If you’re looking to invest in a single stock, it’s easy to get overwhelmed with options. Even if you narrow in on a sector that you want to invest in, there are still more decisions that need to be made. This is where exchange-traded funds (ETFs) can help eliminate that decision making by giving you a pool of stocks to invest in without having to own each individual security.
The big advantage is that you can benefit from diversification while being able to focus on a certain type of sector or industry. Below are two ETFs that could be great buys for very different reasons that you can safely store in your portfolio for years and even decades to come.
BMO NASDAQ 100 Equity Hedged to CAD ETF (TSX:ZQQ) is the stock I would recommend to anyone that is starting out or doesn’t know what to invest in. While you might be confused as to what you’re investing in, as you take a closer look, you’ll see at why the ETF is such a great one.
With this ETF, you’re investing in the top stocks on the NASDAQ, including big names like Facebook and Apple. The ETF does a good job of mirroring the returns of the NASDAQ, and year to date its 13% return has actually outperformed the NASDAQ composite, which has risen by less than 12%.
Another benefit of this ETF is that you’re paying a management-expense ratio of just 0.39%, which is a small fraction of the return that it will likely produce for you.
Whether you’re looking for stability or growth, this ETF can offer both, and it’s hard to argue investing in some of the biggest companies in the world. Unless the NASDAQ falters, this ETF won’t either. Over the past five years, the ETF has risen in price by more than 130%.
This is the ultimate buy-and-forget investment, since you’ll benefit from a strong U.S. economy, and you also aren’t diversifying away your potential returns by trying to mirror the overall market.
For dividend investors that are looking for some recurring cash flow, the BMO Equal Weight REITs Index ETF (TSX:ZRE) can provide you with that. This ETF will give you the top REITs on the TSX, and the best part of REITs is that they provide shareholders with monthly payouts. Over the past 12 months, the BMO Equal Weights ETF has generated a yield of 4.77%, making it a great option for investors looking for a very good and safe dividend.
While the ETF hasn’t generated the same impressive returns that the NASDAQ 100 has, it has been able to produce modest year-to-date returns of around 5%. And over the past five years, the Equal Weights ETF has risen by 21%.
Even if these two ETFs don’t quite line up with what you’re looking for, there are plenty of others out there that will be able to help you minimize your risk, while also allowing you to invest in a wide range of securities without having to incur all the transaction costs that would have come with owing all the individual stocks.
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 David Jagielski has no position in any of the stocks mentioned. David Gardner owns shares of Apple and Facebook. Tom Gardner owns shares of Facebook. The Motley Fool owns shares of Apple and Facebook and has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple.