Another year of retirement over, and what a year it’s been!
2025 started off with US president Donald Trump’s return to power, and by April he had started a full-blown trade war with every trading partner and was threatening to annex Canada. Since then, we’ve seen the evolution of the Ukraine conflict into a grinding war of attrition powered by drones, and now the start of a whole new conflict in Venezuela. It’s been a dizzying flurry of news, all of which sounds big and scary.
So how has this all affected our investments?
To recap, here’s our portfolio.
Our main portfolio’s investments are evenly split between 4 asset classes: Canadian Preferred Shares, Canadian Equities, US Equities, and International Equities.
We also own a small amount of gold, but because that’s a temporary holding I decided to split that off into its own account and manage that separately.
So now let’s go through each component one by one and see how they did last year.
Preferred Shares
At the beginning of 2023, I moved our fixed income from a bond index to the BMO Preferred Share Ladder Index (ZPR). Admittedly, doing this was an act of active investing, so I was taking a bit of a gamble, but I was reasonably confident at the time that because interest rates from 5 years ago having dropped to zero during the pandemic, preferred shares would reset at higher rates.
So was I right about that this year?
Apparently, yes!
Today’s 5-year Government of Canada bond yield is paying about 3.5%, but back in 2020, that number was sitting at less than 1%. That means all the preferred shares renewing their dividend rates this year were forced to reset at higher rates. That meant dividends shot up.
As you can see, dividends started the year paying 4.5 cents per share. That increased to 5 cents per share in June, and then again to 5.6 cents in September. For those keeping track at home, that means their dividend yield went up nearly 25%.
And guess who loves dividend increases? The market does! This is reflected by the fund’s price rising. For 2025, this is what ZPR looked like.
ZPR went up 13.4%! That’s very unusual for fixed income to move this much, and that move looks even more pronounced when compared to a plain vanilla bond index like ZAG, which went slightly negative this year (shown in light blue).
Not too shabby, if I do say so myself.
Dividend increases are truly the gift that keeps on giving, since they reward you in the form of increased income AND capital gains.
That being said, ZPR isn’t a forever holding, since there will eventually come a time in which the interest rate outlook reverses and this fund will see dividends level off or even decline, but we’re not in that situation yet. In fact, these same market forces that pushed this fund’s dividends up should persist over the next year, so I’m planning on hanging onto to this position for at least that long. When the time comes to divest this holding, I will announce it on this blog.
USA
Now over to the equity side.
To be honest, when Trump returned to power at the beginning of the year, and especially when he started this trade war with everyone in April, I was convinced we were heading into a recession. However, last time Trump got elected in 2016, I was also convinced we were heading into a recession, and I was wrong that time as well. So rather than running into cash, we stayed the course, and here’s how VTI did.
Up 15.3%!
An impressive amount, especially considering the imposition of Great-Depression-level tariffs in April. This rise was mostly driven off the back of AI, which presents its own set of worries as a) the technology is unproved and could be in a massive bubble and b) a large percentage of the S&P 500 is now in tech companies, which creates a sector risk similar to the dot-com bubble of 2000.
And while there are still plenty of storm clouds ahead on the US market, including the still-coming inflationary effects of tariffs, the AI bubble possibly bursting, and now the geopolitical ramifications of American military action in Latin America, we have no idea when or how these factors will play out, so the best thing we can do is stay the course and remain diversified.
And speaking of diversification…
Europe, Australia, Far East (EAFE)
Me: Yo Europe. You up?
Europe: Oui oui!
How much you ask?
27.2% is how much!
I’ve been investing for almost 15 years now, and typically the US stock market leads the way, either in gains or losses, while EAFE lags behind providing a buffering force.
Not this year.
After decades of people asking “Why should we be investing internationally?” this is the year that finally answered that question.
EAFE crushed the US stock market. Plus, it paid a higher dividend of about 3% on top of that.
Why?
Lots of reasons. The Ukraine war didn’t have as much of an impact on the European economy’s earnings as investors originally thought it would for one. A massive increase in defense spending prompted by the US threat to withdraw from NATO pushing up defense earnings is another.
But mostly, EAFE benefitted from the simple fact that it was the only other major developed index to invest in that wasn’t the US. In fact, traders coined an acronym for this strategy called ABUSA, or “Anywhere But the USA.”
Fears of the whipsawing trade war kept a lot of money from being invested in the US, and that money found its home in the EAFE index.
Their much lower PE ratios also made them look like much better deals, and when’s the last time you heard a European government in the news this year, versus the near-constant stream of provocations coming from the White House?
Exactly.
In investing, boring is good, because certainty is profitable.
