This biweekly column presents actionable investment strategies for 2024, emphasizing opportunities despite the Canadian dollar’s decline. It highlights strong market performance, with the S&P 500 achieving over 23% returns and Canadian ETFs like XBAL and XEQT performing exceptionally well. Gold and Bitcoin also saw significant gains, while Canadian bonds lagged. Analysts predict a return to normal market conditions in 2025, encouraging long-term investment in diversified portfolios.
Maximizing Your Investment Potential in 2024
In our biweekly column, we are excited to share actionable investment ideas that can help you grow your wealth. While the recent decline of the Canadian dollar may seem discouraging, savvy investors could find that this situation has positively impacted their portfolios in 2024.
The loonie has depreciated by over 7% in recent months, and if you’ve traveled to the United States, you’ve likely noticed the effects firsthand. However, there’s often a silver lining, and this currency weakness has enabled Canadian investors to achieve superior returns compared to their American counterparts!
Strong Market Performance Despite Currency Challenges
The S&P 500, the leading index in the U.S., wrapped up the year with an impressive return of 23.3% (25% when including dividends). Remarkably, this marked the first time since the late 1990s that the S&P 500 experienced back-to-back annual gains exceeding 20%.
For Canadian investors utilizing exchange-traded funds (ETFs) that track the S&P 500, the total return soared to 36% (dividends included)! The surge in U.S. stock markets was further amplified by the sluggish performance of our currency.
While many investors in Quebec diversify their portfolios beyond the U.S., a significant portion remains invested in the world’s dominant stock market. For instance, the iShares balanced ETF, XBAL, consists of 60% stocks and 40% bonds, with approximately 36% of its assets allocated to the U.S., 44% in Canada, and the remainder spread across other regions. In 2024, XBAL achieved remarkable returns of over 16%, the highest since at least 2014.
Additionally, the iShares 100% equity ETF, XEQT, which boasts 47% U.S. stocks, delivered an even more impressive return of nearly 25% last year.
Investing in gold also proved beneficial, as the value of this precious metal surged by roughly 26% in 2024, marking its best performance since 2010. When measured in Canadian dollars, the increase was an astonishing 37%!
Meanwhile, the S&P/TSX index had a more modest performance with an 18.5% gain, making it the best year since 2021 when it saw an almost 22% rise.
Cryptocurrency enthusiasts were in for a treat, as Bitcoin outperformed most asset classes with an incredible return of about 120% in 2024, marking its second consecutive year of gains exceeding 100%.
On the downside, Canadian bonds struggled, with the iShares XBB ETF, which includes nearly 1,700 securities from various levels of government and reputable companies, yielding a mere 4.1%, down from 6.6% in 2023.
So, what can we anticipate for the coming year? Many analysts predict a return to “normal” stock market performance in 2025. Yet, it’s worth noting that similar forecasts were made just a year ago.
If you’re focused on long-term investment, consistently allocating funds into diversified portfolios remains a strategy endorsed by numerous financial experts.