How to Recover from Bad Investments and Start Fresh with XEQT

I still remember the exact moment it hit me.

It was a Tuesday evening in early 2018. I was sitting at my kitchen table, staring at a portfolio that had lost over 40% of its value in three months. I had put a meaningful portion of my savings into a handful of cannabis stocks right before legalization. The narrative had been so compelling. Canada was making history. Everybody was buying in.

And then the bottom fell out. Slowly at first, then all at once.

The worst part wasn’t the money. It was the shame. I couldn’t tell my partner what I’d lost. I stopped opening my brokerage app. I told myself I’d “deal with it later” – and later turned into months of avoidance that only made things worse.

If any of that sounds familiar, this post is for you.

I eventually clawed my way back – not by finding the next hot stock, but by building a simple, systematic approach centered on XEQT that took emotion out of the equation entirely. Today my portfolio is healthier than it’s ever been.

Here’s the full recovery playbook I wish someone had given me when I was sitting at that kitchen table.

1. You’re Not Alone – Investment Losses Are Far More Common Than You Think

One of the cruelest tricks of investing culture is that everyone talks about their wins and nobody talks about their losses. Your social media feed is full of screenshots of 10x gains. Nobody posts the screenshot where their portfolio is down 60%.

But the data tells a very different story:

• DALBAR’s Quantitative Analysis of Investor Behavior consistently finds that the average equity investor underperforms the S&P 500 by 3-4% per year over 20-year periods. That gap is almost entirely due to behavioral mistakes – buying high, selling low, and chasing performance.

• The meme stock aftermath was brutal. Research found that the majority of retail investors who bought GameStop and AMC during the 2021 mania ended up losing money. The top 1% of sellers captured the gains; everyone else was left holding the bag.

• Crypto crash casualties were staggering. Bitcoin fell from roughly $69,000 USD in November 2021 to under $16,000 by November 2022 – a 77% drawdown. Altcoins fared far worse. Luna went to zero overnight, wiping out $40 billion.

• In Canada specifically, the Ontario Securities Commission has reported that nearly half of self-directed investors admit to making at least one investment they later deeply regretted.

The point isn’t misery-loves-company. It’s to counter the shame spiral that keeps people from recovering. You made a mistake with your money. So did millions of other smart, well-intentioned people. The question isn’t whether you fell down – it’s whether you get back up.

2. The Emotional Stages of Investment Loss

Before we get into the practical recovery steps, we need to talk about what happens emotionally when you lose a significant amount of money. Because if you don’t address the emotional side, no amount of strategy will stick.

I went through all of these stages, and I’ve talked to dozens of investors who describe the same pattern:

Denial: “It’ll come back. I just need to hold.” You refresh the app obsessively, looking for any green day as proof that recovery is imminent. You move the goalposts – first you wanted profit, then you just wanted to break even, then you just wanted to stop the bleeding.

Anger: “The market is rigged. That YouTuber was a fraud.” Anger feels more productive than sadness, so you direct your frustration outward. You look for someone to blame – the company, the influencer, the algorithm.

Shame: This is the most destructive stage. “I’m an idiot. How could I have been so stupid?” Shame is what keeps people from talking about their losses, from seeking help, and from re-engaging with their finances. It’s the silent portfolio killer.

Avoidance: The logical conclusion of shame. You stop looking at your accounts. You stop contributing. You tell yourself you’re “just not good at investing” and the money sits there – or worse, continues to bleed – while you look the other way.

Every single one of these stages is normal. They’re the natural human response to financial loss. You’re not broken.

But awareness is the first step to moving through them. And the best antidote to all four stages? Action. Not reckless action. Not revenge trading. Deliberate, structured, simple action – which is exactly what the rest of this guide provides.

3. Step 1: Accept the Loss and Assess the Damage Honestly

This is the hardest step, but everything else depends on it.

You need to know exactly where you stand. Not roughly. Not approximately. Exactly. That means logging into every account, adding up every position, and calculating the actual damage.

Here’s how to do it:

• Log into every brokerage and investment account you have. Wealthsimple, Questrade, your bank’s platform, any crypto exchange. All of them.

• Write down the current market value of each position. Not what you paid. Not what it was worth at the peak. What it’s worth today.

