And how to avoid them ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ October 31, 2025 INVESTOR INSIGHTS View Online INVESTOR INSIGHTS Five mistakes to avoid when building a financial plan Hi there, Most financial plans look great on paper: a bunch of neat charts with smooth growth patterns and tidy assumptions that outline your strategy for budgeting, saving, investing, retiring, and everything else. But real life tends to be a lot bumpier. While you can’t predict the bumps, you do need to make sure your plan is flexible enough to be ready for them. That’s why I always tell clients to think of their financial plan as more of a money GPS. It connects what you have today (and what you’ll earn later) to the future you actually want — while also helping you course-correct when life reroutes you. Here are five of the most common wrong turns I often see people make, and how to steer clear of them. Mistake #1: Mistaking a budget for a financial plan Budgeting helps control debt and builds discipline. And that’s great! Both are essential. But a budget only tracks what’s coming in and out. It doesn’t do things like: connect those numbers to goals like retiring, buying a home, funding education, or just having the freedom to work less. give you any sense of where you are in relation to your goals. help you know which accounts to use to reduce taxes, how much insurance you need to protect your family, or the most efficient way to pass your assets on to the next generation. Mistake #2: Thinking the future will be just like the past Downturns aren’t an if, they’re a when. That’s why a good plan accepts volatility as part of the journey and prepares for it by testing it against a bunch of different scenarios, like a 20% market drop, slower savings, or surprise triplets. A good plan also recognizes that the future may not look like the past, since long-term averages often overstate what investors can realistically expect. (The chart below shows why that can be a dangerous thing.) How to read this chart: each of the squiggly lines represents a different 15-year period. One is from 1990-2004, one is from 1991-2005, and so on, all the way up to the dark green line, which shows results from 2010-2024. As you can see, the last 15 years represent the strongest period — which means the odds of a repeat performance aren’t high. Instead of relying on past performance, a good financial plan uses forward-looking return assumptions — like those published by the not-for-profit FP Canada — that reflect the actual environment you’re investing in: today’s. The aim isn’t to predict the future, but to build confidence that your plan works across many possible futures. Mistake #3: Forgetting to account for fun The best financial plans don’t just build wealth — they support the life you want along the way. When you run your plan through stress tests, you gain confidence. Knowing how much money you can safely spend in both good and bad times gives you permission to spend it. Mistake #4: Not thinking enough about taxes Tax planning is a lifelong process. While you’re saving, that means contributing to RRSPs when your income is higher than it’s likely to be in retirement, using TFSAs for flexible withdrawals and tax-free growth, and holding investments that generate capital gains — rather than interest income — in non-registered accounts. A good plan accounts for all of that building up — followed by all the drawing down: as you get into retirement, it often makes sense to start drawing from your non-registered investments first to give your registered accounts more time to grow (tax-free!) and gradually reduce the size of your taxable estate. Withdrawing modest amounts from your RRSP earlier can help, too, since it helps you avoid the larger (forced) withdrawals and possible clawbacks that come after you have to convert your account into a RRIF. And don’t forget your TFSA, which is often best saved for last. Mistake #5: Thinking you’re ever done Markets will change. Your income, spending, family situation, and even your risk tolerance will change. Your financial plan needs to change with all of it. Reviewing your plan annually — or whenever a major life event occurs — ensures it stays aligned with your reality. Small, steady recalibrations keep your plan relevant and resilient, ensuring it always reflects the life you’re actually living, not the one you imagined five years ago. All the best, Daniel Tersigni, CFA Director, Digital Advice Will you be ready for retirement? Whether you're 25 or 55, our 7-step guide teaches you everything you need to make sure your golden years can really shine. Learn more Did you like this newsletter? Your feedback (even if it's just to complain) helps us get better. If you're feeling chatty, after you rate us below you'll get the opportunity to share more detailed feedback — including topics you wish we'd cover. Yes No Wealthsimple, 80 Spadina Ave Suite 400 Toronto, ON, M5V 2J4 Refer a Friend Privacy Policy Unsubscribe Replies to this email address are not monitored. Have questions? Contact us. The content presented here is for informational purposes only and should not be considered as investment advice. 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