Canada
Now let’s turn our attention over to our home country of Canada. We were among the first targets of Trump’s trade war as he ripped up the trade deal he negotiated from his first term, falsely accused us of sending fentanyl across the border, and threatened to annex us and turn us into the 51st state.
So how has the Great White North weathered this absolute battering?
Holy shit.
The TSX returned 29% this year, making it the highest performing asset in our portfolio, beating both the US and EAFE!
I have to admit, I was not expecting this at all. Like many market watchers, I assumed that our largest trading partner throwing up tariffs and threatening to invade us would be, you know, bad.
Add to that an historically unpopular prime minister and a surging far-right movement in Canada that was receptive to joining the US left plenty to be pessimistic about. But then, something strange happened.
Canadians united.
It was quite amazing to watch. Soon after the threats started, Canadians everywhere started boycotting US products, switching to Canadian (or at least, non-US) alternatives. We stopped travelling to the US and instead travelled to Europe, Asia, or within Canada for vacations. And we even rejected far-right extremism, as well as leftie idealism. Instead, we elected a centrist spreadsheet nerd, Mark Carney.
The results have been quite dramatic. Canada managed to avoid a recession, with our GDP turning positive in Q3 after a weak Q2. We ended the year with a trade surplus of $150 million due to increased trade with Europe and Asia. And our stock market has returned a stunning 29% (the second-best performance of any year, ever!) on the back of surging oil, financials, and gold.
Oh and speaking of gold…
Gold
Earlier this year, I made another active trade and decided to put some money into gold, in the form of the SPDR Gold Trust GLD. My rationale, as I wrote about in this post in October, was that the Trump administration’s policies would spike inflation and drive down interest rates in 2026, which would devalue the USD and cause gold prices to rise.
Here is how that bet went.
8.5% up since I made my initial investment on October 10.
Now, I’m not the only person who figured gold would be a good bet in 2025. Gold had a fantastic year, romping ahead 65% in 2025 (I only caught a piece of that near the end). What I wasn’t expecting, however, was how heavily central banks around the world would also start stockpiling gold.
Governments around the world, most notably China, India, Poland, and Turkey have been buying gold by the literal tonne for the same reason I outlined above: They’re worried about the USD devaluing and they don’t trust the greenback anymore.
And while the greenback still remains the world’s reserve currency for now, it seems that world banks are preparing for the day that’s no longer true, and that continued diversification away from the USD will likely keep prices elevated.
Dividends
And finally, let’s see how our dividends did ths year.
$80,765. This is a significant increase from the $70k we got last year, and is mostly driven by the dividend increases from ZPR.
This is also significantly above what FIRECracker reported we actually spent last year, which was $58k. So not only do we continue to be Dividend-FIRE, we aren’t even spending all the dividends we’re currently earning!
This may be an unpopular thing to say for a FIRE blogger, but I think it might be time for us to spend more money going forward…
Total
Now let’s put it all together. Here’s how my total portfolio performed in 2025.
|
Start (Jan 1, 2025) |
Living Expenses Withdrawal |
End (Jan 1, 2026) |
|
|---|---|---|---|
|
Portfolio A |
$1,689,904.00 |
$45,676.00 |
$2,052,985.00 |
|
Portfolio B |
$712,437.00 |
$24,324.00 |
$847,421.00 |
|
Total |
$2,402,341.00 |
$70,000.00 |
$2,900,406.00 (+24.3%) |
I know, I was just as surprised as you when I put this post together. Our investments, including dividends, are up a stunning total of 24.3% in 2025.
Portfolio A, which is million dollars we originally retired on, has now doubled to two. And Portfolio B, which is where we invested the money we earned after retirement, is now within striking difference of being a million on its own.
Even crazier is what this means in dollar terms. Because our starting portfolio was so large, this means our net worth went up $568k in a single year. This makes 2025 the year that our net worth went up the most ever, hands down.
This also marks the third straight year of double digit gains for our portfolio. In fact, since the beginning of the decade, this is what our investments looked liked according to our Passiv dashboard.
If you were a historian looking at these numbers 100 years in the future without any context, you might conclude that with the exception of 2022, everything must have gone great! But we know that’s not true. Heck, 2025 was the best performing year this decade, yet the news has never been more stressful.
Going into 2026, I’m not planning on making any changes to our target allocations, other than rebalancing. The forces that guided my decisions in 2025 persist in 2026, and if anything changes to that outlook that might affect my allocations, I will announce it on this blog before I do it.
So that’s how our 2025 went. Here’s to a prosperous year for all, and keep on investing!
How about you? How did your investments do in 2025? Let’s hear it in the comments below.
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