3-Fund Bogleheads Portfolio for Canadians

Data: Yahoo Finance adjusted close, fetched live How it's calculated →

What is this portfolio?

The 3-Fund Bogleheads portfolio is the lazy-investing canon: hold the entire stock and bond market through a handful of broad, low-cost index ETFs, rebalance on a schedule, and otherwise leave it alone. This Canadian adaptation adds a fourth sleeve for home-country equity exposure (a real concern for Canadian investors who'd otherwise be 0% Canada in a pure US-style 3-fund). Default tickers are CAD-listed so distributions land in Canadian dollars and the foreign withholding tax math is explicit, not buried.

Hold the target allocation Four asset classes — Canadian equity, US equity, international equity, and bonds — at the weights you set below. The default is 25 / 35 / 20 / 20, balanced toward growth with meaningful bond ballast.

Rebalance on schedule At each rebalance date (monthly, quarterly, or annually), check the drift of each sleeve from its target weight. Only act if the drift exceeds the tolerance threshold — keeps trading costs honest.

Don't time, don't tilt, don't tinker The point of a lazy portfolio is to do nothing between rebalance dates. No tactical shifts on news, no chasing the hot sleeve, no factor bets layered on top. Discipline IS the strategy. For the opposite philosophy — deliberate small-cap and value tilts — see the Ben Felix five-factor portfolio.

Use low-cost broad-market ETFs MERs below 0.30% across the sleeve. The default picks (VCN, VUN, XEF, ZAG) all sit well under that. Canadian-listed picks avoid the currency conversion friction; US-listed equivalents may save withholding tax in an RRSP — see the narrative section below.

Risk notice: Even a diversified 4-asset portfolio can lose 20–40% in a bad year (2008, 2020 briefly). The "lazy" in lazy portfolio refers to the activity level, not the volatility. Asset-class correlations rise during crashes, so the diversification benefit narrows exactly when you need it most. This is educational — see the disclaimer at the bottom of the page.

Building this portfolio as a Canadian

The 3-Fund portfolio comes from the Bogleheads — the community built around Vanguard founder John Bogle's index-investing philosophy. The original US version holds three funds: total US stock market, total international stock market, and total US bond market. The idea is radical only in its restraint: own the whole market at the lowest possible cost, rebalance about once a year, and never try to outguess it.

Canadians need one tweak. A pure US-style 3-fund gives you zero home-country exposure, yet your rent, groceries, and retirement are all priced in Canadian dollars. Most Canadian DIY investors add a domestic-equity sleeve, which is why the default here is four sleeves, not three. The harder questions for a Canadian aren't which assets — they're which ETF (CAD-listed or US-listed) and which account to hold each one in. Those two choices can quietly cost or save you 0.2–0.5% per year.

ETF picks for each sleeve

The defaults below are CAD-listed, so distributions arrive in Canadian dollars and there's no currency conversion needed to trade. Each sleeve also has a US-listed equivalent — relevant for the withholding-tax section that follows. MERs are approximate; confirm the current figure on the provider's fund page (linked in Sources).

Sleeve	CAD-listed	MER	US-listed equivalent	MER
Canadian equity	VCN.TO	~0.05%	— (not needed)	—
US equity	VUN.TO	~0.16%	VTI	~0.03%
International equity	XEF.TO	~0.22%	VXUS / IEFA	~0.05–0.07%
Bonds	ZAG.TO	~0.09%	BND	~0.03%

A common simplification: replace all four sleeves with a single all-in-one asset-allocation ETF like VEQT/XEQT (100% equity) or VGRO/XGRO (roughly 80/20). One ticker, auto-rebalanced, ~0.20–0.24% MER. You give up per-sleeve control and the chance to place each asset in its most tax-efficient account, but you never have to rebalance by hand. Backtest the four-sleeve version here to see what that control is actually worth, or browse the full set of lazy-portfolio backtests.

