Model portfolios by risk level: five recipes, one dial
The investments series ended with a dial: the equity percentage — engine versus brakes. This article turns that dial through its five classic positions. These are the standard recipes discussed in every Canadian personal-finance space; treat them as illustrations of how the pieces combine, not prescriptions — matching a recipe to a person is exactly what the disclaimer at the bottom of this page is about.
Recipe 0 — The emergency fund (0% equity)
What it is: 100% cash equivalents — a HISA, a cash ETF, or redeemable GICs, ideally inside a TFSA. The job: exist when needed. No growth expected, none attempted. The ride: perfectly flat — and that’s the entire point. This money is infrastructure, not investment; it’s what lets the other portfolios survive a job loss without being sold at the bottom.
Recipe 1 — Conservative (~20% equity / 80% bonds & cash)
What it is: mostly bond ETFs with a modest equity slice — or one ticker like VCNS. The job: protect capital first, grow it a little second. Common for money needed in ~3–5 years, or for investors who genuinely cannot tolerate watching losses. The ride: shallow dips (single-digit declines in bad years), modest long-term growth that roughly outpaces inflation.
Recipe 2 — Balanced (~60/40)
What it is: the most famous allocation in finance — 60% global equities, 40% bonds. One ticker: VBAL or XBAL. The job: meaningful growth with meaningful cushioning; the classic “middle of the road.” The ride: bad years exist (2022 hit both stocks and bonds), but historically drawdowns are noticeably shallower than all-equity, and recoveries brisker.
Recipe 3 — Growth (~80/20)
What it is: VGRO/XGRO territory — strong equity engine, thin bond brake. The job: long-horizon growth for investors who want most of the market’s return but appreciate a shock absorber. The ride: expect drops of 25%+ in rough markets; the 20% bond sleeve softens the fall and provides dry powder for rebalancing — which the all-in-one ticker does automatically.
Recipe 4 — All-equity (100%)
What it is: XEQT/VEQT — the whole global stock market, no brakes. The job: maximum long-term compounding for money that won’t be touched for a decade or more. The ride: the full market experience: paper losses of 20–40% at some point are close to guaranteed, and the historical reward for enduring them has been the highest returns of any recipe. The honest qualifier from the all-in-one article applies double here: this recipe only works for investors who won’t sell in the trough.
Special recipe — Saving for a first home
Deadline money follows different rules (a fall just before the purchase can’t be waited out). The common Canadian pattern inside an FHSA: under ~3 years to purchase — GICs and cash ETFs, no equities; 3–5 years — mostly GICs with a small equity slice. The guarantee matters more than the growth once the countdown is real.
Choosing between recipes: the two questions
All the standard guidance reduces to:
- When is the money needed? Decades → the high-equity recipes are historically strongest. Under ~5 years → bonds and GICs take over. Under ~2 → guarantees only.
- What loss would make you sell? Whatever recipe’s worst year exceeds your real tolerance is the wrong recipe for you, regardless of the math. An 80/20 held calmly beats a 100/0 abandoned in a crash — the returns tables never show this line, and it decides more outcomes than any of them.
Every recipe here is implementable as a single all-in-one ETF — the mechanics were the previous article. What remains is matching amounts to budgets, which is exactly the next one.
FAQ
Where do these percentages come from — are they optimal?
They’re conventions, not physics: round-number points on the risk-return spectrum that the industry has converged on. Nothing magical happens at exactly 60/40. Consistency with some sensible recipe matters far more than which one.
Do I rebalance myself?
With an all-in-one ETF — no, that’s its job. With a DIY multi-ETF portfolio, an annual check is the common cadence.
Can I hold different recipes in different accounts?
Yes, and it’s normal: an all-equity TFSA for retirement, a GIC-filled FHSA for the home fund, a cash cushion beside them. Each pot of money gets the recipe matching its deadline.
Next in the journey: What to do with $50, $200, or $500 a month: action plans by budget