1 Source: Maclean’s: The cost of a Canadian university education, 2018

2 Source: Point2Homes, August 20183 2019 RBC Retirement Myths & Realities Poll

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Investment UPDATEFall 2019 edition

28263 (10/2019)

How much is enough?

Child’s education

A 2018 study by Maclean’s magazine found the average annual cost of a Canadian university education to be $9,300 a year for students living at home. That number rises to an average of almost $20,000 for those living away1.

So how much should you be saving to help cover the costs of your child’s post-secondary education?

Buying a home

The average minimum down payment needed by home buyers in Canada is almost $24,0002.

However, average home prices vary widely across the country. So how much will you need for a down payment?

Retirement

According to a recent RBC poll,3 the average 50+ Canadian is looking to save from $574,000 to almost $1 million for retirement.

A financial plan is key to determining how much will be enough for your retirement. You’ll need to look closely at your timeline, how much to save and your future income needs.

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Achieving your long-term financial goals starts with saving enough. It is vital to know how much you need to be saving today to build an investment portfolio to support your future goals.

This quarter we look at common saving goals to help you determine how much will be enough and how much you'll need to save on a regular basis to get there.

Available through RBC Online Banking, MyAdvisor can help you set and track your financial goals, connect with an advisor and monitor your investments.

1 Source: Maclean’s: The cost of a Canadian university education in six charts, 2018 2 Canada Mortgage and Housing Corporation, June 30, 2019 Quarterly Financial Report, based on 5% of an average home sale price in Canada of $477,336.3 2019 RBC Retirement Myths & Realities Poll

Child’s education When setting this goal, consider the cost of tuition, books, travel, accommodation and basic living expenses. As children get older, you may want to account for additional sources of cash flow, such as a part-time job, as well as gifts or scholarships they may receive.

Starting at birth, how could a $25 weekly contribution grow as your child grows?

Determining how much is enough requires an understanding of the expected costs of your end goal. Getting there involves determining how much to save on a regular basis – based on your timeline and expected returns.

2 Investment Update I Fall 2019

4 For illustration purposes only. Assumes 5% annual returns. The CESG will add 20% of the first $2,500 you contribute each year, up to a maximum lifetime grant of $7,200 for each eligible child/beneficiary.

5 Source: Financial Consumer Agency of Canada. Minimum down payments: For home prices of $500,000 or less, 5% of the purchase price. For home prices from $500,000 to $999,999, 5% of the first $500,000 of the purchase price, 10% for the portion of the purchase price above $500,000. For homes of $1 million or more, 20% of the purchase price.

$10,869 Age 6

$25,434 Age 12

$44,953 Age 18

Saving for a home Setting a down payment goal starts with understanding how much you need to save. In Canada, minimum down payment amounts range from 5-20%5, depending on the purchase price of the home.

Additionally, the average minimum down payment needed in Canada is almost $24,0002. However, depending on where you live, that amount may or may not be enough to meet the minimum requirements.

How much down payment will you need?

Average home priceVancouver $995,200 Toronto $800,900

Calgary $419,000 Montreal $367,800

Winnipeg $296,735 St. John's $282,219

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per week

Saving $25 a week for 18 years could add up to almost $45,000 in an RESP. This is based on your $25 weekly contribution plus a 20% Canadian Educations Savings Grant (CESG) of $5 a week.4

$25.00

Source: The Canadian Real Estate Association, as of July 2019

$74,520

$20,950

$14,837

$55,090

$18,390

$14,111

Average minimum down payment requirement

The road to and through retirement

6 For illustrative purposes only, to show the effects of compound growth and not intended to reflect future values of a mutual fund or returns on investment in a mutual fund.

Your retirement timeline and future income needs will drive how much you need to save on a regular basis to achieve your retirement goals.

