The Pyramid of Investment Success

The Pyramid of Investment Success

A colleague of mine wrote a compelling piece I would like to share with you.
– Rob

“The Pyramid of Investment Success”

What is the secret to multi-decade, inter-generational wealth creation? Fortunately, it can be summed up in one easy illustration I call “The Pyramid of Investment Success”.

The Pyramid of Investment Success

Having been in the wealth management business since 1985, I’m convinced that over 80% of one’s long term investment success comes down to a single variable … one’s individual behaviour. In other words, for many of us, our single greatest enemy in our quest for wealth creation is the person who stares back at us from the mirror every day! Somewhat counter intuitively it matters much less if you have the most scientifically determined asset allocation, if you have hired the world’s most successful money manager, if your fees are close to zero, or, if you have eliminated all tax consequences from your portfolio.
If you panic sell just because the Toronto and New York Stock Exchanges have one of their temporary fire sales (also known as a bear market), then everything else just doesn’t matter. Think back to 2008/2009, or the most recent “Covid crash”, when so many individuals committed financial suicide by doing just that.


Once you have a handle on your behaviour and/or have a trusted advisor to help you through these periodic fire sales, (based on my experience, they occur about once every five years and take the markets down, on average, around 30%), then we can move on to the nextlevel of “The Pyramid of Investment Success”.

More specifically, an optimized asset allocation that is customized to your defined needs and goals. An overwhelming influence on your lifelong returns will be determined by what percentage of your net worth should be in real estate, GICs and other fixed income securities, Canadian, U.S., and international companies/stocks. As an example, if 5% of your portfolio is invested in a magical company whose stock goes up 20% every single year but the remaining 95% is sitting in a GIC earning 1%, then I’m afraid your fantasy stock is not going to move the needle very much on your portfolio’s overall return.

The next level of investment success focuses on owning a diversified collection of world class companies –it’s much better to be an investor in great businesses than a speculator in Bitcoin or GameStop Corp. Next, make sure you have done all you can do to minimize taxes and, finally, ensure you are receiving fair value for the fees that you are being charged for having your financial life professionally managed.

Paradoxically, the financial media tend to focus on the top levels of the pyramid. I believe this is because fees, taxes, and security selection are much easier to quantify. As important as these issues are,do not be fooled. One must remain ever vigilant in order to ensure one’s behaviour is helping and not hurting. Do this and 80% of long term investment success may inevitably ensue for you and your family.

Related articles

Expected Rate of Returns in Retirement

In this episode from “Think Smart with TMFG”, Senior Financial Advisors Rob McClelland and Mike Connon with Assante Capital Management Ltd. provide an insightful discussion on the critical role of rate of return expectations in retirement planning. B…

Read More →

All-In on U.S. Stocks – Wise Move or Risky Strategy?

In the latest episode of “Think Smart with TMFG,” Senior Financial Advisors Rob McClelland and Mike Connon from Assante Capital Management delve deep into a daring investment strategy: putting 100% of your assets into U.S. stocks. Highlighting an int…

Read More →

2023’s Most Valuable Companies

In this episode of Think Smart with TMFG, host Rob McClelland and Mike Connon, Senior Financial Advisors of Assante Capital Management Ltd., delve into the world’s most valuable companies in 2023. They offer insights into the various sectors these co…

Read More →

Financial Planning Advice from Canada's Top Financial Advisors

Sign Up To Receive Email Updates On The Financial Industry And Complimentary Workshops.

By providing your e-mail address you provide The McClelland Financial Group of Assante Capital Management Ltd. with your express consent to send you electronic communications. If you choose to discontinue receiving e-mails, you may withdraw consent by contacting [email protected].


Get actionable financial insights from the Top financial planners in Toronto.

Toronto's Top Financial Advisors
Copyright Assante Wealth Management. © 2022

Disclaimer | Assante advisory services are offered through Assante Capital Management Ltd. Assante Capital Management Ltd. is a Member of the Canadian Investor Protection Fund and Investment Industry Regulatory Organization of Canada. The services described may not be applicable or available with respect to all clients. Services and products may be provided by an Assante advisor or through affiliated or non-affiliated third parties. Some services and products may not be available through all Assante advisors. Services may change without notice. Insurance products and services are provided through Assante Estate and Insurance Services Inc.

We have a team of advisors each specializing in varying portfolio sizes. Please let us know the approx. amount of your investable assets to help us to direct you to the advisor that is best suited to you.