3 Canadian ETFs I’d Snap Up Right Now for My TFSA

When it comes to building a TFSA portfolio, especially if you’re a new investor starting out, there’s no question that ETFs are some of the easiest investments Canadians can buy.

ETFs have a tonne of advantages because they offer instant diversification, require very little maintenance, and allow investors to get exposure to a wide range of high-quality businesses without constantly trying to pick individual stocks.

However, not every ETF is built for the same purpose. Some are designed for long-term growth, others focus on generating passive income, and some aim to offer a simple, all-in-one portfolio solution.

And right now, with markets still somewhat uneven and different sectors performing very differently, being intentional about where you get your exposure matters more than usual.

That’s why three of the best Canadian ETFs you can buy for your TFSA right now are the iShares Core S&P 500 Index ETF CAD-Hedged (TSX:XSP), the iShares Diversified Monthly Income ETF (TSX:XTR), and the iShares Core Growth ETF Portfolio (TSX:XGRO).

Two Canadian ETFs built for growth and diversification in your TFSA

If your goal is long-term growth, one of the simplest ways to achieve it is by getting broad exposure to high-quality businesses through the XSP ETF.

The XSP tracks the S&P 500, giving investors exposure to some of the largest and most influential companies in the world. That includes major technology names, global brands, and industry leaders that have consistently driven long-term market returns.

That means this is one of the easiest ways Canadian investors can participate in U.S. market growth with their TFSAs. And right now, if you’re looking for straightforward exposure to global leaders, this is one of the first places I’d go.

Notably, you don’t need to find the next breakout stock to build wealth over time. Instead, simply owning a diversified group of high-quality companies and staying invested for the long haul can be incredibly effective.

In addition to the XSP, the XGRO is another Canadian ETF offering a completely different approach that I’d snap up for my TFSA today.

For example, instead of focusing only on equities, XGRO is an all-in-one ETF that provides exposure to a globally diversified mix of stocks and bonds.

That makes it ideal for investors who want a balanced portfolio without having to manage a tonne of stocks or ETFs themselves.

It’s designed to be a long-term solution where you can invest consistently and let the ETF handle the diversification in the background. And for many investors, that simplicity is exactly what makes it so effective.

A fund focused on generating passive income

While growth is important, many investors also want their TFSA to generate some level of passive income, which is why the XTR is one of the best Canadian ETFs to buy now.

The XTR is ideal for income investors because it’s built to provide regular cash flow by investing in a diversified mix of income-producing assets. Instead of relying on a single company, it spreads that exposure across multiple sectors and securities.

That diversification helps reduce the risk of relying too heavily on any one source of income, while still providing investors with regular monthly distributions.

And right now, if your goal is to start generating consistent income from your TFSA, this is one of the easiest ways to do it without having to build out a full portfolio of individual dividend stocks.

And while ETFs like XTR can serve as a strong foundation for dividend investors, you can also choose to complement individual stocks over time as you become more comfortable with the market.

But even on its own, it’s a practical way to add income to a TFSA today. So if you’re looking to add income to your TFSA without overcomplicating your portfolio, XTR is easily one of the simplest ways to do it.

The post 3 Canadian ETFs I’d Snap Up Right Now for My TFSA appeared first on The Motley Fool Canada.

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More reading

• 3 Canadian ETFs I’d Hold in a TFSA and Never Sell
• 3 Canadian ETFs I’d Tuck Into a TFSA and Never Consider Selling

Fool contributor Daniel Da Costa 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.