If you’re thinking about “How much is enough?” to reach your goals, your RBC advisor is ready to help you:

▪ Identify and prioritize your goals▪ Set a dollar amount and timeline for each goal▪ Select the right investments▪ Create a regular investing plan to help you balance saving and expenses▪ Re-assess and adjust your plan as needed

How long does it take to build a $750,000 portfolio?

Based on 5% annual returns6

How much income can $750,000 generate?

Based on 4% annual returns6

Bi-weekly income $2,000 $1,600 $1,130

Years until assets reach $0

21 31 Portfolio maintains value of $750,000

Thanks to the power of compounding, in this scenario the income generated in retirement is 4 times the amount saved.

Looking to save more? Growing a portfolio from $750,000 to $1,000,000 would take just 5 more years at a savings rate of $400 bi-weekly and annual return rate of 5%.

Bi-weekly investment $100 $400 $800

Years to build $750,000 56 31 21

Financial planning services and investment advice are provided by Royal Mutual Funds Inc. (RMFI). RMFI, RBC Global Asset Management Inc., Royal Bank of Canada, Royal Trust Corporation of Canada and The Royal Trust Company are separate corporate entities which are affiliated. RMFI is licensed as a financial services firm in the province of Quebec.Investment and economic outlook information contained in this report has been compiled by RBC GAM from various sources and reflects our view on September 30, 2019. Information obtained from third parties is believed to be reliable, but no representation or warranty, express or implied, is made by RBC GAM, its affiliates or any other person as to its accuracy, completeness or correctness. RBC GAM and its affiliates assume no responsibility for any errors or omissions.All opinions and estimates contained in this report constitute our judgment as of the indicated date of the information, are subject to change without notice and are provided in good faith but without legal responsibility. Interest rates and market conditions are subject to change. The material in this newsletter is intended as a general source of information only, and should not be construed as offering specific tax, legal, financial or investment advice. Every effort has been made to ensure that the material is correct at

time of publication, but we cannot guarantee its accuracy or completeness. Interest rates, market conditions, tax rulings and other investment factors are subject to rapid change. You should consult with your tax advisor, accountant and/or legal advisor before taking any action based upon the information contained in this newsletter.

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§§ Global growth slowed in the past quarter, hindered by manufacturing weakness, elevated uncertainty from protectionism and Brexit, fading fiscal stimulus and the slowing Chinese economy.

§§ Central banks are working to offset some of the negatives by cutting interest rates, and there is also the potential for additional fiscal stimulus and improved productivity growth.

§§ Weighing the positives and negatives, we look for slower growth in 2019 versus 2018, and for a further deceleration in 2020 in both developed and emerging markets.

§§ Our forecasts were downgraded slightly from last quarter and they are now in line with the consensus for 2019 and modestly lower for 2020.

§§ Central banks have now pivoted to monetary stimulus in a synchronized fashion, with some having already delivered rate cuts and others hinting at additional easing measures.

§§ Global sovereign bonds extended their rally in the past quarter and our valuation models are signaling caution as yields declined to record lows.

§§ We expect upward pressure on real rates over time and therefore the possibility of a bond bear market, in which returns are low or even negative as yields rise for many years, cannot be dismissed.

§§ Global equities rallied in June and July, but stumbled in August as trade tensions escalated between the U.S. and China.

§§ Our models suggest that stocks are relatively attractive outside of the U.S. However, we note that the S&P 500 Index is situated slightly above fair value, at a level that has historically been associated with lower returns and higher volatility.

§§ In an environment of moderate corporate profit growth, low interest rates and low inflation, stocks can deliver gains in the mid-single to low-double digits. In a recessionary scenario, however, the damage to earnings and investor confidence would send stock prices meaningfully lower.

§§ We continue to expect stocks to outperform bonds over the longer term and remain overweight equities and underweight fixed income as a result. However, we don’t feel that this is the time to be running substantial risk positions and have trimmed our exposure to stocks by half a percentage point, moving the proceeds to cash.

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