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Private markets are often misunderstood—especially when it comes to how they are valued and how they behave during periods of market stress.

A common misconception is that private investments appear more stable simply because they aren’t priced daily. In reality, they are valued differently—not less rigorously.

How Private Market Valuations Work

Unlike public securities that fluctuate minute by minute, private investments are typically valued quarterly using disciplined, institutional processes. These valuations rely on:

• Discounted cash flow analysis
• Comparable public market data
• Third-party appraisals
• Real transaction activity and market inputs

Importantly, these methodologies are governed by global accounting standards and reviewed by auditors and independent valuation experts. The goal is to reflect fair value based on fundamentals, not short-term market sentiment.

Why Private Markets Behave Differently

The key difference between public and private investments lies not just in pricing frequency, but in structure and underlying drivers.

Private market investments are typically:

• Long-term in nature, reducing the pressure to react to short-term volatility
• Less exposed to market sentiment, such as panic selling or momentum trading
• Driven by fundamentals, including cash flow, asset quality, and operational performance

As a result, private investments often experience less frequent and less severe price swings, particularly during periods of market stress.

Resilience Through Market Cycles

History shows that private markets have held up differently during major downturns:

• During the 2008 financial crisis, public equities experienced significant declines, while diversified private investments generally saw more moderate drawdowns.
• In periods of rapid market stress, such as the 2020 COVID selloff or 2022 rate-driven downturn, private assets were impacted—but often less dramatically and with a steadier recovery path.

This resilience is not due to “hidden risk,” but rather to the structure and underlying characteristics of the investments themselves.

The Role of Private Markets in a Portfolio

Private investments can complement traditional equities and bonds by introducing:

• Diversified return sources, including income-generating assets and long-term growth opportunities
• Lower correlation to public markets
• Potential downside protection, particularly in private credit and real assets
• More consistent income streams in certain strategies

They can also help investors stay disciplined. Because private investments are not priced daily, they may reduce the temptation to react emotionally during market volatility—an often overlooked driver of long-term outcomes.

How Much Should You Allocate?

There is no one-size-fits-all answer, but many portfolios benefit from a measured allocation to private markets.

A practical framework may look like:

• Conservative investors: 5–15%
• Balanced investors: 15–25%
• Growth-oriented investors: 20–35%

Diversifying across private credit, private equity, and real assets can further enhance outcomes.

Key Takeaways for Investors

• Private markets are not “less volatile” because they hide risk—they reflect risk differently
• Valuations are grounded in disciplined, audited, and globally regulated processes
• Historically, private investments have shown less severe drawdowns and strong recovery characteristics
• They can play a valuable role in building more resilient, diversified portfolios

Our Approach

Through our partnership with Harbourfront Wealth, Rothenberg provides clients with access to institutional-quality private market investments—opportunities that have historically been less accessible to individual investors.

For a more in-depth perspective, we encourage you to read the full article by David Ferreira, CFA, Portfolio Manager, on the Harbourfront Wealth website: How Private Markets Really Work: Valuations, Volatility, and the Case for Resilience – Harbourfront Wealth Group

The traditional 60/40 portfolio—60% equities and 40% fixed income—served as the foundation of balanced investing for decades. It offered a simple and effective way to capture growth while managing risk, supported by the historically reliable relationship between stocks and bonds.

Today, that foundation is being tested.

The environment that supported the success of the 60/40 portfolio—declining interest rates, stable inflation, and consistent diversification benefits—has shifted. In recent years, investors have experienced periods where equities and bonds declined simultaneously, reducing the diversification benefits that portfolios once relied on.

At the same time, structural changes in the global economy—higher inflation, elevated interest rates, and increased market concentration—have introduced new challenges for traditional asset allocations. As a result, many investors are reevaluating whether a portfolio built solely on public markets is sufficient to meet long-term objectives.

Why Look Beyond 60/40?

One of the most notable shifts is the growing importance of private markets—including private equity, private credit, real estate, and infrastructure. These assets are a significant and expanding portion of the global investment universe, yet remain underrepresented in many portfolios. Incorporating private investments allows investors to access a broader opportunity set, including companies and assets that are not available in public markets.

The Case for Private Markets

For long-term investors, private markets can offer several compelling advantages when thoughtfully integrated into a diversified portfolio:

• Diversification beyond public markets
  • Private markets broaden the range of options available to investors, since they represent nearly 90% of investments globally. This can help reduce overall portfolio volatility and improve resilience, particularly during periods when public markets move in tandem.

