2 Canadian ETFs to Buy and Hold in a TFSA Forever

One of the best mindsets investors can adopt inside a Tax-Free Savings Account (TFSA) is thinking in terms of permanent capital. Instead of constantly trading, chasing trends, or trying to predict the next hot sector, the goal becomes finding investments you can realistically hold for decades while allowing dividends and capital gains to compound tax-free over time.

That “forever hold” mentality matters because long-term wealth creation often comes more from consistency and compounding than constant optimization. For Canadian investors looking to keep things simple, broad-market Canadian exchange-traded funds (ETFs) remain one of the easiest ways to build that kind of portfolio. Here are two I like for a TFSA.

Vanguard FTSE Canada All Cap Index ETF

Vanguard FTSE Canada All Cap Index ETF (TSX:VCN) is designed to provide broad exposure to the total Canadian stock market through a single low-cost ETF.

The fund tracks a diversified basket of Canadian companies across sectors like financials, energy, industrials, telecoms, railways, and utilities. Unlike narrower large-cap ETFs, VCN also includes mid-cap and smaller Canadian companies, giving investors more complete domestic market exposure.

Like many Canadian market ETFs, the portfolio still leans heavily toward financials and energy because those sectors dominate the Canadian market itself. The ETF currently offers a trailing 12-month yield of 2.06% while charging an expense ratio of 0.06%.

For TFSA investors seeking a low-maintenance, long-term Canadian equity holding, VCN remains one of the simplest and most affordable options available. It’s delivered a stellar 12.45% annualized total return over the last 10 years.

iShares Core S&P/TSX Capped Composite Index ETF

iShares Core S&P/TSX Capped Composite Index ETF (TSX:XIC) takes a similarly broad-market approach. The ETF tracks the S&P/TSX Composite Index and holds hundreds of Canadian companies spanning virtually every major sector in the market.

Compared to narrower blue-chip ETFs, XIC provides broad diversification across both large-cap and mid-cap Canadian equities, with some allocation to small-caps. That diversification can help reduce dependence on just a handful of giant companies driving returns.

XIC currently carries a trailing 12-month yield of 2.06% with an expense ratio of 0.06%. For investors focused on simplicity, diversification, and long-term TFSA compounding, XIC remains one of the core building blocks many Canadians continue holding for decades.

The post 2 Canadian ETFs to Buy and Hold in a TFSA Forever appeared first on The Motley Fool Canada.

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More reading

• How Much a Typical 45-Year-Old Has in TFSA and RRSP Accounts
• 3 Canadian ETFs Worth Tucking Into a TFSA and Holding for the Long Haul
• How to Build a Retirement Portfolio That Generates $2,000 a Month
• What the Average Canadian TFSA Balance at 60 Can Teach Us
• How to Keep Investing Wisely When the TSX Keeps Climbing

Fool contributor Tony Dong 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.