- What if the Good Life Requires Giving Up Some Freedom? - September 15, 2026
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- My Apartment Gave Me Something That Money Can’t Buy - August 4, 2026
“May you always life in interesting times.”
–Ancient Chinese Proverb
To which I reply: Shut the Hell up, Ancient China!
Oh, we live in interesting times alright. A little too interesting, some might say.
I typically enjoy reading the news, sifting through the headlines of the day and figuring out what moves might affect the world economy and the FIRE community as a whole, versus the clickbait-y noise.
Not this year, though. Nuh-uh. Now, whenever I open a news site, it’s with a feeling of dread, going “What fucked up shit happened today?” There are riots in LA, trade wars with everyone, and now the USA has started an actual shooting war with Iran.
So in the midst of all this craziness, let’s look at how our portfolio has reacted.
Preferred Shares
Back in 2025, I made a judgement call to swap out the bond portion of our portfolio to preferred shares. Admittedly, it was a significant departure from the passive indexing strategy that I take with equities, but I felt the value was just too compelling.
To recap, preferred shares in Canada are mainly structured as rate-resets, which mean that their interest rates reset every 5 years to current market conditions. I use the fund ZPR, which is structured as a preferred share ladder, in which 20% of the fund’s preferred shares are always resetting in any given year. Back in late 2022 (https://www.millennial-revolution.com/invest/is-a-buy-signal-flashing-for-preferred-shares/), I thought that this combination of an attractive dividend yield (6%) on top of incoming dividend hikes was an offer I couldn’t refuse, and we were rewarded with this asset class gaining almost 20% last year and even beating the US index!
Fast forward to 2025. How has the interest rate environment changed?
Here’s a chart of Canada’s benchmark interest rate (the one set by our central bank) over the past 5 years.
Remember, preferred shares resetting in 2025 are resetting from 2020’s interest rate, 2026’s are resetting from 2021’s, and so on. If we look at our chart, we can see that in 2020, Canada’s interest rate was 0.25%. Today’s interest rate is 2.75%. So that means everything resetting this year is going to go up in yield, since 2.75% is higher than 0.25%.
In fact, from this chart we can see that this situation will persist throughout 2026, since 2021’s interest rates were also stuck at 0.25%. Interest rates began rising in 2022 to combat inflation, and at some point this advantage will go away as new preferred shares will start resetting at rates equal (and eventually, lower) than what they were before, so there is a point where exiting this position will make sense. But until that happens, I want my dividend hikes.
So how did the fund do?
After a brief period of sucking when everything plummeted at the start of the year, preferred shares have come roaring back, posting a respectable 4% gain YTD. Combine that with a current dividend yield of 5% and I’m pretty happy, considering I’m getting both good income, and good appreciation. For comparison, ZAG, the Canadian bond index, is flat for the year. Again, we can’t be expecting this kind of performance forever, especially after last year’s blockbuster gains, but as long as the fundamentals support increasing dividends, I’m hanging on to these.
So that’s my take on fixed income. Since I’ve retired and become more focused on income in my investments, I’ve found myself doing more active management on this side of my portfolio. Fixed income tends to swing less wildly, and is more affected by factors like interest rates, dividend yields, and debt levels, all of which I can use math and logic to understand. On this side, I’m more of a “value” investor, and am comfortable jumping on deals that I think are undervalued and delivering particularly attractive yields.
Equities, on the other hand, are a whole different animal. Let’s see how they’re doing so far this year.
US Index
Ah, the USA.
What can I say that hasn’t already been said from all corners of Wall Street? Trade wars bad. Regular wars, even worse. Make stock market sad-sad.
But Trump’s going to do what Trump’s going to do and we just have to deal with it. So how has the US index performed so far this year?
As somewhat expected, all this stuff in the news has weighed on the US index, and is unlikely to get better anytime soon with this newest development in Iran. But you know what? I thought it would be way worse. -1% isn’t great, obviously, but I thought we’d be in a -20% bear market territory. So, the fact that’s it’s basically flat for the year is actually pretty darned good.
Of course, it could all change at any moment as tariffs bite in the summer, or as the repercussions of Trump attacking Iran become more clear, so we’ll have to wait and see if markets remain somewhat stable or go back to plunging soon.
Canadian Index
With all the noise about tariffs, and how Canada’s economy is dependent on trade with the US, there’s no way the TSX can be doing well, right?
OK, once again I was dead wrong in my prediction. The TSX is somehow up 8% this year.
