How I’d Invest $20,000 Today if I Had to Start From Scratch

BMO’s all-in-one asset allocation ETFs are great choices for a buy-and-hold investor.

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Back in 2017, I tried my hand at investing, and let’s just say, it was a hot mess. I threw some cash at a colourful mix of penny stocks and cryptocurrencies. A few skyrocketed, but most were like the awkward guy at a party – just standing there, not doing much. Some went belly-up altogether.

The result? I learned that picking winning stocks is harder than trying to put socks on my cat. While my Foolish writer pals may have some excellent stock picks, I’m all about exchange-traded funds (ETFs) now. They’re like the ultimate all-you-can-eat buffet of stocks, but minus the heartburn.

Why I’d pick an ETF today

I’m all about diversification now. In my humble opinion, investors should have a bit of everything: all 11 stock market sectors; small-, mid-, and large-cap stocks; and stocks from U.S., Canadian, and international developed emerging markets. But pulling that off with just $20,000? Good luck!

You can see how this becomes a giant headache once you try managing more than a dozen stocks, keeping up with the news for each, re-balancing your portfolio, reinvesting dividends, etc. Some of you might actually enjoy this as a hobby, but I sure don’t! There has to be an easier alternative.

Enter the ETF, a nifty little package that holds a bunch of stocks (and other assets like bonds or even commodities) according to certain rules. Today, I live the passive investing life via index ETFs – they don’t try to beat the market, they just chill and do their thing by tracking an index or two.

My ETF of choice

If I could turn back time and start anew with $20,000, I’d put it all in the BMO Growth ETF (TSX:ZGRO). Trading at around $36 per share at the time of writing, this nifty ETF gives you 80% exposure to thousands of stocks from U.S., Canadian, and international stock markets, and 20% exposure to bonds.

Think of ZGRO as the Swiss Army knife of investments – it’s an all-in-one, globally diversified stock and bond portfolio all packed into a single ticker. A fund manager takes care of the heavy lifting, paying out dividends and periodically re-balancing the underlying portfolio.

With ZGRO all you really need to do is buy, reinvest dividends, and hold on for the ride long term. It helps you avoid rookie investor mistakes like trying to time the market, panic selling, or chasing the latest shiny thing. With ZGRO, you get:

  • Extreme diversification: ZGRO covers U.S., Canadian, and international markets; small-, mid-, and large-cap stocks; and all 11 market sectors; and holds 20% in bonds to reduce volatility.
  • Low costs: ZGRO only costs a management expense ratio of 0.20%, or $20 in annual fees for a $10,000 investment, which is extremely cheap compared to mutual funds.

A solid investment plan? Use ZGRO as the backbone of your portfolio, and spice it up with a few choice Canadian stock picks (and the Fool has some great recommendations for those below!)

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. The Motley Fool has a disclosure policy.

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