Why Your Birth Year Matters More Than You Think

Welcome to 2026.

January always brings the same questions: "What will markets do this year? Should I adjust my portfolio? What's my financial resolution?" But we wanted to kick off this year with a different conversation - one that's been on our minds and might explain a lot about our relationship with investing: why some investors feel confident about markets while others remain skeptical - even when they're doing everything "right."

We thought you'd find this as interesting as we did.

Here's something most investors never consider: the decade you were born in may have shaped your financial future more than almost any investment decision you've ever made.

Two investors save $250 monthly in their RRSPs for thirty years. One retires with a substantial surplus; the other struggles to keep pace. The difference wasn't their talent, discipline, or financial knowledge, it was simply the year they happened to start investing (we used age 22 in our review).

Understanding this "Lottery of Timing" reality can transform how you think about your money today.

Consider three investors who each saved $3,000 annually during their first decade in the workforce. Identical discipline, vastly different results:

A Millennial who started investing $250 monthly in their RRSP in January 2000 would have contributed $30,000 by 2010. Despite a decade of perfect discipline, their balance was often barely above - or even below - their total contributions.

An early Gen X investor making identical contributions starting in 1982? Their balance after ten years exceeded $88,000. Nearly three times the outcome for the exact same behaviour.

Same contributions, same time horizon, vastly different outcomes. Why? The S&P 500 returned approximately 12.6% annually from 1982-1991¹. From 2000-2009, it returned -0.9% annually - the "Lost Decade."²

Three Generations, Three Different Realities

Baby Boomers who started investing in the 1980s experienced one of history's greatest bull markets during their peak earning years. Even the 2008 crisis, which hit many near retirement, couldn't shake their fundamental belief that markets reward patience. Decades of gains had built unshakeable confidence.

Early Gen X investors (starting around 1990-1995) caught the tail end of prosperity before the whiplash began. They watched portfolios climb, then collapse when the dot-com bubble burst (NASDAQ down 78%⁴), rebuild, then crater again in 2008 (global markets down 50%). This happened precisely when their careers and RRSP/Investing rates were accelerating.

Late Gen X and Millennials began investing between 1998 and 2007, meaning their formative investment experiences included two devastating bear markets before their portfolios gained meaningful size. After years of disciplined saving, many found their balances barely above their total contributions.

Your birth year didn't just affect your portfolio size - it fundamentally altered your investment psychology in measurable ways.

The Psychology Gap: Faith vs. Skepticism

Baby Boomers who experienced the powerful 1980s and 1990s bull markets developed what researchers call "market faith" - deep-seated confidence that downturns are temporary and recovery is inevitable. Even the 2008 crisis, which hit many near retirement, couldn't shake their fundamental belief that markets reward patience.

This wasn't naive optimism - it was pattern recognition based on lived experience.

Younger generations whose entire investing lifetime has been characterized by volatility and disappointment developed rational skepticism. After watching diligent savings produce minimal results year after year, caution isn't pessimism - it's evidence-based thinking.

The Great Asset Rotation: When Investors Abandon What Doesn't Work

This psychological divide triggered two major behavioural shifts:

Gen X readily abandoned equities for real estate in the 2000s. While their stock portfolios stagnated, their home values appreciated. They pivoted to what was actually working. The consequences were severe: Gen X households lost 45% of their net worth during the financial crisis - the steepest decline of any generation - concentrated in real estate just as it collapsed.

Millennials embraced Bitcoin and cryptocurrencies. After disappointing results from traditional investing, they searched for their own "1980s bull market" equivalent. High-risk alternatives felt rational when conventional strategies hadn't delivered promised results during their entire investing lifetime.

Here's the dangerous feedback loop: Poor early returns → skepticism → seeking alternatives → missing recovery periods → validated skepticism.

Meanwhile, those with positive early experiences stayed invested, captured recoveries, and had their faith reinforced - making them more likely to hold through the next downturn.

