A sum of $500 may not seem like a whole lot to put to work in the markets. However, with inflation continuing to eat away at cash held in mere savings accounts, I’d argue it may be a good idea to get started investing sooner rather than later. And with a large number of exchange-traded funds (ETFs) out there, some of which may be free (or cheap) to trade depending on your brokerage, I’d argue it may be a good idea to consider the numerous options available.
Undoubtedly, 2024 is going to be a year full of surprises.
From rate cuts (or perhaps not?) to a potential economic recession in Canada, it’s not exactly a worry-free time to put some new money into the stock markets. That said, with artificial intelligence’s potential to jolt the economy over the longer term, investors may have many things to look forward to over the coming quarters and years.
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Hunting down an ETF with an extra $500 for 2024?
Now, you could buy a single stock (or perhaps two) with a small amount like $500. However, smaller amounts seem better suited towards an ETF, which can provide broad exposure to a large number of stocks all in one go!
At this juncture, I’m a fan of BMO Low Volatility Canadian Equity ETF (TSX: ZLB), which, I believe, could help pad what could be a very choppy year for markets. Undoubtedly, the ETF, which is heavy in some of the more defensive Canadian stocks, is fresh off a rather flat 2023, with just north of 2% in gains for the year.
Over the last five years, shares are up around 37%, putting it just a bit higher than the broader TSX Index. But why may the ZLB be the better bet? If you’re a new investor looking to put new money into markets, it may be a smart idea to do so cautiously so you don’t scare yourself out of financial markets once the next correction comes rolling around.
ZLB could help smoothen the market road bumps!
Though nobody knows when a correction (that’s a 10% drop from peak to trough) will land, they’re not to be actively avoided by trading in and out of stocks. Instead, corrections tend to hit from out of nowhere. And it’s a far better idea to take it to the chin rather than looking to dodge the blow, given recoveries from corrections could happen when you least expect.
So, what can give your portfolio a slightly stronger chin for the next correction? I’d argue ZLB is a great play at the time of writing. The ETF has a fair management expense ratio of 0.39% and a distribution yield of 2.65% at the time of writing — not at all bad!
Additionally, some of the holdings with the ETF are as impressive as they are defensive. We’re talking grocers, utilities, and financials that boast respectable dividends and less correlation to the rest of the market. All considered, the ZLB is a standout ETF for Canadians to consider in a new year that could hold new levels of volatility!