Three things seemed to have caused unexpected tailwinds for the TSX.
One, the effect of tariffs have caused inflation expectations to spike, and when inflation rears its ugly head, gold prices go up. Canada’s mining sector produces a lot of gold, so that’s looking pretty shiny right now.
Second, the spiralling situation in Iran. I don’t know how things are going to end there, but I do know that whenever there’s war in the Middle East, oil prices spike. All of a sudden, nice, stable, and polite Canada seems like not so bad of a partner to trade with.
And finally, our recent federal election replaced our previous Prime Minister. Justin Trudeau and Donald Trump really really really really really didn’t like each other, and their personal animosity was definitely becoming a problem. Now we have Mark Carney. He’s calm, he’s cool-headed, and he’s kind of boring, which is exactly the kind of leader we need right now.
EAFE Index
Now it’s time to see what’s going on across the pond.
Wow! Go Europe!
I’ve been an investor for over a decade now, and I’ve never seen EAFE outpace the US like this. Even when the world economy’s in the shitter and everything’s going down, EAFE usually gets dragged down along with it.
But not this year.
The media recently made a lot of headlines talking about the Wall Street acronym TACO (Trump Always Chickens Out), but a much more interesting one they’ve coined to describe their trading strategy this year is ABUSA: Anywhere But USA.
As it turns out, the global economy was doing just fine until Trump basically destabilized the US. Money flees uncertainty, so this basically put a big red sign on the US stock market that read “Go Away, Money!”
But you know what? The US stock market is not the only game in town. Investors will go where there’s stability, and right now that’s in the EU, which has a total population about equal to the USA, well-regulated financial markets, and a stable government that’s not engaging in any active wars, trade or otherwise.
Hence, EAFE’s outperformance.
All Together Now
After we withdrew this year’s living expenses from our investments at the beginning of 2025, our portfolio was left with about $2,325,000.
Let’s see how our portfolio is looking so far this year.
Asset Class | Weight | YTD |
Preferred Shares | 25.00% | 4.10% |
Canada | 25.00% | 8.30% |
US | 25.00% | -0.50% |
EAFE | 25.00% | 13.90% |
Total | 6.45% |
So despite all this crap happening, our investments have grown so far this year by about 6.5%, placing our portfolio’s value at $2,477,000.
This tells me two things.
The first is while I can use math to gain some insight into fixed income investments, I can’t predict anything on equities at all. I was certain that the trade war would spin the world economy into a recession, and yet here we are. So while I now believe that some limited active management may be possible for fixed income, I am definitely sticking with passive indexing on the 75% of my portfolio that’s invested in equities.
The second is that you can’t ignore international markets. US stocks have been leading the way in gains over the last few years, so that’s given credence to the argument that investors should throw all their money into VTI and ignore every other region of the world.
Not this year.
A truly passive indexing strategy has to be globally diversified and includes exposure to multiple countries and geographic regions. You never know when wars, natural disasters, or political upheaval will hit any one region, so it’s smart to spread your bets.
Bonus Content: J.L. Collins Interviewed by Hasan Minhaj
A few days ago, comedian and host of the Netflix show Patriot Act Hasan Minhaj sat down to interview our good friend JL “Godfather” Collins and I think it’s the best interview anyone’s done of anyone in the FIRE community, hands down. It’s funny, it’s informative, and it should be required viewing for anyone even remotely interested in FIRE.
Check it out! You know you want to.
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well done guys. well active management is not my cup of tea, hence i left my portfolio as is which is dragged by the fixed income (VAB) component significantly.
Do you think preferred shares are still better option at this time? is it adviable to sell all my VAB and buy ZPR ?
Also i stopped 5 fund portfolio a while back and started all in XEQT which is not bad either.. +1.25 (3.71%) year to date
The only thing which i can compare is that you ditched Asia market completely and have Europe ??
Well not sure if i should try to mimic your like 3 fund equity or continue with XEQT
I think EAFE is Europe, Australia and Far East. The ticker is IEFA.
EAFE stands for Europe, Australasia and Far East.
So Asia is included in it.
I don’t recommend switching ZAG for ZPR, preferred shares are not a substitute for fixed income. Their long term returns are similar to bonds, but with the volatility of stocks. They took a gamble with this approach and won, but I wouldn’t recommend doing what they did, especially not as a long-term strategy.
Nice work you guys. Commendable feat of achievement!
Is your $2,477,000 less of all liabilities or assuming you dont have any and thats Canadian currency right?
