Every year FP Canada, the organization that oversees the financial planning industry in Canada, releases Projection Assumption Guidelines. The guidelines are educated assumptions that are used as the basis for financial plans.
The Projection Assumption Guidelines for 2023 are as follows:
| Inflation Rate | 2.10% | |
| Return Rates | ||
| Short-term | 2.30% | |
| Fixed-income | 3.20% | |
| Canadian equities | 6.20% | |
| Foreign developed market equities | 6.50% | |
| Emerging market equities | 7.40% | |
| *YMPE or MPE growth rate | 3.10% | |
| Borrowing rate | 4.30% | |
*Yearly Maximum Pensionable Earnings (YMPE) or Maximum Pensionable Earnings (MPE)
Although we apply these assumptions for a long-term view of how your financial plan will evolve over time, we also stress test in the event of major changes. We use Monte Carlo simulations that predict poor, medium, and high results over time.