• Calculate your total cost basis. Every dollar you actually put in. Most platforms track this for you.

• Subtract current value from total cost basis. That’s your unrealized loss (if you still hold) or realized loss (if you’ve sold).

• Write the number down. I know it hurts. There is power in facing the real number instead of the vague cloud of anxiety you’ve been carrying around.

When I did this exercise, the actual number was bad – but less terrifying than the shapeless dread I’d been living with. Knowing the exact figure gave me something concrete to work with.

The tax-loss harvesting opportunity: Here’s a genuine silver lining. If you have realized capital losses in a non-registered account, those losses can be carried forward indefinitely and used to offset future capital gains. We’ll cover this in detail in section 8, but for now, just know that your losses aren’t purely wasted – they have real tax value. For a deeper dive, check out our full guide on tax-loss harvesting with XEQT.

4. Step 2: Understand WHY It Went Wrong

You can’t build a better system until you understand what went wrong with the old one. Bad investment outcomes almost always trace back to one or more of these patterns:

• Speculation disguised as investing. You were making a bet on a story – that a stock would go up, that a sector would boom, that you’d time the exit right. Speculation can work, but the odds are heavily against retail investors doing it consistently.

• FOMO (Fear of Missing Out). You saw other people making money and couldn’t stand being left out. The urgency felt real – like the train was leaving the station. If you’ve found yourself swayed by social media investing hype, you know exactly what I mean.

• Lack of diversification. You put too much into a single stock, sector, or asset class. When that one bet went bad, it dragged everything down.

• Following tips and influencers. You invested based on what someone on Reddit or YouTube told you to buy. Tip-following feels like research, but it’s just outsourcing your decisions to strangers with unknown motives.

• Leverage and options. You used margin, leveraged ETFs, or options to amplify your returns – and amplified your losses instead.

• The sunk cost fallacy. You held onto losing positions far too long because you’d already invested so much. “I can’t sell now – I’d be locking in the loss.” But the loss was already locked in by the market.

Take a few minutes and honestly identify which of these patterns contributed to your situation. You don’t have to share your answer with anyone – but the system we’re about to build is specifically designed to protect you from these exact failure modes.

5. Step 3: Build a System Instead of Picking Winners

Here’s the core insight that changed everything for me: I didn’t need to get better at picking stocks. I needed to stop picking stocks entirely.

The entire model of trying to identify winning investments is fundamentally stacked against retail investors. Professional fund managers with armies of analysts fail to beat the market the majority of the time – the SPIVA Canada Scorecard shows that most actively managed Canadian equity funds underperform their benchmarks over every 5-, 10-, and 15-year period. If the professionals can’t do it, what makes any of us think we can?

XEQT (iShares Core Equity ETF Portfolio) solves this problem by replacing stock-picking with systematic global diversification. Here’s what you get in one single ETF:

• Over 9,000 companies across the entire global stock market
• Exposure to 40+ countries including the U.S., Canada, Europe, Asia, and emerging markets
• Automatic rebalancing managed by BlackRock, one of the world’s largest asset managers
• An MER of just 0.20% – a fraction of what most mutual funds charge
• No stock picking, no sector bets, no timing decisions

Here’s a comparison that illustrates why a systematic approach beats a speculative one over time:

This is the shift I made after my cannabis stock disaster, and it was the single best investing decision I’ve ever made – not because XEQT produced some extraordinary return, but because it removed all the ways I was sabotaging myself.

6. Step 4: Create Your Fresh-Start Plan

Now let’s get practical. Here’s the step-by-step process for transitioning from a damaged portfolio to a clean, systematic XEQT setup.

a) Sell your losing positions (with tax awareness)

If you’re holding stocks or crypto that you no longer believe in and that don’t fit your new strategy, sell them. Yes, it feels like admitting defeat. But holding a losing position you don’t believe in isn’t strength – it’s avoidance.

In a TFSA or RRSP, there are no tax implications from selling at a loss (but also no tax benefit – you can’t claim capital losses inside registered accounts).

