12 XEQT Myths Debunked: Common Misconceptions Canadian Investors Believe

Every time I visit my parents for Thanksgiving dinner, I end up in the same conversation with my uncle. He leans back in his chair, folds his arms, and says something like: “You’re putting everything into one ETF? That’s a lot of eggs in one basket.” Then he tells me about his buddy who “made a killing” on some oil stock, and I spend the next twenty minutes explaining why owning 12,000 stocks across 49 countries is literally the opposite of putting eggs in one basket.

I have this conversation at family dinners, at barbecues, at work, and in Reddit threads. The myths about XEQT are persistent, and they keep good people on the sidelines – or worse, they push people toward complicated, expensive strategies that underperform.

So I decided to write down the twelve myths I hear most often and explain exactly why each one is wrong. If you have heard any of these and felt a flicker of doubt about your XEQT strategy, this post is for you.

Myth #1: “XEQT Is Too Risky Because It’s 100% Stocks”

This is the myth I hear most often, usually from people who confuse volatility with risk.

Yes, XEQT is 100% equities. Yes, it will drop 20-30% during a bear market. In 2020, XEQT fell roughly 30% in a single month. That is a real thing that happened and will happen again.

But here is what people miss: volatility is not the same as risk. Volatility means the price moves up and down in the short term. Risk means you permanently lose money. For anyone with a time horizon of five years or longer, the historical probability of losing money in a globally diversified equity portfolio is extremely low.

Let me put it in numbers:

• Over any 1-year period: Global equities have been positive about 73% of the time
• Over any 5-year period: Positive about 88% of the time
• Over any 10-year period: Positive about 94% of the time
• Over any 20-year period: Positive essentially 100% of the time

The “risk” of XEQT is that you will see red numbers on your screen sometimes. The risk of avoiding XEQT is that you park your money in a savings account earning 3% while inflation runs at 2.5%, slowly losing purchasing power for decades.

The reality: XEQT is risky for money you need in the next 1-3 years. For money you are investing for 5+ years, the biggest risk is NOT being in equities.

Myth #2: “You Need at Least $10,000 to Start Investing in XEQT”

I believed this one myself when I was starting out. I thought investing was something you did after you had accumulated a big pile of cash – that there was some minimum threshold below which it “wasn’t worth it.”

This could not be more wrong. On platforms like Wealthsimple, you can buy fractional shares of XEQT starting at $1. One dollar. You do not need to buy a full share. You do not need $10,000. You do not even need $100.

If you can set aside $25 per week – less than the cost of two takeout coffees per day – that is $1,300 per year going into XEQT. At an average annual return of 8%, that $25 per week becomes over $200,000 in 30 years.

The math does not care whether you invest $25 or $25,000. Compound interest works the same way on any amount. The most important variable is not how much you start with – it is how early you start.

The reality: You can start investing in XEQT with as little as $1. There is no minimum. Starting small and early beats starting big and late, every single time.

Myth #3: “XEQT Doesn’t Pay Enough Dividends to Be Worth It”

This myth comes from the dividend investing crowd, and I understand the appeal. Getting a deposit into your account every quarter feels tangible and real in a way that unrealized capital gains do not.

But here is the thing: dividends are not free money. When a company pays a dividend, its stock price drops by exactly the dividend amount on the ex-dividend date. You are literally getting your own money back. The total value of your investment does not change.

What matters is total return – dividends plus capital gains. And on total return, XEQT has historically delivered approximately 8-10% annually, which is excellent by any standard.

XEQT does pay a dividend, by the way. Its yield sits around 2% annually, paid quarterly. But the real growth comes from the capital appreciation of the 12,000+ stocks it holds.

Here is a comparison that illustrates why chasing yield is a mistake:

The investment with the lowest yield (XEQT) has the highest total return. Total return is what builds wealth. Yield is just one component of it.

The reality: XEQT’s total return is what matters, not its dividend yield. Chasing high dividends at the expense of total return costs you money over time.

Myth #4: “You Should Wait for a Dip to Buy XEQT”

This is market timing dressed up in a sensible-sounding outfit. “I’ll wait for a correction and buy cheaper” sounds like a smart, disciplined strategy. In practice, it almost never works.

Here is why:

First, you do not know when the dip will come. Markets can go up for years without a meaningful correction. While you are sitting in cash waiting for a 10% dip, XEQT might climb 20%. Even if the dip eventually comes, you might still be buying at a higher price than today.

Second, even when a dip does come, you will not buy. I have seen this pattern over and over – people say “I’ll buy when the market drops 10%,” and then when it actually drops 10%, they panic and think: “What if it drops another 10%?” Fear takes over, and they stay on the sidelines.

The data backs this up. Vanguard research shows that lump sum investing outperforms dollar-cost averaging approximately 67% of the time. The best time to invest is almost always “right now,” because markets trend upward over time and you cannot predict the dips.

