Warren Buffet's advice was not always right for every investor

You're not Warren Buffet

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Warren Buffet

American investor and philanthropist Warren Buffett, the “Oracle of Omaha,” has finally announced his retirement.

As the curtain closes on one of the greatest investing careers of all time, it’s a good moment to reflect on some of the timeless (and sometimes controversial) wisdom he’s shared over the decades.

One of Buffett’s most famous contrarian takes was hat diversification of investment portfolios isn't all it’s cracked up to be.

“Diversification is protection against ignorance,” he once said. “It makes little sense if you know what you are doing.”

For Buffett, the best strategy has always been to go all-in on a few well-understood, high-conviction investments—think Coca-Cola, American Express, and more recently, Apple. He believed that too much diversification waters down returns and reflects a lack of deep knowledge.

But ,here’s the thing, you are not Warren Buffett. And that’s not an insult, it’s reality.

The Buffett exception

Buffett is an anomaly. He’s spent the better part of a century reading financial statements for fun, analyzing economic moats like a grandmaster,and running a company with a research team of elite investors. He could probably tell you the free cash flow of Dairy Queen off the top of his head while eating a Blizzard.

For him, concentrating investments in a few companies made sense because he had the tools, patience, temperament and access to information most investors simply don’t have. The odds of the average investor picking three to five companies that outperform the market over the long term—without blowing up along the way—are pretty slim.

So while Buffett could afford to put billions into a handful of names, for most of us, doing the same is a little like walking a tightrope without a net—blindfolded.

Diversification— Boring but beautiful

For the average investor, diversification isn’t a weakness, it’s a wise defence. It helps protect your portfolio from the risk if one company, sector or even a country goes sideways.

With diversification, you don’t have to be an expert stock picker. You can invest in a broad index fund or ETF that gives you exposure to hundreds or thousands of companies across industries and geographies. It’s simple, low-cost and historically effective.

In short, diversification is how you admit you’re not Warren Buffett and you win anyway.

But what if I do have a hunch?

Let’s say you’ve done your homework. You believe deeply in a few companies.You’ve read the earnings reports, followed the management team and understand the business model. That’s great.There’s room for that too.

Many smart investors use what’s called a core-satellite approach,

• Core: 80%-90% of your portfolio is broadly diversified in index funds or ETFs.

• Satellite: The remaining 10%-20% is reserved for your “high-conviction” bets—maybe that EV company you believe will change the world or the Canadian tech firm you’ve been following since its IPO.

That way, you get the best of both worlds—the steady growth and risk management of diversification, with just enough room to channel your inner Buffett.

Warren Buffett’s advice is legendary—but even he would likely agree that what works for him doesn’t work for everyone. In fact, he’s often said that most people are best served by simply investing in a low-cost S&P 500 index fund and leaving it alone.

So, go ahead, tip your cap to Buffett. Learn from his brilliance. But remember, you don’t need to be a billionaire stock-picker to build long-term wealth. You just need a plan, a little patience and yes, a well-diversified portfolio.

Because while there may only be one Warren Buffett, there are millions of successful investors who got there a much more boring (and safer) way.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.

Five things to do to protect your financial resources

Financial protection

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There are steps you can take to protect your finances.

With the Liberal Party securing another term in the 2025 federal election, many Canadians are left wondering what that will mean for their personal finances.

Economists have repeatedly commented that the current government has overseen rising debt, persistent inflation and worsening affordability, and Canadians are bracing for that to continue.

While the election outcome reflects the will of voters, it also signals a continuation of the policies that have contributed to Canada’s current economic fragility.

For Canadians concerned about their financial futures, regardless of your political leanings, it’s essential to take proactive steps now to protect against the potential consequences of continued Liberal governance:

1. Tighten your household budget

Despite promises of affordability measures, Canadians have lived through years of high inflation, rising interest rates and increased taxation under Liberal leadership. Many middle-class families find themselves worse off than ever before with grocery prices, rent, and other essentials climbing steeply.

While the Liberals pledged to cut income taxes on the second bracket and expand $10-a-day childcare, those measures may be offset by other policy choices, such as continued deficit spending, which puts upward pressure on inflation and interest rates.

What to do:

• Conduct a thorough review of your monthly expenses.

• Eliminate non-essentials and build a leaner budget that assumes prices will continue to rise.

• Automate savings and consider using high-interest savings accounts or short-term GICs to protect cash from erosion.

2. Be cautious in the housing market

Housing affordability remains one of Canada’s most urgent crises and one that has significantly worsened in recent years. While the government is promising to eliminate GST on new home builds under $1.5 million and accelerate home construction, real estate experts are skeptical that these measures will meaningfully move the needle in the near term.

