The Case for 100% Equities: Why XEQT's All-Stock Portfolio Might Be Right for You

A few years ago I was at a family dinner when my uncle — a retired bank employee who spent 30 years selling mutual funds — leaned across the table and told me I was “gambling with my future.” I had just mentioned that my entire portfolio was in XEQT, a 100% equity ETF. Zero bonds.

He pulled out the classic line: “You need balance. Stocks go down. Bonds protect you.” My aunt nodded. My cousin, who keeps his entire savings in a savings account earning 2%, also nodded. Very supportive crowd.

Here’s the thing: my uncle isn’t wrong that bonds have a purpose. But he’s wrong about when they matter and who actually needs them. For most Canadian investors in their 20s, 30s, 40s, and even early 50s — anyone with a decade or more before they need to touch the money — the data overwhelmingly supports a single, uncomfortable conclusion:

100% equities wins. And it’s not even close.

I know that sounds aggressive. I know it goes against what most financial advisors tell you. And I know the idea of holding zero bonds feels like driving without a seatbelt. But by the end of this post, I think you’ll see why the all-equity approach is one of the most rational, data-backed investment decisions you can make during your wealth-building years.

Let me make the case.

1. The Numbers Don’t Lie: Stocks Beat Everything Over Long Periods

Let’s start with the most important question: does 100% equities actually outperform balanced portfolios over long time horizons?

The answer, looking at nearly a century of global market data, is a resounding yes.

Over any rolling 20-year period since 1926, a globally diversified 100% equity portfolio has delivered higher total returns than a 60/40 or 80/20 balanced portfolio. Not sometimes. Not usually. Every single time. The gap narrows during some periods and widens during others, but the direction is always the same. More stocks means more money at the end.

This makes intuitive sense. Equities represent ownership in real businesses that generate profits, innovate, expand, and grow. Bonds are loans — you lend money and get your principal back with interest. Over short periods, the steady interest from bonds can beat a volatile stock market. But over decades, the compounding power of business ownership crushes the fixed returns of lending.

The Canadian and global data confirms what every long-term investor eventually discovers: time transforms the “risk” of equities into the certainty of superior returns.

2. How the Portfolios Actually Compare

Let’s put real numbers on this. The following table compares a 100% equity portfolio (like XEQT) against common balanced allocations using historical annualized returns from global markets.

Historical Average Annualized Returns by Portfolio Type

Those percentage differences might look small. They are not. Let me show you what they mean in actual dollars.

Growth of $500/Month Over Various Time Horizons

Read that 30-year column again. The difference between 100% equity and a 60/40 balanced portfolio is roughly $285,000 — on contributions of just $500 per month. That is not a rounding error. That is a house down payment. That is an extra decade of retirement. That is the real, measurable cost of holding bonds when you don’t need them.

And this gap only widens with larger contributions. At $1,000/month, the 30-year difference balloons to over $570,000.

3. The Bond Drag Effect

There’s a concept I think about a lot that I call “bond drag.” It’s the invisible cost of holding bonds in a long-term portfolio — not a fee you see on a statement, but the growth you silently give up year after year.

Here’s how it works. When you allocate 20% of your portfolio to bonds earning 3-4%, you are pulling down the average return of your entire portfolio. That drag compounds over time, and the longer your time horizon, the more it costs you.

Think of it like a race where one runner has a slight headwind and the other doesn’t. Over a 100-metre sprint, you can barely tell the difference. Over a marathon, one runner is miles behind.

The Real Dollar Cost of Bond Drag Over 25 Years

The table below assumes you invest $500/month and compares each portfolio against a 100% equity benchmark returning 9% annually.

A 20% bond allocation costs you roughly $97,000 over 25 years. A 40% bond allocation costs you $165,000. And a “conservative” 60% bond portfolio costs you nearly a quarter of a million dollars in forgone growth.

These numbers assume average conditions. In many real-world scenarios, the gap is even wider because bond returns in recent years have been historically low. The 2022 bond crash, where Canadian aggregate bond ETFs like ZAG dropped about 12%, showed that bonds aren’t even reliably safe during all types of downturns.

Bond drag is the cost of insurance you probably don’t need. If you have 15, 20, or 30 years before you touch the money, that insurance premium is enormous — and it comes out of your future self’s pocket.

4. But What About Crashes?

This is the question everyone asks. It’s the question my uncle was really getting at when he told me I was gambling. And it deserves a thorough, honest answer.

Yes, 100% equity portfolios crash harder than balanced portfolios. During the 2008 financial crisis, a globally diversified 100% equity portfolio dropped roughly 40-50%. A 60/40 balanced portfolio dropped about 25-30%. That’s a meaningful difference in the moment. If you had $500,000 invested, you were looking at a loss of $200,000-$250,000 versus $125,000-$150,000.

