Invest Now or Wait? What Market Timing Actually Costs Canadians Buying XEQT
October 12, 2026
If you have a lump sum and room in a TFSA, RRSP or FHSA, the evidence points to putting it into XEQT now. Vanguard’s historical modelling found that investing a windfall immediately beat holding it back and phasing it in about two thirds of the time, because markets rise more often than they fall and cash earns less than stocks over long periods. Waiting for a better entry feels careful, but it is a prediction about the market, and the bill for a wrong prediction arrives as compounding you never get back.
I built the dollar figures below from BlackRock’s published calendar-year returns for XEQT, and I read the Vanguard research summary, Tawcan’s “Avoiding 25 Big Investment &, Retirement Mistakes,” jlcollinsnh’s Q&A series and Canadian Couch Potato’s review of 2020 returns. Where the data runs out, I say so.
Why Your Brain Thinks It Can Time the Market (But Statistically Can’t)
Waiting feels rational because the two possible regrets are not weighted equally. Kahneman and Tversky’s work on loss aversion suggests a loss hurts roughly twice as much as an equal gain pleases. Buying XEQT today and watching it fall 10% next month feels like a mistake you made. Sitting in cash while it rises 10% feels like nothing happened, even though the cost is just as real.
Recency bias makes it worse. Behavioural finance research notes that the 2008 and 2009 financial crisis pushed many investors out of equities, and that the economy and markets recovered in the years that followed without them. Whatever scared you most recently becomes the thing you expect to happen next.
Canadian blogger Tawcan lists trying to time the market among his 25 big investment mistakes. His summary is blunt: market timing does not work, and you are better off staying in the market. He concedes you can take advantage of short-term volatility, as he did during the COVID drop, but that is very different from sitting out indefinitely until things feel safe.
The question is rarely whether a pullback will come. One always does. The question is whether you can identify the right day to buy, and also the right day to stop waiting. As of late summer 2026, XEQT trades around $46.16 against a 52-week high of $46.48 and a low of $38.60, and the TSX Composite sits about 3.8% below its own 52-week high. Every one of those readings feels like a reason to wait. Every one of them has felt that way before.
The Real Cost of Waiting: Canadian Portfolio Data
XEQT launched in August 2019, so there are only a few clean windows to test. BlackRock’s published calendar-year returns for XEQT show 19.57% in 2021, a loss of 10.93% in 2022, then gains of 17.05% in 2023, 24.67% in 2024 and 20.45% in 2025. Those numbers let us test the two most common waiting stories on $20,000, with the usual caveat that past returns do not predict future ones.
Take the investor who looked at 2021, saw a market that had already rebounded from the pandemic crash, and decided to wait for a correction. Suppose the cash earned about 1% during that year, which is my assumption, and the investor bought XEQT on January 1, 2022 instead. By the end of 2025 that $20,000 is about $31,600. The person who simply bought in January 2021 finished 2025 with about $37,400. The gap is roughly $5,800, and the waiting investor still bought right before the one losing year in the sample.
Now take the investor with the worst possible recent timing, who put $20,000 in on January 1, 2022 and promptly watched it fall 10.93%. By the end of 2025 that money was about $31,300. A friend who stayed in cash at a generous 4% for all four years ended with about $23,400. Even the most painful entry in this short history beat cash by close to $7,900.
Two waiting scenarios on $20,000: Sitting out 2021 in cash and buying XEQT in January 2022 left an investor about $5,800 behind someone who bought in January 2021. Buying at the start of 2022, just before a 10.93% loss, still finished about $7,900 ahead of holding cash at 4% through the end of 2025. These figures use BlackRock’s published calendar-year returns and ignore taxes and trading costs.
Waiting did win once in this sample. Someone who stayed in cash through 2022 and bought on January 1, 2023 would have finished about $3,800 ahead of the January 2022 buyer, before counting a year of cash interest. But that investor needed to know 2022 would be the bad year, then needed the nerve to buy in the middle of a bear market, when everything felt worst. Most people who wait for a dip are still waiting when the recovery is well underway. I covered that pattern in the data on waiting for the dip.
