You don’t need to be a professional trader or hedge fund manager that consistently outperforms the markets to retire wealthy. You don’t need to be making six or seven figures, either.
What you do need is the patience to stay invested and the discipline to stay out of your own way. Stocks are liquid assets, and you can flip them for less than $10 in a week after purchase, but that doesn’t mean you should.
Market liquidity is both a blessing and a curse. For beginners who seek to enjoy the upside without the downside, excessive trading activities are more likely to have the reverse effect, as beginner investors are more likely to act on pure emotion caused by short-term fluctuations, rather than logic.
By committing not to time the market, you can do wonders for your retirement fund, but doing so will make for very dull conversations at the water cooler.
While others brag about perfect timing into and out of the hottest marijuana stocks, you may be scoffed at for admitting that you invest in index funds or Bank of Montreal (TSX:BMO)(NYSE:BMO) ETFs, like the three I’m about to show to you in this piece.
While perhaps dull to talk about, the following three BMO ETFs can tilt the risk/reward trade-off in your favour over time. And as you won’t be as tempted to ditch baskets of securities on short-term-focused news, you’ll be more likely to stay out of your way as the markets do their thing.
Without further ado, here are the top BMO ETFs that could propel you to a comfortable and wealthy retirement:
BMO Conservative ETF
As in hockey, sometimes the best offence is a good defence. In today’s volatile market, there’s no better safety play than the BMO Conservative ETF (TSX:ZCON), a new ETF with a mere 0.2% MER (that’s cheap!) was designed for risk-averse investors seeking low-risk income and growth.
The ZCON consists of a mix of bond index funds, the S&P 500 and TSX Index funds, and an emerging market index fund to ramp up returns.
The bond-to-equity ratio is approximately 60/40, so for retirees, the ZCON is a one-stop-shop investment that won’t require much thought or worry about the state of the broader economy.
BMO Balanced ETF
If you’re not yet retired but may be within the next few years, the BMO Balanced ETF (TSX:ZBAL) may be more your cup of tea with its 40/60 bond-to-equity allocation.
Similar to the ZCON, the ZBAL is essentially a fund of funds with a mix of various bond index funds and equity funds with exposure to the U.S., Canada, and the rest of the world.
The only difference between the ZBAL and the ZCON is the slightly higher weighting given to equities. Although there are ample balanced mutual funds out there, which are also funds of funds, products like the ZBAL are a fraction of the price with its 0.2% MER, which is the same price you’ll pay in fees with the ZCON.
Why pay a 2% MER for a balanced fund of funds when you can just pay a tenth of that figure with the ZCON? For older investors, products like the ZBAL are a way to save yourself a fortune in fees.
BMO Growth ETF
Finally, for the growth-savvy passive investor, there’s the BMO Growth ETF (TSX:ZGRO), an equity-weighted blend of index funds suitable for investors of all ages. As it also sports a low 0.2% MER (much cheaper than most mutual funds), it gets my gold star of approval.
Have a look under the hood and you’ll see that the ZGRO is a fund of index funds with an 80/20 equity-to-bond ratio.
The ZGRO is suitable for retirees and passive investors seeking an 80/20 mix who would rather not pay a third of their retirement to a professional money manager to obtain the same allocation, likely with similar funds.
DIY investing has never been easier, thanks to BMO and its new line-up of bond/equity blended ETFs at ridiculously low fees. Save yourself a fortune in fees and go with the ZCON, ZBAL, or ZGRO, depending on your personal risk profile.
Unless you’re retired or close to being so, I’d stick with the ZGRO and its 80/20 equity-to-bond allocation.