ExampleIllustrative ETF projection - adjust return, MER, and wrapper (TFSA / RRSP / taxable) to compare
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The ETF growth calculator projects long-term returns on index ETFs (VEQT, XEQT, VGRO, XBAL, VFV) after MER, inflation, and tax. It's the only projection that matters for most Canadian DIY investors - and the one most charting tools get wrong because they ignore MER drag or withholding tax on US-listed ETFs.
Growth uses monthly compounding at your chosen gross return, then subtracts annualized MER as a drag on balance. For non-registered accounts, dividend income is taxed at your marginal rate annually; capital gains are assumed realized on final sale. For US-listed ETFs held outside RRSP, a 15% withholding tax on US dividends is applied (treaty rate - RRSP exempts this).
Over 30 years at 7% gross return, the difference between a 0.20% MER ETF and a 2.00% MER mutual fund on a $100,000 portfolio is roughly $350,000 of lost growth. Popular all-in-one ETFs: VEQT/XEQT (100% equity, 0.22% MER), VGRO/XGRO (80/20, 0.24%), VBAL/XBAL (60/40, 0.24%).
MER (Management Expense Ratio) is the annual fee charged by a fund, expressed as a percentage of assets. A 1% MER on a $100,000 portfolio costs $1,000/year regardless of performance. Over 30 years at 7% gross return, a 1% MER reduces your ending balance by roughly 20% compared to a 0.2% MER ETF.
VEQT (Vanguard) and XEQT (iShares) are both 100% global equity all-in-one ETFs with virtually identical MERs (~0.22%). The main differences are slight weighting variations and the fund company. Neither is clearly better - both are excellent low-cost options. The more important decision is choosing 100% equity vs a balanced option like VGRO or XBAL.
For Canadian equity ETFs, either works well. For US equity ETFs (VFV, VOO, QQQ), holding in an RRSP avoids the 15% US withholding tax on dividends under the Canada-US tax treaty. TFSA is best for assets you expect to grow significantly since withdrawals are fully tax-free. The Account Optimizer can rank these decisions for your situation.
US-listed ETFs pay dividends subject to a 15% withholding tax at source for Canadian investors, unless held in an RRSP (which is treaty-exempt). Canadian-listed ETFs that hold US stocks (like VFV vs VOO) still incur the withholding tax inside the ETF - only holding the US-listed security directly in RRSP fully eliminates it.
All-in-one or asset allocation ETFs hold a diversified portfolio of global equities and bonds in a single ticker with automatic rebalancing. They are popular for simplicity. Examples include VGRO (80/20 equity/bond), XBAL (60/40), and VCNS (40/60). MERs are typically around 0.20–0.25%.
A commonly used long-term return assumption for a 100% global equity portfolio (like VEQT/XEQT) is 6–8% nominal or 4–6% inflation-adjusted. The calculator defaults to 7% which reflects historical long-run returns. More conservative assumptions (5–6%) are appropriate for balanced portfolios. These are projections, not guarantees.
On a $200,000 portfolio at 7% gross return over 30 years, a 0.20% MER ETF grows to approximately $1,430,000, while a 1.20% MER mutual fund grows to approximately $1,140,000 - a difference of about $290,000 in lost returns solely due to fees. The ETF calculator shows this comparison in real time.
Long-form explainers that pair with this calculator.