That feels terrible. I won’t pretend it doesn’t. But here’s what the fear-based argument misses: what happened after the crash matters infinitely more than the crash itself.

Recovery Timelines for 100% Equity vs Balanced Portfolios

*Measured through early 2026

The pattern is consistent: 100% equity portfolios fall harder, recover to the same level slightly later, but then dramatically outperform balanced portfolios over the following decade. The equity investor gives up a few months or years of temporary pain in exchange for significantly more wealth on the other side.

Here’s the key insight that most people miss: the 60/40 portfolio doesn’t just protect you during the crash. It also holds you back during the recovery and the boom that follows. Bonds dampen the downside, but they also dampen the upside. And since markets spend far more time going up than going down — roughly 75% of calendar years produce positive equity returns — the upside dampening costs you more than the downside protection saves you.

If your timeline is 10+ years, you will live through the crash and the recovery and the boom. The balanced investor never catches up.

If you want to understand the mechanics of how XEQT survives market crashes, I wrote a deep dive on that separately.

5. The Time Horizon Test

Here’s the simplest framework I can give you for deciding whether 100% equities is right for you: look at your time horizon.

Your time horizon is the number of years between now and when you’ll actually need to spend this money. Not when you might feel nervous. Not when the next election is. When you’ll actually sell shares to pay for your life.

The data is clear on this:

• Over any 1-year period, stocks lose money about 25-30% of the time. That’s a real risk.
• Over any 5-year period, the loss frequency drops to about 10-15%.
• Over any 10-year period, globally diversified equities have lost money in less than 5% of historical rolling periods.
• Over any 20-year period, there is no historical rolling period where a globally diversified equity portfolio lost money. Zero.

Read that last point again. Over any 20-year period in modern market history, 100% equities has never lost money. Not through world wars, pandemics, financial crises, oil shocks, or tech bubbles. The short-term “risk” of equities becomes the long-term certainty of growth.

Recommended Allocation by Time Horizon

If your retirement is 15 years away, 100% XEQT is not reckless. It’s rational. The math says so.

If you’re saving for a house down payment in two years, 100% XEQT is reckless. Use a HISA.

The confusion happens when people apply short-term thinking to long-term money. Your retirement savings are not the same as your emergency fund. They don’t need the same portfolio.

6. When Bonds Actually Make Sense

I want to be fair here, because I’m not saying bonds are useless. They’re not. Bonds have a real, legitimate place in specific situations. Here’s when you should genuinely consider adding them.

You’re within 5-10 years of retirement

This is the big one. As you approach the date when you’ll start withdrawing from your portfolio, something called sequence-of-returns risk becomes a genuine threat. A 35% crash right before or just after you retire can permanently damage your retirement income if you’re forced to sell shares at low prices.

This is exactly why the glide path strategy exists — you gradually shift from XEQT toward XGRO and then XBAL as you approach retirement. Bonds earn their place by reducing the size of a potential drawdown during those critical early retirement years.

You’re already retired and living off your portfolio

Retirees have shorter time horizons and no paycheque to ride out downturns. A balanced portfolio provides more stable withdrawals and reduces the chance that a poorly timed crash forces you to sell at the worst possible moment.

You have a specific, non-negotiable expense coming up

If you need $80,000 for a house down payment in four years, you cannot afford a 35% drawdown. A balanced or bond-heavy portfolio gives you a higher probability of having that money when you need it.

Your risk tolerance genuinely can’t handle the volatility

This one is real, and I won’t dismiss it. If a 30-40% portfolio drop would cause you to panic sell — and I mean actually sell, not just feel anxious — then bonds reduce the severity of drawdowns enough that you might stay the course. A portfolio you stick with beats a “better” portfolio you abandon.

The honest answer is this: if none of these situations describe you — if you have 10+ years, a stable income, and the emotional ability to hold through a downturn — you don’t need bonds. You are paying a real, measurable cost for insurance against a scenario that your time horizon already protects you from.

7. The Psychological Cost of 100% Equities

I’ve made a strong data-driven case for all-equity investing, but I’d be doing you a disservice if I didn’t address the hardest part: living through it.

The numbers say 100% equities wins over 20+ years. Your nervous system doesn’t care about 20-year backtests when your portfolio just dropped $40,000 in a week. I’ve been there. Every XEQT investor has been there or will be.

Here’s what it actually feels like:

• Your portfolio drops 15% in a month. You start checking it daily, then hourly. Every financial headline feels personally threatening. You start wondering if “this time is different.”
• Your portfolio drops 30%. Years of contributions have evaporated. Your friends who are in GICs or savings accounts look smarter than you. Your parents mention how bonds would have helped. The temptation to sell and “wait for things to settle” is overwhelming.
• Your portfolio drops 40%. This is the 2008 scenario. You are staring at tens of thousands of dollars in losses. Nothing anyone says about long-term averages makes you feel better. This is the test.

