Financial planners can expect equities returns of more than 6% in the coming decade, and fixed-income returns of more than 3%, according to FP Canada and the Institute of Financial Planning.
The associations’ 2026 Projection Assumption Guidelines published Thursday are designed to help financial planners make long-term projections of 10 years or more that are free from bias, a release said.
Canadian equities and U.S. equities are projected to return 6.3% and 6.4%, respectively, down from 6.6% in last year’s guidelines.
Returns for international developed-market equities and emerging market equities are projected at 6.6% and 7.5%, respectively, down from 6.9% and 8% in last year’s guidelines.
The guidelines assume an annual inflation rate of 2.1% — unchanged from the previous guidelines — and include new guidance on interpreting short-term inflation.
Return rates of 2.4% and 3.2% are projected for short-term and fixed-income investments, respectively. Compared to the previous guidelines, the projection for short-term investments is unchanged, while that for fixed income is down from 3.4%.
The borrowing rate remains at 4.4%.
For the first time, the guidelines include an assumption for shelter projection considerations — primary residence appreciation and primary residence rents — supported by data from the Canada Mortgage and Housing Corp. and global research.
“Because housing costs — whether related to home ownership or renting — represent a significant and persistent component of a household’s financial picture, the committee believed it was important to offer planners clear guidance in this area,” Nick Hearne, chair of the projection assumption guidelines committee, said in the release.
An expected long-term annual appreciation rate of 1% above the inflation rate is “generally reasonable” for both a primary residence and for rent, the guidelines say.
The guidelines are based on a variety of sources, including the actuarial reports for the Canada Pension Plan and the Quebec Pension Plan, historical data for inflation and benchmark fixed-income and equities indexes, and the Shiller earnings-to-price average for relevant equities market indexes.