• Potential for enhanced returns
  • Private markets investors are compensated for holding assets that are not immediately tradable. This “illiquidity premium” provides a unique advantage that can result in higher long-term returns compared to public markets. Additionally, active management in private markets, such as hands-on operational improvements in private equity or underwriting in private credit, may offer additional opportunity to increase returns.

• Lower volatility
  • Private markets are not subject to day-to-day price fluctuations of public markets, which can mean lower overall portfolio volatility and potentially more stable performance in volatile markets.  Moreover, the highly customized nature of private market investments often results in more beneficial investment terms to protect capital, leading to greater downside protection. Finally, they have low correlation to traditional asset classes such as public equities and bonds, adding potential portfolio stability in fluctuating markets.

The Bottom Line

The traditional balanced portfolio isn’t obsolete, but it may no longer be enough on its own. Incorporating private markets can help investors build portfolios that are more resilient, more diversified, and better aligned with today’s market realities.

Our Approach

Through our partnership with Harbourfront Wealth, Rothenberg provides clients with access to institutional-quality private market investments—opportunities that have historically been less accessible to individual investors.

For a more in-depth perspective, we encourage you to read the full article by David Ferreira, CFA, Portfolio Manager, on the Harbourfront Wealth website: Beyond 60/40: The Case for Private Market Investments in the Modern Balanced Portfolio – Harbourfront Wealth Group

Receiving a refund means you’ve paid more tax than required throughout the year. If you do find yourself with a refund, here are six ideas to consider when deciding what to do with those funds.

1. Splurge (strategically) 

Spending tends to rank low on most “what to do with your refund” lists, but it doesn’t have to be off the table entirely. If your refund is relatively small, consider treating yourself to something meaningful, perhaps a dinner out, a weekend getaway, or something you’ve been putting off.

Even if your refund is larger, allocating a portion of it for enjoyment can be a reasonable choice, provided it fits within your broader financial plan.

2. Contribute to your RRSP                                                                                                                          

Using your refund to contribute to your Registered Retirement Savings Plan (RRSP) can help grow your long‑term retirement savings.

You may have unused RRSP contribution room carried forward from previous years if you didn’t contribute up to your limit. Applying your refund to an RRSP contribution can help you take advantage of that available room and move closer to your retirement goals.

RRSP contributions are tax‑deductible and can reduce your taxable income for the year in which the deduction is claimed. The funds then grow on a tax‑deferred basis until withdrawal.

Depending on your situation, contributing to a spousal RRSP may also be worth considering. This strategy can help couples split retirement income more evenly in the future and potentially reduce their overall tax burden.

3. Contribute to your TFSA

Another option is to place your refund into a Tax‑Free Savings Account (TFSA), especially if you’re saving toward a short‑ or medium‑term goal.

TFSA contributions are not tax‑deductible, but any investment growth and withdrawals are completely tax‑free. Your refund can be invested inside a TFSA in a range of income‑generating or growth‑oriented investments.

TFSA savings can be used for major purchases such as a home, travel, or lifestyle goals, and withdrawals do not impact your taxable income. This also makes TFSAs an effective tool for retirement planning, particularly when used alongside an RRSP to diversify how your future income is taxed.

4. Invest through a taxable (non-registered) account

While the tax advantages of an RRSP or a TFSA are very tempting, investing in a taxable brokerage account also has its advantages. Capital gains are taxed at a favorable rate, so it can make sense to hold investments that are likely to generate sizable capital gains in these accounts while holding income generating investments in an RRSP or TFSA.

Dividends collected on stocks in a taxable brokerage account are also taxed preferentially as opposed to some other income sources. This is because the company has already paid tax on these dividends, and the government does not tax this income again.

Another thing to keep in mind is that funds in a taxable account like an RRSP can be more readily accessible over time than funds held in a tax-sheltered account since they are not subject to the same rules.

5. Pay down debt

If you have outstanding debt such as high interest credit card payments, a personal loan or a mortgage you can consider putting some or all your tax refund towards reducing this debt. You can eliminate or at least reduce the overall amount of the payments on this debt, saving the compounded interest cost over time.

In the case of a mortgage, if the refund is sizable, you could consider making a substantial payment to reduce or eliminate this debt entirely.