And then, slowly, quietly, the market recovers. It always has. The investors who held through it end up richer than they were before the crash. The investors who sold locked in their losses permanently.

The psychological cost of 100% equities is real. But it’s a one-time cost that you pay with temporary discomfort, not money. The cost of holding bonds when you don’t need them is financial — and you pay it every year for the rest of your investing life.

If you want to assess where you actually stand, I put together a risk tolerance reality check that walks through the scenarios honestly.

There are also strategies that make 100% equities easier to stomach. Dollar-cost averaging into XEQT on a regular schedule — biweekly or monthly — turns crashes into buying opportunities automatically. You don’t have to make a conscious decision to “buy the dip.” Your automatic contributions do it for you. That mechanical, emotion-free process is one of the most underrated tools for staying the course.

And if the anxiety is about what happens to your ETF structurally during a crisis, read about how XEQT survives market crashes. Spoiler: it’s remarkably resilient.

8. Why Conventional Wisdom Gets This Wrong

If the data so clearly supports 100% equities for long-term investors, why does almost everyone — advisors, banks, robo-advisors, your uncle — recommend bonds for young people?

A few reasons:

Risk questionnaires are designed to protect the advisor, not optimize your returns. The questionnaire you fill out at the bank isn’t trying to find your ideal portfolio. It’s trying to minimize the chance you’ll complain or sue. Any hint of discomfort with volatility and the algorithm pushes you toward bonds. That’s liability management, not investment strategy.

Balanced funds are easier to sell. An advisor recommending 100% equities to a 30-year-old has to explain why crashes are okay and why patience matters. An advisor recommending a balanced fund just says “this is the responsible choice” and moves on.

The industry profits from complexity. If the answer is “buy XEQT and don’t touch it for 25 years,” the financial industry doesn’t make much money. But if the answer involves balanced portfolios, rebalancing, tactical shifts, and annual reviews — well, there are fees to collect.

Most advice is generic, not personalized. A 60/40 recommendation is “safe” advice that works okay for everyone but is optimal for no one. If you’re a 30-year-old with a stable income and a 30-year horizon, generic advice is costing you six figures.

And here’s the irony: XEQT’s MER of 0.20% means you’re owning the entire global stock market for a fraction of a penny on the dollar. No advisor required.

9. What 100% Equities Actually Looks Like in Practice

I want to demystify this because “100% equities” sounds aggressive in theory but is remarkably boring in practice. Here’s my actual routine:

1. Every two weeks, $500 is automatically transferred from my chequing account to my Wealthsimple TFSA
2. Every two weeks, that $500 automatically buys XEQT through Wealthsimple’s recurring buy feature
3. Once a quarter, I glance at my portfolio to make sure the contributions went through
4. Once a year, I contribute to my RRSP and buy more XEQT
5. That’s it. There is no step 6.

I don’t rebalance. I don’t check the news to decide whether to buy. I don’t time the market. XEQT holds over 8,000 stocks across 49 countries and rebalances itself automatically. My job is to send it money. Its job is to grow.

The most exciting thing about my portfolio is how unexciting it is. And that’s exactly the point. Some months it goes up $3,000, some months it drops $5,000. Over the years, the line goes up and to the right. The compound interest calculator on this site can show you what consistent contributions look like over 20 or 30 years. The numbers are quietly staggering.

The Bottom Line

Here’s what I believe, backed by every piece of historical data I’ve been able to find:

If you are a Canadian investor in the accumulation phase — building wealth, not spending it — with a time horizon of 10 years or more, the math overwhelmingly favours a 100% equity portfolio.

Not 80/20. Not 60/40. Not “balanced.” One hundred percent equities.

XEQT makes this incredibly simple. One ETF. Over 8,000 stocks. 49 countries. Automatic rebalancing. A MER of 0.20%. No bonds to drag down your returns. No complexity to manage. No advisor fees to pay.

The case for bonds exists — for retirees, for short time horizons, for specific near-term goals. I’ve written about the XEQT glide path for transitioning out of 100% equities when that time comes, and about how XEQT compares to XGRO and XEQT compares to VBAL if you want to explore those options. Bonds have their moment.

But that moment isn’t now. Not if you’re 25. Not if you’re 35. Not if you’re 45 with 20 years until retirement.

Right now, the single best thing you can do for your financial future is dead simple: buy XEQT, set up automatic contributions, and don’t touch it. Let the global economy do what it has always done — grow. Let compounding do what it has always done — accelerate. And let time do what it has always done — turn the “risk” of equities into the reward of financial freedom.

My uncle still thinks I’m reckless. My portfolio respectfully disagrees.

Disclosure: This post contains referral links. I may receive compensation if you sign up through these links, but this does not affect my honest assessment. I genuinely believe XEQT is an excellent choice for Canadian investors seeking simple, low-cost, globally diversified growth. Historical returns do not guarantee future results. This is not financial advice.