https://www.cwbwealth.com/en/news-and-stories/insights/grow-together-june-2025
In this issue: Message from the President & CEO | Capital gains and dividends – a winning combination | Living richly – a fresh perspective on
wealth and experience | FHSA – blending tax relief and generational impact
Message from the President & CEO
Jim Andrews, CA, CPA, MBA
President & CEO, CWB Wealth
It was a year ago this month that we walked out of a client event in Toronto, and news broke that National Bank would be acquiring Canadian Western Bank, including CWB Wealth. I was with a group of colleagues, and our initial reaction was what you might expect – surprise, uncertainty and a sense of grief – we were building something meaningful and distinct at CWB, and it was going to come to an abrupt halt.
During this past year as we have gotten to know National Bank Financial (NBF) and have begun the integration activities, we have learned a lot about the vision and opportunities this change will bring, especially for clients. NBF’s philosophy for wealth management is a natural fit for our Private Wealth Advisors.
“The best of both worlds” is a phrase that NBF uses to articulate their competitive advantage in attracting top advisors to their business. They have been especially successful in attracting advisors from the Big Five financial institutions, who feel they are required to put the needs of the firm above the needs of their clients. The best of both worlds promises the resources, scale and security of a national institution, complemented with the offer of independence and freedom for each advisor to serve clients on their own terms. It reflects a deep understanding that each client-advisor relationship is unique and individualized and needs to be respected and protected.
This entrepreneurial spirit is actively encouraged at NBF and is layered throughout the firm. Our advisors now have a level of flexibility they’ve never experienced before. They’re better equipped than ever to deepen client relationships on their own terms, refine their unique and personal value propositions, and determine their own vision of a client experience. It’s been exciting for me to see our advisors so energized and engaged with the opportunities coming their way. New partnerships are forming, and many advisors are revisiting the roots of their practice, discovering how to enhance this and bring it further to life.
I’ve worked alongside many exceptional advisors over my 25-year career, and I can say without hesitation that our advisors are the best I have ever worked with, being among the best across the country. Their insight, integrity and long-standing commitment to clients is what has made our firm special. NBF has recognized the quality of our team and is ensuring their transition is as easy as possible. It’s heartening to see them recognize our talent and invest in it.
Most importantly, the commitment to the boutique experience remains. Our Private Wealth Advisors will continue to meet their clients at moments that matter most, whether it’s a conversation about goals, during a life event, or for a custom solution. This fall, as has been our tradition, we look forward to welcoming you to our annual Speaker Series events across Canada, where we'll be tailoring the event for each city.
In keeping with the theme of the Best of Both Worlds, in this issue of Grow Together, we explore what this means in practice. Scott Blair, Chief Investment Officer, shares how combining capital gains and dividends can create a portfolio that, like a hockey team, plays both offense and defense. Wesley Fong, Senior Planner, breaks down the First Home Savings Account and how it blends the strengths of both RRSPs and TFSAs to support intergenerational wealth transfers. Finally, Russ MacKay, Private Wealth Advisor, Portfolio Manager, helps shift our perspectives on both leaving a legacy and purposeful spending. In reflecting on the book Die with Zero, Russ has learned that you can do both and shares how he recently put this into practice while visiting Greece with his daughter.
As always, we thank you for working with us during these exciting times. We look forward to what’s ahead, and to continuing this new chapter together.
Capital gains and dividends – a winning combination
Scott Blair, CFA
Chief Investment Officer, CWB Wealth
For hockey fans, the Stanley Cup Playoffs are a thrilling time, especially if their team goes far. Success hinges on countless strategic decisions made by coaches and players, from line-ups to in-game plays. Yet, in the end, only one thing truly matters – who won.
A similar parallel can be drawn with investing, where there are almost an infinite number of decisions to be made. And like great teams, portfolios often combine a strong offensive and defensive structure. Every investment has two essential return components: income (your defense) and price appreciation (your offense). For stock investing, that typically means dividends and capital gains. These bring together the best of both worlds to create a winning combination, giving you a better chance of achieving your goals over time.
The power of two for one smart portfolio
Investors typically bundle dividends and capital gains into one total return number, so you may or may not be familiar with the weight that each can carry. Let’s take a look at the playbook to see where total returns come from.