The foreign withholding tax gotcha — the part US blogs skip. The US government withholds 15% of the dividends US stocks pay to foreign investors. How much of that you avoid or recover depends entirely on which account holds the fund:

RRSP: a US-listed ETF holding US stocks (e.g. VTI) is exempt from the 15% under the Canada-US tax treaty. A CAD-listed ETF holding US stocks (e.g. VUN) is not — the 15% is lost inside the fund. For the US sleeve, VTI-in-RRSP beats VUN-in-RRSP by roughly the dividend yield × 15% (about 0.2% per year), on top of the lower MER.
TFSA: the 15% applies no matter what you hold, and it's not recoverable. The treaty doesn't cover the TFSA (it was created in 2009, after the treaty's last major revision). There's no way to dodge US withholding tax on US equity inside a TFSA. (New to the account? See our 2026 TFSA contribution room guide.)
Non-registered: the 15% applies but you can claim it back as a foreign tax credit on your return. A taxable account doesn't permanently lose the withholding tax — you just front it for the year.

This backtest uses dividend-adjusted prices and does not model withholding tax, so real after-tax returns on the US and international sleeves run slightly below the chart unless they're held in the right account. Educational only — not tax advice.

Where to hold each sleeve (asset location)

If you've only got one account funded, hold everything there and don't overthink it. The choices below start to matter once a portfolio spans more than one account type. These are general considerations, not a recommendation for your situation.

US equity

RRSP, as a US-listed ETF (VTI) if avoiding the 15% withholding tax matters to you. If it lands in a TFSA instead, the withholding tax is unavoidable — and usually fine, because the TFSA's tax-free growth outweighs it over time.

Bonds

RRSP or TFSA. Bond interest is taxed as full income in a non-registered account — the least tax-efficient income there is — so bonds are usually the first thing people shelter.

Canadian equity

Non-registered first, if you're spilling over. Canadian eligible dividends get the dividend tax credit and capital gains are only half-taxed, so Canadian equity is the most tax-efficient thing to hold in a taxable account.

International equity

TFSA or RRSP. International withholding tax generally isn't recoverable in registered accounts regardless, so location here is driven by tax deferral rather than withholding — shelter it like any other equity.

Asset location is a real optimization, but a second-order one. Getting your savings rate and your overall stock/bond split right matters far more than which account holds which sleeve. Don't let perfect asset location stop you from simply starting.

Sources

3-Fund philosophy. Bogleheads wiki: Three-fund portfolio.
Foreign withholding tax by account type (RRSP treaty exemption, TFSA non-coverage, non-registered foreign tax credit). Vanguard Canada: The impact of withholding taxes on Canadian ETF investors (PDF); BlackRock Canada: Understanding Foreign Withholding Tax (PDF).
ETF MERs. Provider fund pages: Vanguard Canada (VCN, VUN), iShares Canada (XEF), BMO ETFs (ZAG). Confirm the current MER on the fund page before relying on it.

Figures accessed 2026-05-28. Tax rules change; verify against canada.ca and the fund prospectus before acting.

Portfolio configuration

Saved presets

Portfolio assets — up to 10. Leave unused slots empty.

Asset 1

Asset 2

Asset 3

Asset 4

Asset 5

Asset 6

Asset 7

Asset 8

Asset 9

Asset 10

Filled weights must sum to 100%. Current total: 100% (4 assets)

Backtest mechanics

Starting capital ($)

Start date

Rebalance frequency

Rebalance tolerance (%)

Commission + slippage (%)

Risk-free rate (%, annual)

Benchmark 1 (buy & hold)

Benchmark 2 (buy & hold)

Cash flow — contributions & withdrawals

Amount per period ($)

Direction

Frequency

Cash goes into

VCN.TOVanguard FTSE Canada All Cap · VUN.TOVanguard US Total Market · XEF.TOiShares MSCI EAFE IMI · ZAG.TOBMO Aggregate Bond Index Data through: —

Return

Risk

Quick reality check before you get excited. This is a learning tool, not financial advice. Every number on this page came straight from the inputs you set above — change the start date or growth target and the whole picture shifts. Play with the dials, see what moves, but don't mistake a backtest for a guarantee.

