This guide may help you establish a long-term investment return assumption. This assumption is established as "inflation plus".
This guide will help you analyze the returns for selected financial indices versus the inflation. The indices you may analyze include:
Canadian equities (TSE300)
Foreign equities (S&P500)
Fixed income (long-term bonds)
Cash or cash equivalent (Treasury Bills)
You may analyze returns for any period over the last 35 years. Indicate the period you wish to analyze by selecting the corresponding first and last year. By default, this period is set to the last 25 years.
For the purposes of these illustrations, most recent year's returns (2005) are approximated.
You may also select an asset mix for the indices you wish to analyze. By default, the asset mix is as follows:
Canadian equities
Foreign equities
Fixed income
Cash
30%
20%
40%
10%
Finally, you may select an approximate management fee. Choices are 0% to 3%, in increments of 0.5%.
You will find below the following additional sections:
Returns from "first year" to "last year"
This section may include a table or a graph or not be shown at all. In table format, it shows the annual return for each index, the combined annual return for the selected mix, the average return for each index over the period selected and the overall return for the period for the selected mix. In graphic format, it shows the combined annual return for the selected mix as well as the inflation.
Real return for period of "first year" to "last year"
This section illustrates how you arrive at a real return assumption, i.e. the percentage to add to the inflation.
Change scenario
Under this section, you may select or change the following parameters to further your analysis:
