### The Most Overlooked Error Affecting Your Retirement – December Dividend Income Update
In 2016, I made a significant life choice: I took a break, relocated my family into a small RV, and set off on an extraordinary road trip to Costa Rica. After returning in 2017, I decided to officially step down from my position as a private banker at National Bank to fully immerse myself in my passion project: [Dividend Stocks Rock](http://dividendstocksrock.com). Along with this career change, I began overseeing my personal pension account at National Bank, turning it into a public real-world case study. My experiment? To allocate **100% of the resources into dividend growth stocks**.
#### How It All Started
In August 2017, my portfolio adventure commenced with $108,760.02 in a locked retirement account. Since this account is locked, I cannot inject extra capital—growth can only be generated through capital gains and dividends. While I provide monthly updates on my portfolio, my aim is not to flaunt returns or recommend replication but to present an honest view of genuine portfolio management—the ups and downs. I hope this journey sheds light on lessons that others may find beneficial.
In December 2024, reflecting on my annual performance revealed a critical yet frequently ignored error many investors encounter when strategizing for retirement. Let me walk you through my portfolio performance and share this vital insight.
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### 2024 Performance Summary
Here’s a summary of my portfolio’s performance as of **January 2, 2025 (pre-market):**
– **Initial investment (Sept 2017):** $108,760.02 (no extra capital added).
– **Current portfolio value:** **$301,964.28**
– **Dividends received (TTM):** $5,152.47
– **Average yield:** 1.71%
– **2024 performance:** +26.00%
– Benchmarks: VFV.TO = +35.24%; XIU.TO = +20.72%
– **Dividend growth (2024):** +12.22%
– **Cumulative return (Sept 2017 – Jan 2025):** +177.64%
– **Annualized return (87 months):** +15.13%
For context:
– **Vanguard S&P 500 Index ETF (VFV.TO):** +204.60% (annualized: 16.61%)
– **iShares S&P/TSX 60 ETF (XIU.TO):** +108.20% (annualized: 10.64%)
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### Understanding Returns
Examining short-term performance, the S&P 500 has indeed shown remarkable outcomes, propelled in part by key players like the “Magnificent 7.” However, no one—including myself—can accurately predict where the most significant returns will arise. For instance, switching completely to Bitcoin in early 2020 would have yielded incredible returns, but retrospect isn’t strategy.
Over the **last seven years**, I’ve compiled a significant historical record to assess my portfolio approach. Although the timeframe is not flawless (lacking a major recession for evaluation), it includes minor events like the 2018 bear market, the sudden 2020 crash, and declines in 2022. My objective has always been to remain steady and make thoughtful, informed choices.
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### Benchmark Explanations
Since my portfolio is evenly divided between Canadian and U.S. investments (**50% CAD / 50% USD**), I calculate a composite benchmark for evaluation.
– **Benchmark return (50% XIU.TO + 50% VFV.TO):** 156.40%
– **My return since inception:** 177.64%
– **Added value:** +21.24%
While I slightly lagged my benchmark in 2024 (26% vs 27.98%), my overall track record supports my long-term strategy. For me, exceeding a benchmark isn’t my main goal—I prioritize control and comprehension of each stock I possess.
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### The Retirement Error Investors Miss
Investors frequently fall into a precarious pit by overestimating long-term returns in their retirement forecasts. While I’ve secured an annualized return of **15.13%** since 2017, I don’t expect to maintain this level indefinitely. For retirement planning, I apply a conservative growth estimate of **6.5%-7%**.
The truth is that markets are cyclical. During phases of strong returns, it’s easy to feel invulnerable. However, these cycles inevitably change, and excessive confidence can result in adverse retirement consequences. Take it from my early experiences as a financial planner in 2007, when portfolio returns appeared outstanding—until the 2008