In a non-registered (taxable) account, selling at a loss creates a capital loss you can use to offset capital gains. However, be aware of the superficial loss rule: if you buy the same or identical security within 30 days before or after the sale, the CRA will deny the loss. Since XEQT is not identical to most individual stocks, this usually isn’t an issue – but consult a tax professional if you’re unsure.

b) Open a Wealthsimple account (if you don’t have one)

Wealthsimple offers zero-commission trading on XEQT, which means every dollar goes directly into your investment instead of paying trading fees. They also support TFSAs, RRSPs, and non-registered accounts, so you can set up whatever account types you need.

c) Deploy the proceeds into XEQT

You have two options here:

• Lump sum: Invest everything at once. Historically, lump-sum investing beats dollar-cost averaging about two-thirds of the time because markets trend upward.

• Dollar-cost average over 3-6 months: If investing everything at once feels too risky after a bad experience, split it into equal monthly purchases. You’ll sacrifice a small amount of expected return in exchange for emotional comfort – a perfectly valid trade-off.

d) Set up automatic contributions

This is the single most important habit to build. Set up a recurring transfer from your bank account to your Wealthsimple account, and set a recurring reminder to buy XEQT on a specific day each month. Automation removes willpower from the equation.

e) Delete the noise

Unfollow the stock-picking accounts on social media. Unsubscribe from the hot-tip newsletters. Delete the trading apps you used for speculative bets. Your new system doesn’t need any of that input.

7. Step 5: Rebuild Your Confidence

After a bad investing experience, your confidence is shattered. You don’t trust yourself, the market, or maybe even XEQT – because the last thing that felt like a sure thing turned out to be anything but.

That’s okay. Confidence rebuilds through small, consistent wins. Here’s how to accelerate that process:

• Start with whatever amount feels comfortable. If that’s $50 per month, start with $50. The amount doesn’t matter nearly as much as the consistency. You’re rebuilding a habit, not trying to get rich quick.

• Track your progress monthly. Not daily. Monthly. Use Wealthsimple’s built-in tracking and watch your total contributions and portfolio value grow. In the early months, most growth comes from contributions rather than returns – and that’s fine.

• Celebrate milestones. Your first $1,000 invested. Your first $5,000. Your first dividend payment. Your first month where market returns exceeded your contributions. These small wins compound not just financially but psychologically.

• Zoom out when volatility hits. XEQT will have red days and red weeks. When that happens, look at the 5-year or 10-year chart of global equities. Short-term noise is just noise.

• Remember your “why.” You’re building long-term wealth through a proven system. The boring approach is the one that actually works.

It took me about a year of consistent XEQT investing before I fully trusted the process. The first market dip after I switched was nerve-wracking. But I held, kept contributing, and when the market recovered, my portfolio recovered with it – without me having to do a single thing.

8. The Tax Silver Lining – Turning Losses into Future Savings

If you lost money on investments held in a non-registered (taxable) account, there’s a real financial benefit hiding inside your pain. Canadian tax law allows you to use capital losses to offset capital gains – and those losses can be carried forward indefinitely or carried back up to three years.

Here’s how it works in practice:

• You sold Stock X at a $10,000 loss in 2025. That creates a $10,000 capital loss.
• In 2027, you sell some XEQT (or any other investment) at a $10,000 gain. Normally you’d owe tax on 50% of that gain (the taxable capital gain is $5,000).
• But your carried-forward loss offsets the gain entirely. You owe zero capital gains tax on that $10,000 profit.

To claim capital losses:

1. Report the losses on your tax return using Schedule 3 (Capital Gains or Losses). Even if you don’t have gains to offset yet, report the loss so it’s on file with the CRA.
2. Carry the loss forward automatically. The CRA tracks your net capital loss balance and applies it when you request it in future years.
3. Or carry it back up to three years by filing a T1A (Request for Loss Carryback) to amend a previous return where you had capital gains.

Important notes:

• Losses in TFSAs and RRSPs don’t count. Capital losses inside registered accounts have no tax value. If the gamble fails inside a TFSA, you lose both the money and the contribution room.
• The superficial loss rule applies. You can’t sell at a loss and buy the same or identical security within 30 days before or after the sale.
• Keep good records. Wealthsimple provides tax documents that make tracking your adjusted cost base easier.