Heads up for Canadian readers. With the default Canadian-listed ETFs, all returns shown are in CAD — no currency conversion needed to trade them. The numbers still ignore taxes (in a non-registered account, every rebalance is a taxable event) and the foreign withholding tax levied inside funds that hold US or international stocks. Real after-tax returns will be lower. Swap in US-listed tickers and the chart effectively switches to USD, with CAD/USD currency swings back in play.

Next rebalance signal

Portfolio vs. benchmarks

Start-date sensitivity — rolling CAGR by start date

Drawdown from peak

Annual returns

Allocation over time

Cumulative contributions vs. portfolio value

What follows are simulations, not predictions. The market doesn't know we ran them — and neither do taxes, fees, or how you'll actually feel when your account is down 50%. Use these to get a sense of the risk, not to plan around a specific outcome.

Monte Carlo — 10-year forward projection (2,000 paths)

What is this telling me?

We ran 2,000 imaginary versions of the next 10 years by replaying real historical daily return patterns in random order. Each "path" is one possible future. Together they show the full range — from lucky outcomes to unlucky ones — so you can see what this portfolio might realistically do going forward.

Green line (median path)

Half of all 2,000 futures ended above this line, half below. Think of it as the single most representative outcome — not a guarantee, just the middle of the range.

Orange bands

The darker band shows where the middle 50% of futures landed. The lighter outer band covers 90% of all simulated futures. A wider band means more uncertainty.

Median CAGR

The typical yearly growth rate across all simulations — like a compound interest rate. A 30% CAGR means your money roughly triples every ~4 years in the median scenario.

Risk of Ruin

The % of futures where your portfolio fell below 50% of what you started with. This is the worst-case catastrophic loss risk — you should be comfortable with this number before investing.

Probability of Loss

The % of futures where you ended 10 years with less money than you started. Even over a long horizon, some paths go negative — this tells you how often that happened.

Mean Max Drawdown

On average across all futures, how far did the portfolio fall from its peak before recovering? For example, -60% means at some point you'd be watching your account drop by more than half. This is the emotional pain number.

⚠️ Important: This is based on historical patterns and does not predict the future. Diversification reduces risk but never eliminates it — in a severe market crash, correlations rise and most assets can fall together. Past performance does not guarantee future results.

Percentile fan chart — portfolio value (block-bootstrap, not assuming normality)

50th pct (median) 25th–75th pct band 5th–95th pct band

Stress tests — portfolio performance during market crises

What is this telling me?

Unlike the Monte Carlo which simulates imaginary futures, stress tests look at what actually happened during real historical market crises. Because this portfolio spreads across assets that don't all move together and rebalances back to target weights, crashes affect it differently than holding any single asset alone.

Return %

How much the total portfolio gained or lost from the start to the end of that crisis window. A -39% return means if you had $100,000 at the start, you'd have about $61,000 at the end of that period.

Max Drawdown

The worst single drop from a peak during that period — the lowest your account would have looked. This is deeper than the overall return because it captures the scariest moment before any recovery.

Days

How many trading days the period covered. Shorter crashes (like COVID in 2020) recovered faster. Longer downturns (like 2022) dragged on and gave the portfolio less opportunity to average down.

Why some periods are missing

A crisis period can only be shown when every asset in the portfolio has real price data covering it. If one of your chosen ETFs launched after a given crisis (for example, the 2008 Financial Crisis), that period is hidden — there's no real data to backtest it.

💡 Tip: Large negative returns during crashes are expected with this portfolio. The key is whether the portfolio recovers — look at the Post-COVID Recovery row to see how dramatically the portfolio can rebound after a crash.