If we look at $100 invested in Canada’s flagship index (the S&P/TSX Composite Index) over the past 25 years to the end of May 2025, we see something interesting (see figure 1). The navy line shows the capital appreciation in the index, while the blue line includes total return (capital appreciation plus dividends). The initial $100 investment grew to $283 based solely on capital appreciation, which translates into 4.2% per year annualized. A disappointing number, but the starting point matters here as the dotcom bubble was still in the process of bursting at the start of the chart.
When we add dividends to the capital appreciation, the number is much more impressive. That $100 now turns into $551 over the same period, bringing the return to 7.1% per year annualized. Dividends provide the stable, more predictable portion of the portfolio, while the capital gains provide the horsepower. The latter is more volatile over time, but also more powerful when paired with the former.
Figure 1: The power of dividends plus capital gains
The Canadian advantage
The U.S. has a high weight in technology. Although many of these companies pay dividends, the businesses are also growing fast, presenting lots of opportunity for management to invest in the business to grow outsized profits. Smart management teams should allocate capital to where they see the best returns for shareholders.
Canada, on the other hand, is heavy in stable industries such as financial companies and pipelines. They have growth avenues but not as many competing demands on their capital, like the rapidly growing tech space. Many of these companies have been strong performers over the years and have committed to growing their dividends and investing in the business. It’s another way to achieve the best of both worlds – long-term growth with a foundation of steady income.
Most of the world is more like Canada and less like the U.S., with a higher percentage of dividend growers and fewer large tech names. That said, when it comes to dividend investing, Canada has a huge tax advantage. When dividends are paid out by a Canadian corporation, they are typically paid out with after-tax dollars. To avoid double taxation, the government provides a dividend tax credit. Many countries also have withholding tax on dividends paid out to Canadians in non-retirement accounts, making Canadian dividends even more attractive.
When 1+1 = more than 2
If you need to regularly draw income from your portfolio (such as in retirement), a healthy dose of dividends for your equity exposure can be the right play. Such portfolios tend to be less volatile, and the income is more predictable. In the end, you will also get capital gains over time in addition to a growing stream of income as dividends rise. If you’re looking to grow your wealth and don’t need the income, capital gains may be the better option with heavier diversification in U.S. and International markets.
Whether you’re aiming for steady income, long-term growth, or both, understanding how dividends and capital gains work together is key to building resilience and opportunity into your portfolio. That’s where your advisor plays a critical role. Like a great coach, they don’t just pick the best players, they build the right line-up for your goals.
Living richly – a fresh perspective on wealth and experience
Russ MacKay, MFA-PTM, CIM®
Private Wealth Advisor, Portfolio Manager, CWB Wealth Partners
I recently returned from a special father/daughter trip to Greece where we enjoyed the islands of Naxos and Crete, followed by a few days in Athens. It was a wonderful experience in so many ways, and maybe more so because of the book I read while there, Die with Zero by Bill Perkins.
The larger part of my career has been about advising clients on wealth accumulation and ensuring that a reasonable margin of safety is built in to ensure they don’t die with zero (or even worse, still be alive with zero!). But the book surprised me. It wasn’t about reckless spending or abandoning planning. It was about being deliberate in maximizing how we use our wealth to create meaningful experiences instead of saving and waiting to do so much later in life or, regrettably, never doing them at all.
Measuring life in “experience points”
Bill then layers on another concept: memory dividend points. These points are the emotional returns you add to the experience points, and are earned when you relive the experience or parts of it. Looking at photos, retelling stories, and sharing your experience with others to inspire them are all ways of doing this. Having only been home for a couple of weeks, I’ve not only locked in the experience points, but am already earning memory dividend points each time friends and clients ask me about my trip. Many of them want to know information as they are considering Greece in their future travel plans. I can only imagine how many of these memory dividend points I will earn in the years ahead as I continue to share my stories.
Wealth and meaning – the best of both worlds
- To you and your family
- To charity and community
- To the government in the form of taxes
This happens while you are alive, or on your passing. Knowing this, think about how you are allocating your wealth now and how you plan to allocate the wealth in your estate. Are you maximizing the experience points you could earn? What about the memory dividend points? Unfortunately, anything you plan to do with your money when you are gone will earn you zero points. With thoughtful planning though, you can create more life and more legacy.