Why Diversified Portfolios Matter More Than You Think

This is where discipline and professional advice are invaluable.  A 100% equity portfolio amplifies both the euphoria of "Golden Years" and the devastation of "Lost Decades." A properly diversified “balanced” portfolio (60% equities, 40% fixed income in this example) with systematic rebalancing significantly reduces this generational gap:

Notice what happened: The balanced approach turned the "Lost Decade" into a 5.1% return - not spectacular, but far from the devastating experience of all-equity investors who watched portfolios crater twice in eight years.

Why this matters now: For Millennials who stayed disciplined in balanced portfolios through the 2000s, those years of buying "cheap" equities during rebalancing are now paying enormous dividends. Their TFSAs and RRSPs have accelerated dramatically since 2010 because they accumulated shares at depressed prices.

For those approaching or in retirement, understanding this difference is essential:

During accumulation (contributing years): Market crashes are mathematically advantageous. You're buying more units at lower prices through your regular contributions. Poor early returns actually set you up for stronger future growth.

During withdrawal (RRIF phase): Market crashes become mathematical predators. You're forced to sell units while prices are down to fund your lifestyle, permanently locking in losses.

The Retirement Stress Test:

Imagine two retirees, each with $1 million. Both average 7% returns over 20 years.

Even though their average return is identical, Retiree B could run out of money 10+ years earlier because they were forced to sell assets during market lows to fund withdrawals for income needs.

One bad market year at age 71 matters exponentially more than a bad year at age 31.

This is why professional advice becomes critical as you transition from accumulation to decumulation. The strategy that served you for 30 years must fundamentally shift.

1. Increase your savings rate systematically

If you experienced unfavourable early markets, a higher savings rate can overcome nearly a decade of poor returns. An investor with terrible market timing saving 15% of income often ends up ahead of someone with perfect timing saving 10%.

Boost RRSP or TFSA contributions by 1-2% annually as income grows. This "automatic escalation" approach improves retirement readiness by 30-40% according to industry studies, without requiring dramatic lifestyle changes.

2. Rebalance annually without exception

This forces you to sell high and buy low automatically. Studies show rebalanced portfolios outperform by 0.56% annually over 10 years, as well as reducing overall risk⁸, compounding into tens of thousands of dollars over your investing lifetime.

This should be automatic and mechanical, regardless of market sentiment or your emotional state.

3. Create decision rules now for the next downturn

Write down your target asset allocation (and why) and rebalancing triggers while markets are calm. When panic hits, and your negative experience screams "sell" or "do anything” to top the pain, follow the predetermined plan.

This single practice separates investors who eventually succeed from those who permanently fall behind by abandoning strategies right before they pay off.

What's your "market origin story"? Do you remember the year you made your first significant investment? Has your outlook on investing been shaped more by your experience or by long-term data?

Understanding your sequence risk - both past and future - is the first step toward building a strategy that works regardless of what markets deliver next.

This document is provided as a general source of information and should not be considered personal, legal, accounting, tax, or investment advice, or construed as an endorsement or recommendation of any entity or security discussed. All investments involve risk, including the potential loss of principal. Leveraged ETFs and other complex investment vehicles may not be suitable for all investors and should only be used with a full understanding of their risks. Asset class performance varies over time, and diversification does not ensure a profit or protect against a loss. Every effort has been made to ensure that the material contained in this document is accurate at the time of publication. Market conditions may change, which may impact the information contained in this document. All charts and illustrations in this document are for illustrative purposes only. They are not intended to predict or project investment results. Individuals should seek the advice of professionals, as appropriate, regarding any particular investment. Investors should consult their professional advisors prior to implementing any changes to their investment strategies. The opinions expressed in the communication are solely those of the author(s) and are not to be used or construed as investment advice or as an endorsement or recommendation of any entity or security discussed. Mutual funds and other securities are offered through De Thomas Wealth Management, a mutual fund dealer registered in each province in which it conducts business and a member of the Canadian Investment Regulatory Organization (CIRO).