Return % per crisis period

Stress period detail

Period	Return	Max DD	Days

Date	Action	Pre total	Max drift	Trade $	Post total	Allocation after

Date	Type	Amount	Into	Before	After	Allocation after

Metric	Portfolio

Year	Inflation	Portfolio
Year	Inflation	Return	Balance

How these numbers are calculated

Data source

Prices come from Yahoo Finance via yfinance with auto_adjust=True, so closes are dividend-adjusted (every fund's distribution stream is included). The default tickers are CAD-listed so prices are in Canadian dollars; if you swap in US-listed equivalents they'll be in USD and the chart will be in USD.

CAGR

(end_value / start_value)^(1/years) − 1, where years = trading_days / 252.

Annualized volatility

std(daily_returns) × √252. Population std (divisor = n). Assumes daily returns are independent and identically distributed; in practice returns show mild autocorrelation and fat tails, so treat the annualized figure as an approximation.

Sharpe ratio

(mean_daily − rfr_daily) / std_daily × √252, where rfr_daily = (1 + rfr_annual)^(1/252) − 1. The risk-free rate is whatever you set in the config above. Default 2% is a rough time-weighted average for 2015–2022 (T-bill yield was near 0% in 2015–2021, ~5% in 2023+). For period-accurate ratios, override to match your chosen backtest window. Also reported with a standard error band: SE(Sharpe) = √((1 + 0.5·Sharpe²) / T_years) (Lo 2002, IID approximation).

Sortino ratio

(mean_daily − rfr_daily) × 252 / downside_dev_annualized, where downside deviation only counts days with returns below rfr_daily, summed-of-squares divided by total n (Sortino & Price 1994 convention).

Maximum drawdown

Largest peak-to-trough percentage loss using daily close prices only. Intraday lows are not captured, so actual lived drawdowns may be a few percent worse.

Monte Carlo

Block-bootstrap resampling of historical daily portfolio returns. Default: 2,000 paths, 10-year horizon, 5-day blocks, RNG seed = 42 on first render (click "Re-run with new seed" to see how stable the bands are). Block-bootstrapping preserves short-term autocorrelation and volatility clustering — it does not assume normal/Gaussian returns. Risk of Ruin = % of paths ending below 50% of the anchor value; Probability of Loss = % ending below the anchor value.

The MC projection anchor is configurable via the toggle above the section. Default: initial capital (matches a fresh investor's mental model: "if I start today with $X, what range of outcomes might I see in 10 years?"). The alternative is anchoring on the backtest's ending value (useful when asking "if I'm already at $X, what's next?").

Limitation: 5-day blocks preserve weekly autocorrelation but not regime/crisis dependencies. Heavier-tailed events than what's in the historical sample won't appear.

Stress tests

Hardcoded historical windows (2018 vol, COVID 2020, post-COVID recovery, 2022 rate hikes, 2022 tech crash, plus GFC 2008 if data exists). Only windows with ≥5 trading days of overlapping data are shown. The default Canadian-listed tickers start trading in 2012–2013, so the GFC 2008 window won't render for those — swap to US-listed equivalents for longer history.

Transaction frictions

Commission + slippage is applied symmetrically — the sell side receives price × (1 − f), the buy side pays price × (1 + f). Default 0.15% per side ≈ 0.30% round-trip, realistic for Canadian discount brokers on liquid ETFs.

What's NOT modeled

Taxes — every rebalance is a taxable event in a non-registered account
Currency / FX — all returns are USD, ignoring CAD/USD volatility
Foreign withholding tax on US ETF distributions (treatment depends on account type)
Inflation — returns are nominal, not real (subtract ~2–3% per year for real CAGR)
Settlement delays — assumes T+0 cash availability
Bid-ask spread variability — uses closing price, not actual fill price

Source code

All calculations are open and inspectable in the public repository — Python tools (Monte Carlo, stress tests) and JS in this page itself.

The bottom line: this is a learning tool, full stop. Every number depends on the inputs you chose, so different choices give you different results. Even diversified portfolios can lose 20–40% in a bad year, and no backtest changes that. Foreign withholding tax, currency drag, and tax-wrapper choice can all shift the real-world outcome meaningfully from what the chart shows. Before you put real money on the line, sit down with a registered Canadian advisor. That's what they're there for.