Canadian TSX investors have been trying to add as many stocks to their Tax-Free Savings Accounts (TFSA) and Registered Retirement Savings Plans (RRSP) as possible. But honestly, it’s been a risky place. Which is why a lot of TSX investors may have started looking for exchange-traded funds instead.
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Why an ETF?
An ETF offers you the benefit of saving time and money. On average, you’ll pay about $10 in commission fees for every stock trade you make. That’s to either sell or buy. So that’s $20 you have to make up right there if you’re building a portfolio from scratch.
Furthermore, you also have to research to come up with a portfolio that makes sense for your own goals. You don’t want to buy up every risky stock on the market. Sure, every portfolio can handle some risk. But overall, you should be invested in strong long-term stocks for ultimate performance. And that’s a lot of work.
So instead, TSX investors may want to consider an ETF that creates a one-stop-shop for their portfolio. By simply choosing the right one for you, you’ll have access to an entire portfolio of stocks. Better still, it’s managed by a team of professional investors who will constantly juggle investments to optimize performance.
Vanguard Growth ETF
So what ETFs would you like to consider? First up, I’d consider the Vanguard Growth ETF Portfolio (TSX:VGRO). Coming on the market in 2018, it has grown steadily by making solid choices for its TSX investors.
It’s perfect for those seeking easy, long-term growth. The company has an incredible diversity of investments, with over 13,000 equities in a myriad of industries. This gives you access to the top growth stocks on the market, without even being aware of what they are!
Furthermore, it’s a cheap investment in several respects. First, it trades at $31.32 per share, with a management expense ratio (MER) of 0.24% per year. It’s also at a discount, with shares down 3.4% year to date, though up 6.36% in the last year. You also get access to an annual dividend yield of 1.75%.
Based on historic performance, a decade-long investment in Vanguard would potentially lead TSX investors to a portfolio worth $14,153.
iShares S&P/TSX ETF
Another strong option for TSX investors it the iShares Core S&P/TSX Capped Composite Index ETF (TSX:XIC). This ETF invests primarily in Canadian equities, aiming to replicate the performance on the TSX. Coming on the market in 2001, it has years behind it of growth for Canadians to consider.
This ETF is meant for long-term holding, as if you were holding the TSX directly. However, you’re now buying it at an incredibly cheap price, with access to every stock on the market. Not bad for just $34 per share as of writing.
And right now, the ETF offers TSX investors an incredibly low MER of just 0.06%. That’s insanity compared to its peers. Shares are up 1.78% year to date, and 20% in the last year alone! Furthermore, you get a 2.52% dividend yield, which is more than you can say for the TSX through direct investment.
Based on historic performance, if you were to invest in this iShares ETF for a decade, you could potentially have a portfolio worth $15,449.
