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The “All-in-One” Investment Taking Over Canadian Portfolios

Alex Smith

Alex Smith

2 hours ago

6 min read 👁 1 views
The “All-in-One” Investment Taking Over Canadian Portfolios

When it comes to investing in the stock market, taking a long-term approach is really the only strategy that can reliably build serious wealth over time.

Because both the economy and market are cycling constantly and incredibly hard to predict in the short term, long-term investing is necessary to mitigate a lot of that short-term risk.

Over the long haul, the economy is always growing, and the best companies will continue to find ways to expand their operations and profitability, often outpacing the broader economy.

In the near term, though, recessions, market crashes or black swan events are all incredibly difficult to predict, which is why long-term investing is so crucial.

In addition to a long-term mindset, though, the other most important factor is stock selection. It doesn’t matter how long-term your strategy is if you buy lower-quality stocks that will underperform for years.

The problem is, though, most Canadians don’t have the time, knowledge or interest to research dozens of individual stocks. That’s why more and more Canadian investors are turning to simple, all-in-one solutions that give broad exposure to quality companies without the hassle.

These investments often own the biggest and most reliable names on the market. Furthermore, they provide instant diversification and charge minimal fees, and, most importantly, they let you stay invested in the market for the long haul without having to worry about constantly monitoring individual stocks in your portfolio.

That’s why the investments continuing to gain popularity and take over Canadian portfolios right now are broad-market index ETFs.

So, if you’re looking to put some hard-earned money to work and want a simple, low-stress investment that you can own with confidence for years, here are two of the best index ETFs to buy now.

A top fund offering exposure to Canada’s top blue-chip stocks

If you’re a Canadian investor looking to gain exposure to the largest and most reliable stocks in Canada, then there’s no question that the iShares S&P/TSX 60 Index ETF (TSX:XIU) is a top choice.

The XIU is one of the best all-in-one investments for Canadians because it offers exposure to Canada’s biggest banks, energy producers, railways, telecoms, utilities, and resource giants. These are the most reliable names with strong balance sheets and long histories of delivering through every cycle.

That means not only do you get the instant diversification with exposure to 60 well-established and high-quality companies, but the stock also offers diversification across multiple sectors.

And because many of these stocks also pay dividends, the XIU offers investors a current yield of roughly 2.3%.

So, if you’re looking for a simple investment to put your hard-earned money back to work for you, the XIU is one of the best ETFs that you can buy and hold with confidence.

The best investment for U.S. exposure in Canadian portfolios

In addition to XIU, the iShares Core S&P 500 ETF (TSX:XSP) is another all-in-one investment that’s taking over Canadian portfolios.

While the XIU is one of the best ways to gain exposure to the largest and most reliable stocks in Canada, the limitation is that it doesn’t offer geographic diversification outside the country.

That’s why the XSP ETF, which tracks the S&P 500 Index, is the perfect fund to pair with XIU.

The U.S. market has been the world’s growth engine for decades. Furthermore, the S&P 500 has delivered higher average returns than most other indices over the long term.

That’s why owning the XSP and having exposure to U.S. businesses, which also tend to have more global operations, is such a smart strategy.

It not only adds diversification to your portfolio if Canada’s economy starts to slow, but it also offers exposure to American stocks with significant long-term growth potential.

So, if you’re looking for a simple investment to buy now that you can own passively for years, the XSP and the XIU are easily two of the best ETFs for Canadians to consider.

The post The “All-in-One” Investment Taking Over Canadian Portfolios appeared first on The Motley Fool Canada.

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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.

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