4 Canadian ETFs to Buy and Hold Forever in Your TFSA

These ETFs provide investors with the perfect portfolio of options for those seeking long-term growth in a TFSA.

| More on:
ETF chart stocks

Image source: Getty Images

Investing in exchange-traded funds (ETFs) within a Tax-Free Savings Account (TFSA) is a savvy strategy for Canadians aiming to grow their wealth over the long term. ETFs offer diversification, cost efficiency, and simplicity, making them ideal for TFSAs, where investment income and capital gains are tax-free. Let’s explore why long-term ETFs are a top choice for your TFSA and delve into the specifics of four standout options.

Why ETFs?

First, let’s get into why ETFs can be such a strong choice for your TFSA. In this case, ETFs provide instant diversification by pooling together a variety of assets, such as stocks and bonds, into a single fund. This broad exposure reduces the risk associated with investing in individual securities. For TFSA investors, this means you can achieve a balanced portfolio without the complexity of managing multiple investments.

Cost efficiency is another significant advantage. ETFs typically have lower management fees compared to mutual funds, allowing more of your money to work for you. Over time, these savings can compound, enhancing your overall returns within the tax-free environment of a TFSA.

Moreover, ETFs offer flexibility and liquidity. These are traded on stock exchanges, so you can buy and sell them throughout the trading day at market prices. This accessibility makes it easier to adjust your investment strategy as your financial goals evolve. Now, let’s examine four ETFs that are particularly well-suited for long-term holding in a TFSA.

The ETFs

iShares Core MSCI All Country World ex Canada Index ETF (TSX:XAW) provides exposure to global equities, excluding Canadian companies, making it ideal for investors seeking international diversification. It includes holdings from developed and emerging markets across various sectors. As of writing, XAW had a year-to-date return of 25.52%, reflecting strong global market performance.

Then there’s Vanguard All-Equity ETF Portfolio (TSX:VEQT), which holds 100% equities, offering diversified exposure across Canadian, U.S., and international stocks. It’s designed for investors with a higher risk tolerance seeking long-term capital growth. As of writing, VEQT had a year-to-date return of 25.77%, indicating robust performance.

For growth, Vanguard Growth ETF Portfolio (TSX:VGRO) maintains an asset mix of approximately 80% equities and 20% fixed income, providing broad exposure across Canadian, U.S., and international markets. This diversification balances growth potential with some degree of stability. As of writing, VGRO had a year-to-date return of 20.89%, showcasing solid growth.

Finally, Vanguard FTSE Canadian High Dividend Yield Index ETF (TSX:VDY) focuses on Canadian companies with high dividend yields, primarily in the financials, energy, and telecommunications sectors. It’s suitable for investors seeking regular income through dividends. As of writing, VDY had a year-to-date return of 18.50%, reflecting steady performance, making it an ideal investment for extra income.

Bottom line

When selecting ETFs for your TFSA, consider your investment goals, risk tolerance, and the importance of diversification. Combining these ETFs can help create a balanced portfolio tailored to your financial objectives. Remember, while TFSAs offer tax advantages, it’s crucial to invest in products that align with your long-term strategy. That way, investors will always maximize growth potential.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

More on Dividend Stocks

Muscles Drawn On Black board
Dividend Stocks

Invest in These 2 Canadian Stocks to Beat Trump’s Trade War

These two stable Canadian stocks look even better now with Trump's trade wars hitting headlines.

Read more »

voice-recognition-talking-to-a-smartphone
Dividend Stocks

Better Telecom Stock: BCE vs Rogers Communications?

BCE (TSX:BCE) and the telecoms sector sport huge dividends going into the spring season.

Read more »

a sign flashes global stock data
Dividend Stocks

3 Top Financial Sector Stocks for Canadian Investors in 2025

Here are some top financial stocks Canadian investors should have on their radars.

Read more »

Man data analyze
Dividend Stocks

The 2 Best TSX Stocks to Buy Before a Recovery

These two Canadian stocks may be down now, but for long-term investors, they could provide a major win.

Read more »

TFSA (Tax-Free Savings Account) on wooden blocks and Canadian one hundred dollar bills.
Dividend Stocks

Transform Your TFSA Into a Money-Making Machine With Just $10,000

This dividend stock offers the potential for major gains, and dividend income while you wait. It's perfect for a $10,000…

Read more »

Man holds Canadian dollars in differing amounts
Dividend Stocks

Invest $20,000 in 2 TSX Stocks for $945.96 in Passive Income

Put aside $20,000, and suddenly you can have almost another $1,000 to put in your pocket.

Read more »

monthly desk calendar
Dividend Stocks

An 8.6% Dividend Stock Pays Cash Every Month!

This dividend stock has value, passive income, and a drool-worthy dividend yield. So add it to your watchlist today.

Read more »

Dividend Stocks

This 7.2% Dividend Stock Is My Top Pick for Immediate Income

This dividend stock offers an attractive yield of over 7% and is a solid investment to generate steady monthly income.

Read more »