Accumulating wealth

The power of compound interest 

Pre-authorized contribution plan 

The following charts demonstrate how monthly contributions, aided by the power of compound interest, can add up over the years. 

Assuming 3 per cent compound annual return¹ ($) 

Monthly contribution	5 years	10 years	15 years	20 years
50	3,231	6,986	11,347	16,413
100	6,464	13,973	22,696	32,828
200	12,928	27,947	45,393	65,659
300	19,393	41,921	68,090	98,489
500	32,322	69,869	113,485	164,149
800	51,716	111,792	181,577	262,640
1,000	64,646	139,740	226,971	328,300

Assuming 5 per cent compound annual return² ($) 

Monthly contribution	5 years	10 years	15 years	20 years
50	3,399	7,762	13,362	20,549
100	6,799	15,527	26,727	41,101
200	13,600	31,055	53,456	82,204
300	20,401	46,583	80,185	123,307
500	34,002	77,639	133,642	205,514
800	54,404	124,224	213,829	328,824
1,000	68,005	155,281	267,287	411,031

1,2  Rates of return are used only to illustrate the effects of compound growth and are not intended to forecast future values or returns on investments in any mutual or segregated fund. It is assumed that all monthly contributions are made at the beginning of the period. 

Asset allocation mixes 

The following list of diversified portfolios covers the spectrum of risk and return profiles designed to meet various investment goals. 

Conservative 

• Income generation 
• Emphasis on preserving capital 

Moderate 

• Income generation 
• Long-term growth 
• Slightly greater emphasis on fixed income portion 

Balanced 

• Long-term growth consistent with safety of capital 
• Slightly greater emphasis on equities 

Growth 

• Long-term growth with little need to generate income 
• Increased exposure to foreign equities 

Global diversification 

Canada represents less than five per cent of the world stock market capitalization.¹ When you consider the fact that over half² of Canada’s stock market is confined to the financial, energy and materials sectors, if you limit your client’s portfolio to Canadian investments, you may be missing out on a number of world-class opportunities. 

1 Source: As per MSCI ACWI weightings as of September 30, 2019. When you consider the fact that over half2 

2 Source: Morningstar Direct as of September 30, 2019. of Canada’s stock market is confined to the financial, energy and materials sectors, if you limit your client’s portfolio to Canadian investments, you may be missing out on a number of world-class opportunities. 

Mutual fund sector weights – Canadian Equity Category Average vs. International Equity Category Average 

Source: Morningstar Direct as at September 30, 2020. For illustration purposes only. 

The growth of a $10,000 portfolio with and without foreign content 

30 years (October 1, 1989 – September 30, 2019) 

Source: Morningstar Direct as at September 30, 2020. For illustration purposes only. This is based on a hypothetical scenario. 

Yield spectrum 

While Canadian government bond yields may be low, there’s a world of income out there worth exploring. The chart illustrates the wide spectrum of choices available to portfolio managers looking to build a globally diversified income portfolio. 

Sources: Bloomberg as of September 30, 2020.