The Liberals have been in power since 2015 and housing affordability has deteriorated significantly in that time. Despite repeated promises, demand due to large increases in immigration continues to outstrip supply, and the cost of owning or renting a home remains out of reach for many Canadians.

What to do:

• Avoid speculative home purchases, especially in overheated markets.

• Consider renting if it allows for greater financial flexibility.

• For buyers, look into first-time homebuyer incentives but evaluate long-term affordability carefully.

3. Prepare for economic headwinds

Many financial analysts point to Canada’s growing federal debt and sustained deficit spending as red flags for long-term economic health. Add to that the risk of U.S. protectionist policies, particularly with U.S. President Donald Trump’s return to power — and the outlook becomes even more uncertain.

Government spending has provided short-term support, but without a clear path to balance, it could limit the government's ability to respond to future economic shocks. Ratings agencies have warned Canada’s fiscal position is weakening, which could eventually lead to higher borrowing costs for everyone.

What to do:

• Build or reinforce your emergency fund with three to six months of living expenses.

• Avoid taking on new high-interest debt.

• Diversify your investments to include inflation-protected and defensive assets.

4. Maximize existing government programs but don’t rely on them

Programs like the Canada Child Benefit, national dental care and proposed credit card interest caps are helpful for many families. But there's growing concern about how sustainable those initiatives are amid ballooning deficits and slower economic growth.

What to do:

• Take advantage of available benefits while they last but avoid relying on government support long-term.

• Use government funds to invest in long-term priorities like education savings or debt repayment.

5. Get professional financial advice

In times of uncertainty, expert guidance can make a significant difference. With another four years of potentially unpredictable federal economic policy ahead, a professional financial planner can help you build a plan that factors in tax changes, inflation and risk management.

What to do:

• Schedule an annual review with your financial planner.

• Ask specifically how proposed tax and benefit changes might affect your household.

• Rebalance your portfolio with a focus on capital preservation and income stability.

While Canadians may differ in their political views, the economic realities under continued Liberal leadership, including mounting debt, cost-of-living pressures and housing inaccessibility, require serious attention. Rather than waiting for conditions to improve, Canadians would be wise to take ownership of their financial security now.

The next four years may pose challenges but they also offer an opportunity to become more intentional with money, more resilient to economic shocks and more independent of government promises.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.

Do you know the rate of returns in your financial plan?

Rating your rates of return

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The use of standardized guidelines helps ensure that financial projections are grounded in objective data.

What rate of return is your advisor using when they prepare retirement plans or investment proposals for you?

If you don’t know, it’s time to start asking.

Last week, FP Canada and the Institute of Financial Planning released the 2025 Projection Assumption Guidelines, providing standardized return assumptions for financial planners in Canada. Those guidelines are designed to promote consistency and objectivity in long-term financial projections, such as retirement planning, by offering data-driven benchmarks for expected returns across various asset classes.?

2025 Projection Assumption Guidelines overview

The 2025 guidelines incorporate market-based expected returns and historical data to reflect realistic long-term (10 year) expectations. The key assumptions in the annual report are as follows:

• Inflation rate: 2.1%

• Short-term vnvestments: 2.4%

• Fixed income: 3.4%

• Canadian equities: 6.4%

• U.S. equities: 6.6%

• International developed market equities: 6.9%

• Emerging market equities: 8.0%

• Borrowing rate: 4.4%?

These figures are based on a combination of sources, including actuarial reports from the Canada Pension Plan (CPP) and Quebec Pension Plan (QPP), historical data, and market-based indicators like the Shiller earnings yield. ?

Importance of understanding projection assumptions

For clients, it's crucial to understand the assumptions underlying their financial plans. Projections based on overly optimistic return assumptions can lead to unrealistic expectations and potential shortfalls in achieving financial goals. Conversely, conservative assumptions may necessitate higher savings rates or adjustments in retirement plans.?

Clients should proactively engage with their financial planners to discuss the assumptions used in their projections. Key questions to ask include:?

• What return assumptions are being used in my financial plan?

• How do these assumptions compare to the FP Canada guidelines?

• What is the rationale for any deviations from these standard guidelines??

If a planner uses return assumptions significantly higher than those recommended, it's essential to understand the justification. While there may be valid reasons for deviations, such as specific investment strategies or asset allocations, consistent overestimation without clear rationale could indicate a lack of objectivity or potential conflicts of interest.?