Timing only beats investing immediately if you are right twice, once when you wait and again when you buy back in.
Lump Sum vs. Dollar-Cost Averaging: Which One Are You Actually Doing?
Holding cash while you wait for a better price is neither lump sum investing nor dollar-cost averaging. It is market timing with a friendlier name. Genuine dollar-cost averaging means investing money as you earn it, every paycheque, on a schedule that does not care what the market did last week.
The confusion matters because the term has drifted. Vanguard’s research compared investing a windfall immediately against staging it in over time, and found the immediate approach came out ahead about two thirds of the time. Vanguard has pointed out that staging a windfall is not really dollar-cost averaging, since a windfall is not income arriving over time. It is a decision about when to deploy money you already have.
jlcollinsnh, whose Simple Path to Wealth series is a pillar of the indexing community, makes the same distinction. Automatic investing from each paycheque is the only form of dollar-cost averaging he endorses. For a lump sum, he invests all at once, because the money waiting on the sidelines is sitting in cash and effectively changing your plan. If you are putting a monthly amount into XEQT from your salary, you are already doing the right thing, and our guide to how much to invest each month covers how to size it.
Phasing in a windfall is not irrational, and it can keep a nervous investor from bailing out at the wrong moment. If that is what it takes for you to start, pick a fixed schedule of a few months, automate it, and do not skip a purchase because the headlines are ugly. Understand what you are paying for peace of mind, which is a statistical headwind in roughly two out of three historical periods.
The Inflation and Tax Penalty You’re Not Seeing
Cash feels safe because the balance never drops. The purchasing power can still drop quietly. Tawcan treats forgetting about inflation as its own mistake and uses a 2.5% inflation assumption in his projections. Take a high-interest savings account paying 4%. If the interest sits in a non-registered account and your marginal tax rate is 30%, you keep about 2.8% after tax. Subtract 2.5% inflation and your real return is about 0.3%. That is the return on the safe side of the waiting trade, using assumptions you can swap for your own.
Inside a TFSA the tax disappears but a different cost shows up. Every dollar of room used to hold cash is room not compounding in an equity fund. A TFSA is tax-free whether it holds a HISA or XEQT, so the shelter is worth more attached to an asset with higher expected growth. This is why Tawcan says people need to stop using the TFSA as a savings account and treat it as a retirement account.
In a non-registered account, timing adds a further layer. Selling XEQT to dodge a drop triggers a capital gain you would not otherwise have to realize, and you then pay tax on it while sitting in cash. A commenter on a Canadian Couch Potato post about indexing made the point well, noting that market timing makes a portfolio less tax efficient and that only returns after tax, after expenses and after inflation actually matter.
You will sometimes see claims that timing costs two to four percentage points a year. The sources I read make the qualitative case against timing but do not support that number, so I will not hand it to you as fact. The scenario maths above, built from real XEQT returns, is a better guide than a round number.
What to Do the Next Time Headlines Scare You
If you have money you will not touch for at least five years and it is sitting in cash only because you are nervous, invest it. XEQT held 100% equities through 2022 and fell 10.93%, so you need to accept that this will happen again, but a long horizon is what absorbs it. If you need the money within five years, for a down payment or tuition, it does not belong in an all-equity fund in the first place, and that decision has nothing to do with the news.
If you already own XEQT and the market is falling, the right move for most investors is to do nothing. The fund rebalances itself across Canadian, US, international and emerging markets, as I explain in why XEQT rebalances for you, so there is nothing to reposition. Selling converts a temporary decline into a permanent one.
If you are still earning, keep contributing on schedule. A falling market means each contribution buys more units, which is the one genuine advantage of regular investing. Stopping contributions during a decline is exactly the timing error that systematic investing is meant to prevent.
If you are close to retirement and the volatility is a real problem rather than a feeling, your allocation may be too aggressive, and a more balanced all-in-one fund may fit your actual needs. That is a planning decision made on a calm day, with your horizon in mind, not a reaction to a bad week.
