Do gold and crypto belong in a Canadian RRSP or TFSA — or is more diversification too risky? How to manage alternative investments

Morningstar’s portfolio research argues that while diversification certainly paid off in 2025, with both international stocks and gold outperforming the U.S. market, not all asset classes are worth adding to your portfolio.

So where does that leave a Canadian with a TFSA, an RRSP and a balanced index fund? The honest answer is that a small allocation to gold and possibly crypto may be helpful, but a large one almost certainly will not.

Why a 60/40 Canadian portfolio is not as diversified as it looks

The traditional balanced portfolio assumes stocks and bonds will behave differently during periods of market stress. While that relationship has often held in the past, 2022 demonstrated that it is not guaranteed, when rising inflation and interest-rate shocks pushed both asset classes lower simultaneously.

For investors approaching retirement or already drawing income from their portfolios, such a synchronized decline can be especially painful.

Neither gold nor crypto is driven by the same forces as stocks or bonds. Gold has historically responded to factors such as real interest rates, currency movements and geopolitical uncertainty. Bitcoin’s drivers remain the subject of debate, but its performance has frequently diverged from traditional asset classes over longer periods.

A diversified asset doesn’t necessarily need to outperform, but it should behave differently when the rest of the portfolio is struggling.

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What gold actually does and doesn’t do in a portfolio

Gold’s primary role is not long-term growth. Over extended periods, equities have generally outperformed gold and produced stronger inflation-adjusted returns. Gold’s value comes from its ability to provide a negative correlation to the stock market, especially during inflation shocks and periods of geopolitical instability.

There are several ways Canadian investors can hold gold inside an RRSP or TFSA. Physical gold bullion that meets the Canada Revenue Agency’s purity standards is eligible for registered accounts under CRA rules. Gold ETFs listed on Canadian exchanges, as well as shares of gold mining companies, are also RRSP- and TFSA-eligible and trade like any other security. Each option has pros and cons. For example, bullion has storage and insurance costs, ETFs add a small management expense ratio (MER), and mining stocks add company-specific risk on top of the gold price.

For most Canadians, a single-digit allocation through a low-cost, physically backed gold ETF inside a registered account is often the simplest approach.

Where does Bitcoin fit, and what are the risks?

The Canadian Securities Administrators (CSA) and the Canadian Investment Regulatory Organization (CIRO) have both issued repeated investor alerts about unregistered crypto trading platforms, fraud risk and the volatility of crypto assets.