Forecasting expected returns for your portfolio (and the risk that goes with it)
Every year, FP Canada produces something called a projection assumptions guideline. This is a document that gives financial planners guidance in terms of what assumptions to use for forward-looking expected returns for different portfolios.
Aravind's recent substack dives into FP Canada's projected return assumption guidelines, how to use them to construct what the expected return for varying portfolios would be, as well as a look through some historical data to also share what the potential worst-case drawdown or worst-case drops in said portfolios might be.
This is useful if you are interested in understanding what kind of assumptions to use for your own portfolio in terms of what to expect long-term, growth-wise. Additionally, it's a good insight if you haven't ever taken a dive through history to see what the worst-case scenarios are for your portfolio and whether you might be able to stomach those drops.
Aravind Sithamparapillai
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