The Historical Record: Canadians Who Invested During Crisis vs. Those Who Waited
The pandemic crash is the clearest recent test. Canadian Couch Potato’s review of 2020 notes that from peak to trough Canadian equities fell more than 37%, and foreign markets lost between 26% and 29%. The Vanguard Growth ETF Portfolio fell more than 25% in 40 ugly days, then fully recovered 196 days later. By year-end, all-in-one ETFs across the risk spectrum had gained roughly 8.4% to 11.4% for 2020.
The investor who sold in March or waited for further declines had to be right about two things. The market had to fall further after they got out, and they then had to get back in before the recovery. For a growth portfolio the recovery took 196 days, and it began while the news was still dire.
The 2022 bear market tells the same story at a slower pace. XEQT lost 10.93% that year, then returned 17.05%, 24.67% and 20.45% in the three years that followed. Compounded, an investor who held through the whole stretch turned $20,000 into about $31,300 despite beginning at the worst possible time.
XEQT launched in 2019, so I cannot show you its numbers from 2008 and 2009 without inventing them. What the record does show, according to justETF’s bear market analysis, is that the MSCI World ETF entered bear market territory on October 6, 2008, already down about 24% from its peak a year earlier, and behavioural research documents many investors leaving around then and missing what came after. You can test your own start dates against real historical data in our XEQT historical calculator.
A 30-year investor who never times the market does not need to be clever. They need to avoid the handful of expensive decisions that clever people keep making.
RRSP Matching and TFSA Contribution Room: Why Timing Is a Tax Mistake
The 2026 TFSA limit is $7,000, and cumulative room for someone eligible since 2009 is $109,000. Unused room carries forward, so waiting does not make you lose the room itself. What you lose is the tax-free growth that money would have generated while it sat in cash. You cannot go back and earn that sheltered time later, and your total room only grows by the annual limit, so every year of delay is a year of shelter you used on a low-growth asset.
The same logic applies to the RRSP. Your limit is 18% of last year’s earned income up to the annual dollar maximum, and the deadline for each tax year falls in the first 60 days of the following year. Waiting until the last day each year to make a lump-sum contribution leaves months of sheltered growth on the table. Unused RRSP room also carries forward, so I would push back on the idea that waiting forfeits the deduction outright. The real loss is delayed growth and a delayed refund, which you could have invested too.
If your employer offers a group RRSP match, the urgency is greater. Some plans match per paycheque, and unclaimed matching may not carry forward, so check the terms of yours. A match is an immediate return that is very hard for any market-timing strategy to beat.
Where you hold XEQT also matters for tax. The RRSP eliminates US dividend withholding tax, while the TFSA and FHSA face about 15% on US dividends. That is a reason to think about location, not a reason to delay buying. If you are saving for a first home, the FHSA adds a deduction on top of tax-free growth, and its $8,000 annual limit and $40,000 lifetime cap are worth using early. For a broader picture of the fund itself, the complete XEQT guide is a good starting point.
Registered account limits for 2026: The TFSA limit is $7,000 a year, the RRSP limit is 18% of prior year earned income up to the annual dollar maximum, and the FHSA limit is $8,000 a year with a $40,000 lifetime cap. Unused room carries forward in all three, but the sheltered growth you skip while waiting does not.
Frequently Asked Questions
Is it better to invest a lump sum all at once or spread it out in Canada? Vanguard’s historical modelling found that investing immediately beat staged investing about two thirds of the time. Spreading it out is a reasonable choice if it keeps you from panicking, but on average it costs you expected return.
Should I buy XEQT when it is near an all-time high? For most long-term investors, yes. As of late summer 2026 XEQT trades near its 52-week high, but highs are a normal feature of a rising market, and waiting for a lower price means holding cash that has tended to earn less than equities over time.
What if I invest right before a crash? A January 2022 purchase, just before XEQT’s 10.93% decline that year, still grew from $20,000 to about $31,300 by the end of 2025. That beat 4% cash by roughly $7,900, though results will differ for future periods.
Does my TFSA or RRSP room expire if I wait to invest? No, unused room carries forward. What you lose is the tax-sheltered growth you would have earned during the wait, which cannot be recovered later.