The reality: Time in the market beats timing the market. If you have money available to invest, buy XEQT now. Do not wait for a dip that may or may not come.

Myth #5: “XEQT Has Too Much US Exposure”

XEQT allocates roughly 45% to US stocks, and some Canadians feel uncomfortable with that. “Why am I giving almost half my money to the Americans?” is something I have heard more than once.

But think about what that 45% actually buys you. It includes Apple, Microsoft, Amazon, Google, Nvidia, Johnson & Johnson, JPMorgan, and thousands of other companies that operate globally. Apple does not just serve the US market – it sells products in every country on earth. When you own US stocks, you own global businesses that happen to be listed in the US.

Meanwhile, Canada represents only about 3% of global stock market capitalization. If XEQT allocated proportionally to market cap, your Canadian allocation would be 3%, not 25%. The fact that XEQT gives you 25% Canadian exposure is actually a deliberate home-country tilt designed to benefit Canadian investors through reduced foreign withholding tax and dividend tax credits.

If anything, XEQT is more Canadian-heavy than a purely rational allocation would suggest – not too American.

The reality: The US stock market represents roughly 60% of global market cap. XEQT’s 45% US allocation is actually underweight relative to the global benchmark. US companies are global businesses, and owning them is not the same as betting on America.

Myth #6: “You Need to Check XEQT’s Price Daily”

If you are checking your XEQT balance every day, you are not investing – you are spectating. And it is actively hurting your returns.

Behavioral finance research consistently shows that the more frequently investors check their portfolios, the worse their returns. Why? Because seeing short-term losses triggers emotional reactions. A 2% dip on a random Tuesday makes you anxious. Enough anxious days in a row, and you start thinking about selling. Selling during a temporary dip locks in a real loss.

A famous study found that investors who checked their portfolios daily earned significantly less than those who checked quarterly or annually. The reason is simple: on any given day, the stock market is roughly 50/50 up or down. On any given year, it is up about 73% of the time. On any given decade, it is up virtually always. The more often you look, the more noise you see. The less often you look, the more signal you see.

My personal rule: I check my XEQT portfolio once per quarter, usually when I receive the distribution statement. That is four times per year. The rest of the time, I am living my life.

The reality: Checking your XEQT balance daily adds zero value and significant emotional cost. Set up auto-invest and check quarterly at most. Your future self will thank you.

Myth #7: “XEQT Can’t Beat a Good Stock Picker”

This is the one that refuses to die, because everyone knows someone who “beat the market” picking stocks. Your coworker who bought Shopify before it took off. Your uncle who loaded up on oil stocks in 2020. The Reddit poster who turned $5,000 into $50,000 on a meme stock.

Here is what these stories leave out: survivorship bias. You hear about the wins. You do not hear about the losses. For every person who made 10x on a single stock, there are dozens who lost 50% or more and quietly moved on.

The professional data is overwhelming:

Source: SPIVA Canada Scorecards

These are professionals. People who went to business school, have Bloomberg terminals, work 60-hour weeks analyzing companies, and manage billions of dollars. 98% of them cannot beat the index over 15 years. The idea that you or I can do it part-time with a brokerage app is, with respect, delusional.

Yes, some people will beat XEQT in any given year. That is how averages work. But the probability of beating it consistently over 10, 20, or 30 years is vanishingly small. Why bet your retirement on being the statistical exception?

The reality: Almost nobody beats a diversified index fund over the long term. XEQT is the long-term winner by default, because it IS the market.

Myth #8: “XEQT’s MER of 0.20% Is Expensive”

This myth usually comes from people who have been looking at US-listed ETFs like VTI (0.03%) or VOO (0.03%) and wondering why Canadian investors are paying so much more.

Context matters. XEQT is not a single index fund – it is a fund of funds that holds four underlying ETFs, automatically rebalanced to maintain its target allocation across Canadian, US, international, and emerging markets. The 0.20% MER covers the cost of this rebalancing, the foreign withholding tax structure, and the convenience of one-ticker global diversification.

Let me compare XEQT’s cost to what most Canadians actually pay:

If you were previously in a bank mutual fund paying 2.2%, switching to XEQT saves you roughly 2.0% per year. On a $100,000 portfolio, that is $2,000 annually. Over 25 years, the fee difference compounds to over $150,000 in extra wealth. XEQT is not expensive – it is a massive upgrade from what most Canadians currently pay.

Could you build a slightly cheaper DIY portfolio with four separate ETFs? Yes, you would save about 0.05-0.08% per year. On a $100,000 portfolio, that is $50-$80 annually. In exchange, you take on the responsibility of rebalancing, tracking, and managing four ETFs yourself. For most people, paying 0.05% more for the convenience of XEQT is an exceptional deal.

The reality: At 0.20%, XEQT is remarkably cheap for what it delivers. It is 10x cheaper than bank mutual funds and only marginally more expensive than a DIY multi-ETF portfolio.

Myth #9: “You Should Sell XEQT When Markets Crash”

This is the myth that destroys the most wealth. It sounds rational – “get out before it drops further” – but it is catastrophically wrong in practice.

Here is the problem: you have to be right twice. You have to sell at the right time AND buy back at the right time. Miss either one, and you are worse off than if you had done nothing.

The historical record is clear. Every market crash in history has been followed by a recovery:

• 2008-2009 (Financial Crisis): Markets dropped ~50%. Recovered to pre-crash levels within about 5 years. Then doubled again.
• 2020 (COVID): Markets dropped ~34%. Recovered fully within 5 months.
• 2022 (Rate Hikes): Markets dropped ~20%. Recovered within about 18 months.

In every single case, the investors who stayed in XEQT and kept buying recovered fully. The investors who panicked and sold locked in their losses and often missed the sharpest part of the recovery – which typically happens in the first few weeks, when fear is highest and selling feels most tempting.

The reality: Selling XEQT during a crash is the single most destructive thing you can do to your long-term wealth. Crashes are temporary. Selling makes the losses permanent.

Myth #10: “XEQT Is Only for Young Investors”

The assumption here is that because XEQT is 100% equities, it is only appropriate for people in their 20s or 30s who have decades until retirement.

This misunderstands how investment suitability works. The key variable is not your age – it is your time horizon. A 55-year-old who does not plan to touch their TFSA for 15 years has a perfectly appropriate time horizon for XEQT. A 60-year-old with a government pension that covers their basic expenses might keep their RRSP in XEQT for decades because they do not need to draw on it immediately.

Conversely, a 25-year-old saving for a house down payment in two years should NOT put that money in XEQT. The time horizon is too short, regardless of their age.

The question is not “how old am I?” It is “when will I need this money?”

The reality: XEQT is appropriate for any investor with a time horizon of 5+ years, regardless of age. If you are 50 and investing money you will not touch for 15 years, XEQT can absolutely be the right choice.

Myth #11: “You Need Multiple ETFs to Be Properly Diversified”

I held this belief for years. I used to own seven different ETFs – a Canadian equity fund, a US fund, an international fund, a bond fund, a REIT fund, and a couple of sector funds. I thought I was being sophisticated. In reality, I was overcomplicating things for no measurable benefit.

XEQT holds over 12,000 individual stocks across 49 countries. It includes every major sector: technology, financials, healthcare, energy, consumer goods, industrials, telecommunications, and more. It covers large-cap, mid-cap, and some small-cap stocks across developed and emerging markets.

What additional diversification does a seventh ETF provide that 12,000 stocks do not? Essentially none.

The only reason to hold additional ETFs alongside XEQT is if you want to change your asset allocation – for example, adding bonds as you approach retirement. But for equity diversification specifically, XEQT is as diversified as you can possibly get in a single Canadian-listed product.

The reality: XEQT is one of the most diversified investments available to Canadian investors. Adding more equity ETFs on top of it adds complexity, not diversification.

Myth #12: “XEQT Will Underperform Because Canada Is a Small Market”

This myth stems from a fundamental misunderstanding of what XEQT actually holds. People see “Canadian ETF” and assume it is heavily concentrated in Canadian stocks.

In reality, only about 25% of XEQT is Canadian. The other 75% is invested internationally – 45% US, 20% international developed, and 10% emerging markets. When you buy XEQT, you are not betting on Canada. You are buying the entire global stock market with a modest Canadian tilt.

That Canadian tilt actually benefits you as a Canadian investor:

• Canadian dividends qualify for the dividend tax credit, which significantly reduces your tax bill in non-registered accounts
• Canadian stocks incur no foreign withholding tax, unlike US or international stocks
• Canadian-dollar denominated stocks eliminate currency conversion costs

XEQT gives you global growth with Canadian tax advantages. It is the best of both worlds.

The reality: XEQT is 75% international. It is a global portfolio, not a Canadian one. The 25% Canadian allocation exists specifically because it provides tax advantages for Canadian investors.

The Complete Myth vs. Reality Cheat Sheet

The One Myth That Costs Canadians the Most Money

If I had to pick the single most expensive myth on this list, it would be Myth #4: waiting for a dip. I have met countless Canadians who have been sitting in cash for months or even years, waiting for the “right time” to invest. Every month they wait, their money earns 3-4% in a savings account while XEQT’s long-term average return is 8-10%.

The math on this is brutal. A year of waiting on $50,000 costs you roughly $2,000-3,000 in expected returns. Two years of waiting doubles that. And the cruelest part: when the market finally does dip, these same people are too scared to buy because “what if it goes lower?”

The only reliable strategy is consistency. Buy XEQT regularly, regardless of what the market is doing. Set up automatic purchases. Stop watching the price. Let time and compounding do the work.

That is the boring, unsexy truth. And it is the truth that will actually build your wealth.