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
Mark
My name is Mark Seed – the founder, editor and owner of My Own Advisor. As my own DIY financial advisor, I’m looking to start semi-retirement soon, sooner than most. Find out what I did and how I realized Financial Independence to tailor your own path. Join the newsletter read by thousands. Always free.
