So, you’ve paid off monthly bills, added to your emergency fund, and now you have $1,000 left over. Time to hit the casino! All jokes aside, there’s probably better ways to spend that $1,000.
If you don’t have any big purchases or travel planned, consider investing it for future growth. A $1,000 investment might not seem like much, but consistently making contributions of that size can compound over time to create a seven-figure retirement portfolio.
With just $1,000, it might be tempting to swing for the fences via risky investments like cryptocurrency, meme stocks, or penny stocks. This is a bad idea. Instead, consider taking the get-rich-slow approach by investing it in a diversified exchange-traded fund, or ETF. Here’s my top pick for April.
Why I love ETFs
Few other investments can offer the sheer diversification, liquidity, and affordability that ETFs provide. These nifty instruments can package thousands of stocks in a single ticker according to various rules, indexes, and strategies. There’s an ETF out there for almost every investment and thesis.
For investors focused on maximum diversification, ETFs are ideal. A globally diversified ETF can hold stocks from all countries, sectors, market caps, and styles, which ensures that the investor has a good chance of receiving the market’s average return over time.
If you’re sick of actively trying to beat the market, consider kicking back and passively tracking the market instead. You won’t outperform, but you’re not likely to underperform either. Over the long term, this approach has a higher chance of ensuring success.
My ETF pick
My ETF of choice for a $1,000 investment that I could set-and-forget is the BMO All-Equity ETF (TSX: ZEQT). For a 0.20% expense ratio, you receive exposure to thousands of stocks from every market in the world. It’s as diversified as investing in stocks gets.
ZEQT is comprised of multiple underlying ETFs, which currently track stocks from the following geographies: 45% in the U.S., 25% in Canada, 22% in international developed, and 8% in international emerging markets. It will re-balance periodically back to these allocations.
Personally, I love ZEQT because it offers peace of mind. Sure, it’s still as volatile as any other 100% stock ETF, but I no longer have to worry about it long term. I’m betting on the world stock market – short of a nuclear Armageddon, there’s a high chance it eventually goes up.
With ZEQT, I don’t have to bet on things like large-cap stocks outperforming, energy stocks falling, or U.S. stocks stagnating. I’m globally diversified at all times, with a low fee to boot. As a result, I’m confident sinking $1,000 into it and scheduling recurring investments to grow my portfolio even faster.
