Episode Details

A bond matures. A bond fund never does. Almost everything confusing about owning bonds in Canada comes out of that one line.

This is three pieces in one. The research on whether you should own bonds at all, the seven ways you can actually own them here, and the inflation-indexed floor most Canadians already own without seeing it on a statement.

Part 1. The paper that says own zero bonds.
Anarkulova, Cederburg and O'Doherty. 39 countries, 1890 to 2023, a million simulated lifetimes. All stocks, all the time, a 7 percent chance of running out of money against 19.7 percent for the funds that get more conservative as you age. They publish the price too: the average worst drop along the way is 55 percent, and 1 lifetime in 20 drops 76. Which models home bias for each coutnry. Then the part that rarely gets quoted. When they let the model pick the mix at every age instead of holding one for life, it buys 27 percent short-term government bills at 65, and by 68 it's back above 90 percent equity. So the argument was never whether. It's how many years, and when.

It's a working paper rather than peer reviewed, and Emory funded it, not Dimensional. Both worth saying out loud.

Part 2. Seven ways to own bonds in Canada.
GICs, individual bonds, ladders, bond ETFs, all-in-one funds, target maturity funds, private credit. RBC alone runs 21 target maturity bond ETFs, so the menu is bigger than the decision. One question sorts all of it, and it isn't cost or yield: does the thing have an end date? Something that matures walks its price risk down to zero on a day you knew going in. XBB carries 6.73 years of duration today and will carry about 6.7 in 2041, because it sells bonds as they age out of the index and buys new ones. It isn't a bond, it's a permanent claim on the bond market.

The all-in-one is the one people ask about most and it doesn't work how it looks. It doesn't hold stocks and bonds, it holds other funds inside one trust, and when stocks run past 60 percent the manager sells units of the equity funds and buys more of the bond fund. Nothing on your statement. That's the product: rebalancing that happens in March whether or not you'd have had the stomach for it. Vanguard looked at its own plan members through 2020 and 90 percent made no trade all year, against 4 percent in the all-in-one group. What you hand over is judgement. You can't hold the bonds in the RRSP and the stocks in the TFSA when it's one ticker, you can't spend the bond sleeve first, and you don't pick the year your gains land. VBAL paid out 43 cents a unit at the end of 2025 to people who sold nothing.

Part 3. You already own a bond.
Maximum CPP at 65 this year is $1,507.65 a month and full OAS is $751.97. Call it $2,259.62, indexed to actual inflation, and neither one falls if prices fall. A Canadian insurer this month, single life, registered, escalating at 2 percent, pays about $457.21 a month per $100,000, so that floor is worth roughly $494,000 of purchased annuity.

Blanchett and Finke modelled what that does to the allocation question. As guaranteed income goes from 5 percent of wealth to 75 percent, the optimal equity allocation moves from 30 percent to 95. Two people with identical portfolios, different right answers.

It works because CPP and OAS are tied to real inflation, and most Canadian private sector pensions aren't fully indexed, so read your own plan's clause.

Add up CPP, OAS and any pension. Subtract what you actually spend. The gap is the only part a portfolio has to cover.

Sources named: Anarkulova, Cederburg and O'Doherty on lifecycle asset allocation. Blanchett and Finke on guaranteed income and optimal equity. Vanguard plan member trading data through 2020. iShares XBB duration. Vanguard VBAL 2025 distribution. CRA and Service Canada figures for CPP and OAS.

The full written guide is in the Calm Money Community.

This is education, not advice for your situation,