Canadians: 3 of the Best Ways to Invest for Retirement

Here are three ways you can reach your retirement goals using low-cost ETFs.

| More on:
Happy Retirement” on a road

Image source: Getty Images

Stock-picking can lead to outsized gains, but research on active versus passive investing shows that most investors fail to outperform a simple index fund over long periods of time. Personally, I’m a big fan of using low-cost exchange-traded funds, or ETFs to create a retirement portfolio. In fact, I don’t own a single individual stock. My entire nest egg is stashed in a mixture of ETFs.

The biggest advantage of passive investing for retirement using ETFs is the ability to stay hands-off and not worry. I might not beat the market, but I won’t lose to it either. My portfolio’s long-term performance will match the market’s return (as long as I can keep bad investing habits like over-tinkering and panic-selling under control). If a low-cost, low effort method of investing for retirement is your goal, keep reading!

Buy the S&P/TSX 60

The S&P/TSX 60 Index is a market cap-weighted index of the largest TSX stocks, and it’s often cited as a benchmark for Canadian stock market performance. It makes for a great passive investment to track the largest players in the Canadian stock market.

To invest in the S&P/TSX 60, you can buy the iShares S&P/TSX 60 Index ETF (TSX:XIU). XIU is the oldest ETF in Canada, and it’s very popular, with $11 billion invested in it and a high volume traded daily. It will cost you an expense ratio of 0.20%, or $20 per $10,000 invested.

Buy the S&P 500

The S&P 500 Index is a market cap-weighted index that tracks the 500 large-cap stocks listed on U.S. exchanges. It spans the technology, healthcare, financials, communications, consumer staples, industrial, and energy sectors. It’s often used as a benchmark for fund managers to compete against.

To invest in the S&P 500, you can buy the BMO S&P 500 Index ETF (TSX:ZSP). ZSP trades in Canadian dollars, alleviating the need to convert U.S. dollars and buy a U.S. listed ETF. Best of all, ZSP is even cheaper than XIU is, with an expense ratio of just 0.09%.

Buy the world

Investors can also buy the stocks of international developed markets like Europe, Japan, and Australia, or international emerging markets like China, Africa, the Middle East, and South America. A great way to do this via a single ticker is with the Vanguard All-Equity ETF Portfolio (TSX:VEQT).

Investors who buy VEQT own a portfolio of 3,526 stocks covering the entire world’s investable market, making it the ultimate passive investment. For an expense ratio of 0.24%, the fund manager re-balances the portfolio for you and pays out dividends. With VEQT, all you need to do is buy and hold!

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 Tony Dong has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

More on Investing

financial freedom sign
Energy Stocks

Could Investing $10,000 in Enbridge Make You a Millionaire?

A top-tier dividend stock can help you accumulate wealth or become a millionaire over time.

Read more »

Electricity high voltage pole and sky
Dividend Stocks

Fortis Stock: Should You Buy, Sell, or Hold Today?

Fortis is down 15% from the 2022 high. Is the stock now oversold?

Read more »

A bull outlined against a field
Tech Stocks

Bull Market Buys: 1 Magnificent Stock to Own for the Long Run

Here's why investors can consider gaining exposure to tech stocks such as Shopify in the ongoing bull run.

Read more »

Hand arranging wood block stacking as step stair with arrow up.
Tech Stocks

Why Shares of Celestica Stock Jumped 5% on Monday

Celestica (TSX:CLS) stock continues to see its share price rise higher, but not only because shares of Nvidia (NASDAQ:NVDA) are…

Read more »

tsx today
Stock Market

TSX Today: What to Watch for in Stocks on Thursday, June 13

The Fed’s latest decision to hold interest rates unchanged could keep TSX stocks volatile as investors continue to speculate about…

Read more »

consider the options

This Stock Is Miles Ahead of its Industry: Is it a Buy Now?

This company has been making significant waves since the beginning of 2024.

Read more »

Dice engraved with the words buy and sell
Bank Stocks

TD Bank Stock: Buy, Sell, or Hold at the 12-Month Low?

TD is near its 12-month low. Is more downside on the way?

Read more »

financial freedom sign
Stocks for Beginners

Could This Undervalued Stock Make You a Millionaire One Day? 

The TSX has good millionaire-maker stocks if you wait. This futuristic stock might look undervalued once you see its growth…

Read more »