What do you do for dwelling – rent in Canada or still country hopping/geo-arbitraging?
Have you been looking at the US Big Beautiful Bill and its implications to us FIRE folks? I believe all US dividends, cap gains and remittances will be taxed at 3.5% should the bill pass.
US isn’t stable. Investments go to stable places so Canada and Europe should indeed outpace, at least until TACO is out of office
Nicely done! It’s good to see your second careers working out well for you.
Your blog, books, and social media incomes must be paying off handsomely.
Wishing you continued success!
EAFE is not just Europe eh =)
And there IS a war in Europe right now…
Don’t tell me you already forgot the Russian Invasion of Ukraine and the war still raging in Eastern Europe? (and it does impact Western Europe too).
Congrats on your good returns so far this year!
Russian invasion? lol
Who wanted to join NATO knowing very well that is impossible? That was a war declaration in itself
Yup, Russian Invasion.
That’s what it’s called anywhere outside Russia (where the State Media calls it “Special Military Operation” lol).
Thanks
US is 50% of global market cap. Meanwhile SP500 has 30% non US revenue. So just buying US index still gets you foreign diversification with US army protection….
By this logic you could argue that with 30% of the revenue of the EAFE index being driven by the USA, you are still getting diversification.
US military is already priced in and being Canadian, the S&P500 IS foreign diversification.
Absolutely agree on the EAFE. Not sure it’s priced in for Canada as tax drag from 5% defense spend will cost the Canadian investor going forward – but not a US investor. I haven’t run the math but I think it’s more efficient to invest locally from a total tax perspective.
Thank you for sharing this portfolio update. It is a good summation of the year so far. I might be missing something it appears your portfolio value at the end of last year 2024 was $2,402,341.00 and not $2,325,000 based on your article 2024 Portfolio update. That would be a 3% growth YTD instead 6.5%. Also should still be deducting your expenses from Portfolio value since your are now yield or dividemd FI? Your portfolio updates provide for me very useful insights and relatable reference. Thank you.
Congrats on your performance this year! I saw the JL Collins interview with Hasan as well, and it was awesome to see two of my favs from different genres interact together. Them being friends makes my heart happy.
I’m curious though, since you also are close with him, have you and JL ever gotten into any spirited discussions about your investment approach? JL pretty much advocates a version of “VTSAX and chill” while your approach seems to stray far from that “boring” path.
This was a wild ride from geopolitical dread to solid investment strategy — and I’m here for it.
Life is a series of choices, from simple daily decisions to life-altering moments. Each choice, no matter how small, plays a role in shaping your destiny.
interesting times indeed!
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Hey, I loved the opening to this portfolio update! That ‘Shut the Hell up, Ancient China!’ line really made me laugh out loud. It’s such a relatable and candid reaction to living in these ‘interesting times.’ Can’t wait to see the rest of your take on 2025!
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Hey there! I just finished reading your 2025 Mid-Year Portfolio Update, and wow, it really hit home! The way you broke down your investment strategies and the focus on balancing risk versus growth is something I totally relate to. I’ve been trying to navigate my own portfolio lately, struggling Geometry Dash Wave between wanting to take risks with new ventures and playing it safe with my old faithfuls. Your insights about diversifying assets definitely sparked a lightbulb moment for me! It’s refreshing to see such transparency in financial discussions—thank you for sharing your journey! Excited to see where the rest of 2025 takes us all!
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Thanks for sharing your 2025 portfolio update! It’s inspiring to read about how you retired early by rejecting home ownership and built a 7-figure portfolio. Your story of traveling the world at 31 is so motivating.
The point about preferred shares is interesting, especially given the current volatility. I wonder if holding them long-term will really provide enough stability compared to other options during these “interesting times.”
It’s interesting to see how the portfolio is holding up amidst all the global turmoil you described. I’ve had a similar experience of dread when opening news sites lately. I’m curious, have you considered adjusting your asset allocation at all given the increased geopolitical risks, or are you sticking with your original plan?
This is exactly the kind of information I was looking for. I hope I can continue to come back for helpful information in the future.
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That “Shut the Hell up, Ancient China!” line lands because it refuses the usual calm-investor pose and admits the dread first. That honesty makes the later portfolio discussion feel steadier, not less rational.
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Great mid-year update. The preferred shares swap is looking like a solid call, and the EAFE comeback is a good reminder that global diversification matters even when US stocks have been dominating. Thanks for sharing the numbers.
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