inflation-beating wealth.

Now, I am not saying hold zero cash. An emergency fund of 3-6 months of expenses in a high-interest savings account is prudent. But everything beyond that emergency fund should be invested — and for long-term goals, XEQT is where it belongs.

Mistake #2: Paying High Mutual Fund Fees

This is the single most expensive mistake Canadian investors make, and it happens because the Canadian banking system is structured to profit from it.

When you walk into a TD, RBC, BMO, or Scotiabank branch and say “I want to invest,” you are directed to a financial advisor. That advisor — who is really a salesperson — will recommend the bank’s proprietary mutual funds. These funds charge MERs of 1.5-2.5%, which come directly out of your returns every single year.

How fees compound against you:

Consider two investors, each putting $500/month into their chosen investment for 25 years. Both earn a gross return of 8% from the market. The only difference is fees.

The high-fee investor pays $92,000 more in fees and ends up with $109,000 less wealth. And the gross market return was identical. The only difference was the fee structure. This is why fees matter more than almost any other investment decision you will make.

Mistake #3: Home Country Bias

Canadians love Canadian stocks. Banks, energy companies, telecoms, railroads — these are familiar names that pay solid dividends. The problem is that Canada represents approximately 3% of global stock market capitalization. When you put 50-60% of your equity holdings in Canadian stocks, you are making a massive concentrated bet on a very small slice of the world economy.

What you miss with a Canada-heavy portfolio:

A Canada-heavy portfolio means you are overexposed to banks and oil companies and severely underexposed to the technology and healthcare sectors that have driven a huge portion of global market returns over the past two decades.

XEQT fixes this automatically. Its ~25% Canadian allocation gives you meaningful home country exposure (important for currency matching and dividend tax credits) while the remaining 75% gives you global diversification across all sectors.

Mistake #4: No Investment Plan (aka “Collecting” Instead of Investing)

The average Canadian portfolio is not the result of a deliberate strategy. It is the result of accumulation — a savings account here, a mutual fund the bank recommended there, a few stocks a friend mentioned, maybe a GIC that was on promotion. Over time, these disconnected decisions pile up into a portfolio that serves no coherent purpose.

XEQT replaces this accidental approach with intentional simplicity. One fund. One strategy. Global diversification. Automatic rebalancing. Low fees. It is a complete investment plan in a single ticker.

4. The 25-Year Cost of Being Average

Let’s put it all together. Two Canadians, both investing a total of $1,000/month over 25 years. One follows the average Canadian approach; the other goes all-in on XEQT.

The Average Canadian Investor

• $350/month in a savings account (2.5%)
• $300/month in a balanced mutual fund (6% after 2% MER)
• $200/month in Canadian individual stocks (7% — generous assumption)
• $150/month in GICs (3.5%)
• Blended return: approximately 4.5%

The XEQT Investor

• $1,000/month in XEQT (8% average return)
• MER: 0.20%

25-Year Comparison

Three hundred and forty-eight thousand dollars. Same income. Same total amount saved. The only difference is where the money went. The XEQT investor has 65% more wealth — enough to fund an entirely different retirement.

5. Why the Canadian Financial System Keeps You Average

This is the part of the post where I need to be blunt. The reason the average Canadian portfolio looks the way it does is not because Canadians are financially unsophisticated. It is because the Canadian financial system is structured to profit from the status quo.

The Bank Advisor Model

Canada’s Big Five banks (TD, RBC, BMO, CIBC, Scotiabank) dominate the investment landscape. Their “financial advisors” are, in most cases, salespeople with incentive structures tied to the products they sell. They are not obligated to act in your best interest — they are obligated to recommend “suitable” products, which is a much lower bar.

When a bank advisor recommends the RBC Select Balanced Portfolio (MER: 1.81%) instead of XEQT (MER: 0.20%), they are not necessarily giving you bad advice by regulatory standards. The product is “suitable.” But it costs you nine times more in fees and will likely underperform a simple XEQT portfolio over any meaningful time horizon.

The Mutual Fund Industry’s Scale

Canadian mutual fund assets total well over $2 trillion. The fee revenue generated by these assets — at an average MER of roughly 2% — exceeds $40 billion per year. That is $40 billion flowing from Canadian investors to the fund management industry annually. This is an enormous economic incentive to maintain the status quo and discourage the shift to low-cost ETFs like XEQT.

The Psychological Lock-In

The average Canadian investor faces several psychological barriers to switching:

• Trust in the bank brand: “I’ve been with RBC my whole life. They wouldn’t steer me wrong.”
• Complexity aversion: “I don’t understand ETFs. My advisor handles everything.”
• Loss aversion: “If I sell my mutual funds, I might lose money in the transition.”
• Status quo bias: “What I have is working fine.” (It is probably not.)

Breaking through these barriers requires education, which is exactly what sites like this one exist to provide.

6. The Simplicity Advantage: One Fund, No Decisions

One of the most underrated benefits of XEQT is that it eliminates the need for ongoing decision-making. The average Canadian portfolio requires constant attention:

• “Should I move money from savings into investments?”
• “Is it time to sell my individual stocks?”
• “Should I switch mutual funds?”
• “Am I rebalanced properly between asset classes?”
• “Do I have enough Canadian stocks? Too many?”

With XEQT, none of these questions exist. You buy XEQT on a regular schedule and you ignore everything else. The fund handles geographic allocation, sector exposure, stock selection, and rebalancing — all for 0.20% per year.

This simplicity is not a bug — it is the primary feature. Investment decisions are opportunities to make mistakes. Every decision point is a chance to panic-sell, performance-chase, or overthink. XEQT removes nearly all of those decision points. The fewer investment decisions you make, the better your returns tend to be.