6. Build or boost an emergency fund

Your refund money can be used to start or add to an existing emergency fund. This is money set aside in a liquid, low‑risk account to cover unexpected expenses such as job loss, medical costs, or major home or vehicle repairs.

A common guideline is to aim for three to six months of essential expenses. This typically includes housing costs, food, utilities, insurance, transportation, and other necessities required to maintain your standard of living.

Having an emergency fund can help you avoid relying on debt when the unexpected occurs and provides valuable peace of mind.

Review your withholding tax

While not something you would do with the funds from a tax refund, this is a good time to review your withholding tax for the current year to see if it best reflects your situation. Has your income level changed? If so, are you having enough withheld?

Withholding tax refers to the amount of income tax your employer withholds from your paycheck and typically does not consider various deductions normally claimed, such as RRSP contributions, which reduce your taxes payable. If you find yourself getting a sizable refund each year you might consider reducing your withholding tax, so you receive more money with each paycheck.

The takeaway… prioritize what’s important to you

Getting a hefty refund can be a form of forced saving, but you are not receiving any interest on this money. You could be putting it to better use during the year by investing it. However, it really depends on your current situation and your needs.

Contact your Rothenberg Wealth advisor to discuss the best way to put your tax refund to use and to do a review of your withholding tax to ensure that it is optimal for your situation.

By: Robert Rothenberg, CFA, CIWM, FCSI

When new prospects come to see us, they typically ask about our rate of return assumptions when projecting their financial success in retirement.

Many individuals look at the long-term average for the stock market at 10% or a blend of fixed income and equities and average 7% over retirement when calculating the income and portfolio growth of their investments.

When people are working and in the accumulation phase of their life and saving money on a regular basis to fund their retirement, using an average rate of return is fine as it doesn’t matter whether your portfolio performs well at the start and underperforms towards the end or underperforms at the start and excels at the end.

In retirement, many other factors come into play when determining if your income is sustainable. One of the major factors is the sequence of returns.

Poor returns at the start of retirement while withdrawing funds may make it extremely difficult to ever catch up. Bad timing can show that funds can be exhausted using a 5% withdrawal rate and an average rate of return of 10% in less than 20 years while the same withdrawal rate and a 7% average rate of return can have more funds than what an investor had initially when returns are strong at the onset.

The following illustration shows three different examples. The first shows a retiree lucky enough to retire in 1989 having started with $1 million taking out $50,000 per annum indexed to inflation with their funds growing to over $3,000,000 in 20 years.

The second example shows the same retiree with the sequence of returns reversed with the same $1 million and the same withdrawals. This retiree would run out of money in 18 years even with an identical average return.

The third example shows a retiree earning 7% which is considerably less than 10% but having close to $1.3 million after 20 years.

A cash wedge strategy would be highly recommended when starting the withdrawal phase of your life. Having 18 – 24 months of income invested in cash equivalents and short-term bonds which is used to fund your withdrawals early in retirement will help ensure success if the market declines dramatically early on.

By having this cash wedge, you won’t need to sell any of your equity holdings at low prices to fund your retirement allowing time for them to recover.

In retirement, consider less volatile stocks with decent dividends or dividend growth for most of your equity exposure. When the 2008 meltdown occurred, stocks with less volatility than the overall market performed significantly better in aggregate.

Investing similarly to a pension plan as well having some funds in private infrastructure, private real estate and/or private equity can also support this plan.

The same can be said for inflation which has been a non-factor for the better part of a decade. The historical average has been slightly more than 3% in North America with average annual rates in the 1 – 2% range. Indexing your withdrawals to inflation early on at higher rates will have a similar result as poor returns early in your retirement.

Try to keep the increase of your withdrawals below the inflation rate as this can help sustain your capital as most illustrations do index income withdrawals fully with inflation.

Taxation and costs also play a part in the success of your retirement. Maximizing contributions to Tax Free Savings Accounts is a must for individuals with non-registered funds. This can reduce the income tax payable on interest and dividend income along with capital gains substantially.

Consider pulling out some of your RRSP funds prior to age 71 if you are in a relatively low tax bracket to offset paying a higher amount of tax down the road.

Many individuals who do not have a private pension plan should consider taking out a small RRIF or annuity at age 65 to take advantage of the $2000 pension income credit.

Costs can also affect a successful retirement and eat away at returns. Ensure your overall costs are reasonable for the advice you are receiving.

By reviewing your retirement plan regularly taking into account the variables mentioned above will help you succeed where many fail.