The FP Canada Standards Council and the Institut québécois de planification financière (IQPF) published their 2019 Projection Assumption Guidelines on Tuesday.
The guidelines, which are developed and updated annually, are designed to help financial planners make long-term financial projections (10 years or more).
This year’s guidelines assume an inflation rate of 2.1% and return rates of 3.0% and 3.9% for short-term and fixed-income investments, respectively.
Canadian equities are projected to return 6.1%, foreign developed market equities are expected to return 6.4% and emerging market equities are pegged at a return rate of 7.2%.
The guidelines are developed from publicly available data sources, including the Canada Pension Plan Actuarial Report and Quebec Pension Plan Actuarial Valuation, as well as historical data from bond and equity indices.
New this year, the FP Canada Standards Council and the IQPF surveyed financial professionals on their long-term projections for inflation and rates of return. The data from this survey are designed to replace the Willis Towers Watson Annual Canadian Investment Perspectives Survey, which was discontinued in 2016, FP Canada said in a release.
This year’s guidelines come into effect April 30, 2019. Read the full guidelines here.