Diversification

Diversification: which risk does it change?

Using the same stretch of historical data, compare the ending real value and maximum drawdown of different allocations. The results reflect specific data and rebalancing assumptions — they don't make any one allocation necessarily superior.

Select an example allocation

An illustrative path of $1 million, 1988–2025

real value (after inflation) · rebalanced yearly (a mathematical simplification)

Your choice

Reference mix (same as your choice)

Ending value

$6.49M

from $1M · over 37 yrs

Maximum drawdown

-15%

this is the reference mix

The chart depends on the historical period chosen, the data basis of each line and the annual rebalancing assumption; under a different period or different assumptions, the relative results of the allocations may change.

With this page's data and the current allocation, the portfolio's maximum drawdown is -15% (the current allocation is the reference mix), and the ending real value is $6.49M. The differences come from how each asset class moved over this stretch of history and from the annual rebalancing assumption; other periods may give different results. Adjust the class weights to see how the historical outcome changes.

Adjust the allocation and watch it respond. Raising one slider scales the other two down in proportion; the three always total 100%.

Single home

25%

Stocks (S&P/TSX)

45%

Bonds & gold

30%

Notes on method. This page compares concentrated ownership of a single home vs a multi-asset financial portfolio — not a symmetric asset-class comparison — and is not a forecast or a recommendation. Series bases: "single home" follows the reconstructed path of one real Greater-Vancouver home (individual volatility far above the city average; no rent income; maintenance, property tax, and transaction costs excluded); "stocks" is the S&P/TSX estimated total return (price + fixed dividend yield, CAD, deflated by Canadian CPI — the same series as this site's century-comparison tool); "bonds & gold" is a mixed reference series (weights and basis are author simplifications; USD portions converted simply, unhedged); data extended to 2025 by the author from public market data. Annual rebalancing to target weights is a mathematical simplification — a single home can't be divided or traded 5% a year, and transaction taxes are excluded. Diversification cannot guarantee a profit or protect against loss. Every household's circumstances differ. For educational purposes only.

Illustration only, 1988–2025, real (inflation-adjusted) returns; the comparison is concentrated ownership of a single home vs a multi-asset financial portfolio, and the lines use different return bases. Stocks are the S&P/TSX estimated total return (price + fixed dividend yield); bonds & gold is a mixed reference series (author simplification); the home is an illustrative single-property reconstruction. Not future results, not personalized advice, not a promise of returns. For educational purposes only.

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