Ethical considerations and trustworthiness

The use of standardized guidelines helps ensure that financial projections are grounded in objective data, reducing the influence of personal biases or sales incentives. Clients should be wary of advisors who consistently present projections with higher-than-recommended return assumptions. Such practices may not align with ethical standards and could compromise the trustworthiness of the advice provided.?

Engaging in open discussions about projection assumptions fosters transparency and trust between clients and advisors. It empowers clients to make informed decisions and ensures that financial plans are tailored to realistic expectations.?

The 2025 Projection Assumption Guidelines serve as a valuable tool for both financial planners and clients, promoting consistency and realism in long-term financial planning.

Clients are encouraged to actively participate in discussions about the assumptions used in their financial plans, ensuring that projections are based on sound, objective data. By doing so, clients can better align their financial goals with achievable outcomes and maintain confidence in the advice they receive.?

For more detailed information, you can access the full 2025 Projection Assumption Guidelines at FP Canada 2025 Projection Assumption Guidelines.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.

Financial scam precautions are failing

Fighting financial scams

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Financial scams are on the rise so it's best know how to avoid becoming the victim of a financial scam.

Despite countless warnings, public awareness campaigns, and an ever-growing library of resources on how to avoid financial scams, the number of victims—particularly seniors in Canada—continues to rise.

It's a troubling paradox—we know more than ever about how scams work, yet more people are losing money to them. Clearly, our current precautions aren’t enough. So, why are these protections failing, and what can Canadians do to truly safeguard themselves and their loved ones?

The changing face of financial scams

Financial scams have evolved. Today’s fraudsters are sophisticated, organized, and relentless. They exploit human psychology, social engineering tactics, and current events to create highly convincing narratives. Whether it’s a fake Canada Revenue Agency call, a phishing email from a bank, or a grandparent scam involving a panicked “grandchild” in trouble, modern scams are designed to create urgency, fear, or excitement—causing people to act before they think.

Technology has played a major role in this evolution. Artificial intelligence now enables scammers to mimic voices, generate lifelike videos, or create convincing messages from trusted institutions. Robocalls and spoofed phone numbers make fraudsters seem legitimate. As these tactics become harder to detect, it’s easy to see why even savvy individuals fall victim.

Why current recautions aren’t enough

Most fraud prevention advice boils down to a few common tips: don’t click suspicious links, don’t share personal information, and don’t send money to people you don’t know. While this advice is helpful, it’s often too simplistic or vague—and it assumes a level of tech literacy and confidence that not all Canadians, especially older ones, have.

For seniors, many of whom didn’t grow up with the Internet or smartphones, recognizing a scam can be much harder. Fraudsters know this and often target them specifically. Cognitive decline, loneliness, and unfamiliarity with digital platforms make some older adults particularly vulnerable.

Moreover, scams are increasingly personalized. Criminals may mine social media, data breaches, or online forums to craft custom-tailored attacks. In such cases, standard advice like “don’t trust strangers” falls short—because the scammer may not feel like a stranger at all.

Steps to truly protect yourself and loved ones

To combat these increasingly clever and dangerous scams, Canadians—especially seniors—need more than general advice. They need proactive, practical, and ongoing protections. Here’s what can help:

1. Build a trusted circle of support—Seniors should have one or two trusted people, such as an adult child, financial advisor, or close friend, they can run things by before making financial decisions. Encourage the habit of saying, “Let me talk to someone and get back to you.” Scammers thrive on urgency. Slowing down can make all the difference.

2. Use call and email screening tools—Caller ID spoofing is rampant. Services like Call Control, Hiya or features from your phone provider can help filter out known scam calls. Similarly, enable email filters and spam protections to reduce exposure to phishing.

3. Freeze credit and set up alerts—While Canada doesn’t yet offer full credit freezes like the U.S., you can still place fraud alerts on your credit file through Equifax and TransUnion. Also, set up transaction alerts with your bank and credit cards to receive immediate notifications of any activity.

4. Stay educated together—Scams change all the time. Stay up to date through resources like the Canadian Anti-Fraud Centre. Families should discuss scams regularly, treating it like a “digital fire drill.” Seniors who feel included and informed are more likely to speak up if something seems suspicious.

5. Report and share experiences—Too many victims stay silent out of shame. But reporting scams not only helps law enforcement, it also helps others avoid similar traps. Share experiences with friends, family, or community groups. Fraud loses power when people talk about it openly.

The bottom line is scams are not just a nuisance, they’re a growing threat to financial and emotional well-being. The good news is awareness is only the first step. With the right systems and supports in place and conversations, Canadians can turn the tide and protect themselves more effectively.

The key is not just knowing how to avoid scams but having the confidence and support to act when something doesn’t feel right.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.