Let’s look at a simple example. Consider a newly retired couple in their early 60s, whose net worth is $10,000,000. Their financial plan has been built to reflect their desired lifestyle and spending throughout retirement, with a decent margin of safety. Projections show the couple will leave a $4,000,000 estate to their two adult children (now in their twenties) when they pass. Let’s explore two possible paths for that $4,000,000 (see figure 2).
Figure 2: The power of spending with intention
We can see the difference in the combined points that could be earned by following a bit of Bill’s advice (not dying with zero, but dying with less). On the left side of figure 2 we see the points earned by not spending or using that $4,000,000 before it becomes part of their estate. ZERO. Since there are no experience points earned, no memory dividend points can be earned either.
Contrast this with the option to spend thoughtfully and live fully (as represented on the right side of figure 2) where they decide to use an additional $1,500,000 of their capital while they are alive. From this, they allocate $250,000 to themselves to spend on travel and other niceties that generate lifetime experience and memory dividend points. Another $1,000,000 is pre-gifted to their adult children to help purchase real estate and support their future families, earning them lifetime experience and memory dividend points. Finally, another $250,000 is donated to charity or a Donor Advised Fund while they are alive. Planned properly, they would benefit from tax savings in supporting charities that are meaningful to them, while earning even more experience and memory dividend points from the feeling of goodwill it creates and seeing the impact of their giving.
Keep in mind that with their current net worth and the goal of leaving $4,000,000 to the estate, this couple is still living a very good life. They could spend roughly $300,000 per year and still have $4,000,000 at age 100. What we are really talking about is just $1,500,000 worth of additional spending over a 40-year period. When used intentionally, that money can create rich, lasting experiences, plus provide financial impact where it matters most. With strategic planning, the couple preserves long-term security while adding purpose to their wealth.
Die with Zero is a catchy name for a book – it definitely grabs your attention. While I may never fully embrace the idea of spending everything (call me old school), I’ve certainly come away with a new perspective. I will now be thinking more about how I spend my time and money, so I can truly get the best of both worlds: a life well-lived and a legacy that reflects my values.
FHSA – blending tax relief and generational impact
Wesley Fong, CFP®, R.F.P., BCom
Senior Planner, CWB Wealth
With intergenerational wealth transfer being top of mind these days, many families are looking for tax-efficient, flexible ways to support their children’s financial futures. Given soaring real estate prices, one increasingly popular option is helping fund a First Home Savings Account (FHSA). This tax efficient account combines the best features of both a Registered Retirement Savings Plan (RRSP) and a Tax-Free Savings Account (TFSA), making it an attractive way for parents to give their children a strong start in life.
Why the FHSA stands out
First launched in April 2023, the FHSA is still relatively new and perhaps not everyone is aware of how it works. According to Canada Revenue Agency, about 739,000 Canadians have opened FHSAs since its year of inception, but only about 5% of them have withdrawn funds to purchase a home so far. This suggests many are likely still saving.
Designed to help first-time home buyers save for a downpayment, the FHSA allows them to contribute up to $8,000 per year (or up to $16,000 per year with carryforward from a prior year) and a lifetime maximum of $40,000.
Additionally, this savings vehicle presents a rare opportunity to gift early, reduce future estate complexity, and set the next generation up for financial success in a tax efficient framework. And by combining the tax benefits of two familiar accounts: the RRSP and TFSA, it gives young Canadians a tax deduction on the way in and tax-free withdrawals on the way out.
Here are some strategic benefits of the FHSA:
- Contributions are tax-deductible like an RRSP – The FHSA holder receives a tax deduction in the year of contribution, or the deduction can be carried forward to a later year. This can be especially useful if the FHSA holder is a student or has low income when the contribution is made. For those who have maximized their RRSP and TFSA contributions, the FHSA adds a third pillar for intergenerational gifting. This lets parents shift a portion of their estate plan forward in a way that’s impactful, tax-efficient, and aligned with family values.
- Withdrawals are tax-free like a TFSA – As long as the FHSA holder is making a qualifying withdrawal to buy their first home, there is no tax on the withdrawal. This includes the original principal, as well as any interest and growth in the account. Another great feature of the FHSA is there is no repayment requirement unlike the Home Buyers’ Plan (HBP). The HBP is a program that allows individuals to withdraw funds from their RRSP to purchase their first home.
- Combine FHSA with HBP for maximum support – The FHSA can be used in tandem with the HBP for your first home purchase. This means you can potentially access over $100,000 in tax-advantaged funds ($60,000 from HBP and over $40,000 in FHSA contributions). For spouses or common-law partners, this could translate to over $200,000 available for a home purchase. And families can contribute to RRSPs, TFSAs, and FHSAs simultaneously for maximum effect.
- Flexibility for life’s twists and turns – Life doesn’t always follow a straight path. Another attractive feature of the FHSA is that it can remain open for up to 15 years, giving account holders plenty of time to save for a home purchase. This supports flexibility while optimizing tax-deferred growth. And if your child decides not to purchase a home or moves abroad, the funds can be transferred into an RRSP on a tax-deferred basis, without affecting their RRSP contribution room.
- Freedom and control – Parents can gift money annually to their children to make FHSA contributions. This not only supports your child’s financial journey but fosters accountability, decision-making, and early investment literacy. Since the child is the FHSA account holder, the onus would be on them to make good investment decisions.
- Giving now vs inheriting later – The FHSA lets parents begin passing on wealth during their lifetime, strategically and tax effectively, while helping their children build equity sooner. In gifting early, you can experience the emotional reward of seeing your children benefit from your support while you’re alive. And doing so simplifies estate administration, bypasses probate, and helps foster financial independence.
FHSA key features at a glance compared to the TFSA, RRSP, and HBP
| FHSA | TFSA | RRSP | HBP | |
| Tax-deductible contributions | Yes | No | Yes | Yes |
| Tax-free withdrawals | Yes – for home purchase |
Yes | No – withdrawals are fully taxable |
Yes – for home purchase |
| Max contribution limit | $8,000/year, up to $40,000 lifetime maximum |
$7,000/year, plus any unused room from prior years |
Annual limit set by CRA |
Annual RRSP limit set by CRA |
| Max withdrawal amount | No withdrawal limit |
No withdrawal limit |
No withdrawal limit |
$60,000 maximum from RRSP |
| Repayment requirements | No repayments required |
No repayments required, but any funds withdrawn can be recontributed the following year |
No repayments required * |
Withdrawals must be repaid over 15 years, or they will be taxed as income |
Important considerations for taxes and timing
There are some quirks with using an FHSA, and understanding these will help you make strategic decisions to optimize its advantages.
First, it differs from an RRSP and TFSA in some important ways. Contribution room starts only when an FHSA is opened. This means that even though the FHSA was introduced in 2023, if you didn’t open an account until 2025, your available room this year is only $8,000 – it’s not retroactive from age 18 like with a TFSA or an RRSP.
And unlike an RRSP, FHSA contributions made within the first 60 days of the year cannot be deducted on the prior year’s return. FHSA contributions are reported on a calendar year basis.
To qualify as a first-time homebuyer, the account holder must not have owned a home in the past four calendar years. This means if they previously owned a home but have been renting for several years, they could potentially still open an FHSA and make contributions. Finally, the funds must be used or transferred within 15 years of opening the account or by age 71. Whichever comes first.
The FHSA has taken some of the best features of the RRSP, TFSA, and HBP and offers an ideal option for prospective home buyers to consider. Used thoughtfully, it provides another tool in the toolkit for families to reduce their future estate tax burden and gain satisfaction in seeing their wealth make a difference today by supporting the next generation.
If you’d like to explore how an FHSA could fit into your family’s wealth strategy, we’d be happy to guide you.
Sources: Canada Revenue Agency
Information presented herein is for discussion and illustrative purposes only and is not a recommendation or an offer or solicitation to buy or sell any securities. Views expressed are as of the date indicated, based on the information available at that time, and may change based on market and other conditions. Unless otherwise noted, the opinions provided are those of the authors and not necessarily those of CWB Wealth or its affiliates. Investment decisions should be based on an individual's own goals, time horizon, and tolerance for risk. Nothing in this content should be considered to be legal or tax advice and you are encouraged to consult your own lawyer, accountant or other advisor before making any financial decision. Investors should consult their financial advisor before making a decision as to whether mutual funds are a suitable investment for them. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments.
Please read the prospectus, which contains detailed investment information, before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. CWB Wealth uses third parties to provide certain data used to produce this report. We believe the data to be accurate, however, cannot guarantee its accuracy. Visit cwbwealth.com/disclosures for our full disclaimer.