9. Real Recovery Scenarios – Three Paths Back

To make this concrete, let’s look at three fictional (but realistic) Canadian investors and how each could recover using the framework we’ve outlined.

Profile A: The Crypto Believer

Situation: Priya, 28, invested $15,000 in various cryptocurrencies in late 2021. Her portfolio peaked at $25,000 before crashing to $4,500 by mid-2022. Some coins partially recovered, and her current crypto value sits at about $7,000. She hasn’t invested in anything since.

Total invested: $15,000. Current value: $7,000. Loss: $8,000.

Recovery plan:

• Sell remaining crypto positions, realizing the $8,000 loss for tax purposes (if held in a non-registered account)
• Open a Wealthsimple TFSA (she hasn’t used much of her contribution room)
• Invest the $7,000 proceeds into XEQT inside her TFSA
• Set up $400/month automatic contributions
• Use the $8,000 capital loss to offset future gains in her non-registered account

Projected outcome: Assuming 7% average annual returns, Priya’s $7,000 lump sum plus $400/month could grow to approximately $75,000 in 10 years – diversified across 9,000+ companies instead of betting on a single asset class.

Profile B: The Meme Stock Trader

Situation: Marcus, 34, got swept up in the meme stock craze of 2021. He put $20,000 into GameStop, AMC, and BlackBerry. He bought near the highs, watched positions crash, then averaged down. His remaining holdings are worth about $6,000. He also spent roughly $2,000 in trading fees and expired options premiums.

Total invested: $22,000 (including fees and premiums). Current value: $6,000. Loss: $16,000.

Recovery plan:

• Sell all meme stock positions and close options account
• Transfer proceeds to Wealthsimple
• Invest $6,000 into XEQT in his RRSP (to get the tax deduction on contributions)
• Increase his automatic RRSP contributions to $600/month
• Carry the capital losses forward to offset future gains

Projected outcome: Starting with $6,000 plus $600/month at a 7% average annual return, Marcus could have roughly $120,000 in 10 years. The RRSP tax deductions on his contributions will also generate refunds he can reinvest, accelerating his recovery.

Profile C: The Mutual Fund Fee Victim

Situation: Susan, 45, has been investing through her bank’s mutual funds for 15 years. Her losses have been slower and more insidious. Her mutual funds charge MERs of 2.0-2.5%, and she only recently discovered how much those fees have cost her. On $150,000 in mutual funds, she’s been paying roughly $3,000-$3,750 per year in fees.

Total invested over 15 years: $120,000. Current value: $150,000. What it could have been with low-cost indexing: approximately $195,000. Hidden fee drag: roughly $45,000.

Recovery plan:

• Transfer mutual fund holdings in-kind to Wealthsimple (many brokerages will cover transfer fees)
• Sell mutual funds and buy XEQT (0.20% MER vs. 2.0%+)
• Continue her existing $800/month contribution, now going into XEQT
• The 1.8% annual fee savings compounds dramatically over the next 20 years before retirement

Projected outcome: By switching to XEQT’s 0.20% MER and continuing her $800/month contributions, Susan could have an additional $80,000-$120,000 at retirement compared to staying in her bank’s mutual funds. Same contributions, same markets – dramatically lower fees.

Your Comeback Story Starts Now

If you’ve read this far, you’ve already done the hardest part. You’ve stopped avoiding and started engaging. That puts you ahead of the majority of people who lose money investing and never recover – not because recovery is impossible, but because they never try.

Your past investment mistakes don’t define your financial future. Every successful investor has a graveyard of bad trades in their past. What separates the people who build real wealth from the people who don’t isn’t that they avoided mistakes – it’s that they learned from them, built a better system, and kept going.

XEQT isn’t magic. It won’t double your money overnight. What it will do is give you a reliable, low-cost, globally diversified vehicle that removes the behavioral traps that caused the problem in the first place. It replaces speculation with system, anxiety with automation, and the question “What should I buy?” with the answer “I already own the whole market.”

The best time to start over was the day after your loss. The second best time is today.

Close the tabs with the meme stock forums. Stop checking the price of the coins you wish you’d sold. Open a fresh account, buy your first share of XEQT, set up your automatic contributions, and start writing a new chapter.

You’ve already survived the worst part. The recovery is going to be the rewarding part.