Studies consistently show that the best-performing investment accounts are the ones that are forgotten about — accounts where the owner set up automatic contributions and never logged in again. XEQT is specifically designed for this approach.

7. Making the Switch: From Average to XEQT

If your current portfolio looks anything like the average Canadian’s, here is how to transition to an XEQT strategy:

Step 1: Take Inventory

List everything you own across all accounts. Include:

• Savings accounts (with balances and interest rates)
• GICs (with maturity dates and rates)
• Mutual funds (with names, MERs, and current values)
• Individual stocks (with current values and your adjusted cost base)
• ETFs (with names, MERs, and current values)
• Any employer pension details

Step 2: Decide What to Keep vs. Replace

Keep:

• Emergency fund in a high-interest savings account (3-6 months of expenses)
• Employer pension with matching (this is free money — always contribute enough to get the full match)

Replace with XEQT:

• Excess cash beyond your emergency fund
• High-fee mutual funds
• GICs (unless they are in a short-term savings vehicle like an FHSA for an upcoming home purchase)
• Individual stocks (unless you have a specific, informed reason to hold them)
• Duplicate or overlapping ETFs

Step 3: Choose Your Platform

If you are not already on a commission-free platform, now is the time to move. Wealthsimple offers commission-free XEQT trading, fractional shares, and automatic recurring buys — everything you need.

Step 4: Execute the Transition

In a TFSA or RRSP: You can sell existing holdings and buy XEQT within the account with no tax consequences. This is a tax-sheltered swap — do it without hesitation.

In a non-registered account: Selling existing holdings may trigger capital gains tax. Consider selling in stages over multiple tax years to spread the tax impact, or use losses from underperforming holdings (like my cousin’s cannabis ETF) to offset gains from winners.

Transferring between brokerages: If you are moving from a bank brokerage to Wealthsimple, you can do an in-kind transfer (moving the actual securities) or sell at the old brokerage and buy at the new one. Wealthsimple often covers transfer fees for larger accounts.

Step 5: Set Up Automatic Contributions

Once your XEQT portfolio is established, set up recurring buys aligned with your payday. This is the most important step. Automation removes emotion, ensures consistency, and builds wealth on autopilot.

8. Common Objections (and Honest Answers)

“My mutual fund advisor provides value through financial planning.”

Some advisors genuinely do. But you are paying $2,000+ per year per $100,000 for that planning. You could hire a fee-only financial planner for $1,500-3,000 one time, invest in XEQT, and come out dramatically ahead. The “bundled advice” model is the most expensive way to get financial planning.

“Canadian stocks pay great dividends. I need that income.”

Canadian dividend stocks do pay attractive yields. But dividend income is not free money — it comes out of the stock price. And a dividend-focused portfolio is poorly diversified, concentrated in financials and energy, and underweight growth sectors. XEQT pays dividends too (roughly 2% yield), and your total return — dividends plus capital appreciation — is what actually matters for wealth building.

“I can’t handle 100% equities. I need bonds for safety.”

If XEQT’s 100% equity allocation makes you uncomfortable, consider XGRO (80/20 equity/bond split) or XBAL (60/40). These still provide the diversification, low fees, and automatic rebalancing benefits — with a smoother ride. The important thing is moving away from the high-fee, poorly diversified average portfolio, even if you choose a more conservative all-in-one ETF.

“I’ve been with my bank for 20 years. It feels disloyal to leave.”

Your bank does not have feelings. Your bank has shareholders who benefit from your high-fee mutual fund holdings. The bank will be fine without your 2% MER. Your retirement, on the other hand, will be significantly better without it.

“The market is too risky right now.”

The market is always “risky right now.” There has never been a moment in history when investing felt perfectly safe. If you wait for calm, you will wait forever. Time in the market beats timing the market — and every year you wait costs you compounding.

9. What “Beating Average” Looks Like Over a Lifetime

Let me paint the picture in retirement terms. Two Canadians, both earning the same salary, both saving $1,000/month from age 30 to 60.

The Average Canadian Investor (4.5% blended return)

• Portfolio at 60: ~$730,000
• Sustainable annual withdrawal (4% rule): ~$29,200/year
• Monthly retirement income (from portfolio): ~$2,430

The XEQT Investor (8% return)

• Portfolio at 60: ~$1,400,000
• Sustainable annual withdrawal (4% rule): ~$56,000/year
• Monthly retirement income (from portfolio): ~$4,670

The XEQT investor can withdraw nearly double per year in retirement. Combined with CPP and OAS, that is the difference between a comfortable retirement and one where you are constantly watching your spending. Same career, same savings effort — completely different outcomes.

10. Stop Being Average

The average Canadian portfolio is not bad because Canadian investors are bad with money. It is bad because the default path — the bank advisor, the high-fee mutual fund, the excess cash sitting in savings — is designed to benefit the financial industry, not you.

Breaking from the average requires exactly one decision: buy XEQT instead.

• Instead of 30% in a savings account → invest in XEQT
• Instead of a 2% MER mutual fund → buy XEQT at 0.20% MER
• Instead of 60% Canadian stocks → own the world through XEQT
• Instead of a patchwork portfolio → hold one fund that does everything

You do not need to be a financial expert. You do not need to pick stocks, time markets, or read annual reports. You need a Wealthsimple account, a recurring buy order for XEQT, and the patience to let it compound for decades.

The average Canadian investor will likely retire with significantly less wealth than they could have had. You do not have to be average. The tools to do better are available to every Canadian, right now, for the cost of 15 minutes and a few taps on your phone.

Disclosure: I may receive a referral bonus if you sign up through links on this page. All opinions are my own. Return estimates are based on historical averages and are not guaranteed. The “average Canadian portfolio” is a composite based on publicly available data from Statistics Canada, IFIC, and Bank of Canada reports — individual portfolios vary widely. This is not financial advice.