If Canadians have learned one thing over the last few years, it’s that nothing is for certain. Especially when investing in the stock market. One stock can be up one day, and down another. Which is why today we’re going to think more long term.
If you have $100,000 on hand, or are working towards that savings goal, you’re going to want to turn it into a lot more. Especially if you’re aiming for a retirement goal in the millions of dollars, which most Canadians now believe is necessary.
So today, let’s look at what Canadians should consider to create that million-dollar amount. And, of course, two options to get you there.
What to consider
Beyond your own personal risk tolerance and needs, we’re going to get into some basis. If you have a long time horizon, between 10 and 30 years, there are some main approaches you’re going to want to consider.
The first is long-term investing through index funds, exchange-traded funds (ETF), and dividend-paying stocks. The former two provide a low-cost basket of stocks or bonds that track a particular market index, or overall market growth. The dividend stocks provide a regular income stream alongside potential returns. Here you’ll want a long history of dividend increases.
Where and how much you invest will be down to a few things. Of course, how much time you have should be considered. If you’re close to retirement, you may want more returns in the short term. It also comes down to risk tolerance, which if you have a longer time range could mean higher risk investments. Since you have the time for them to bounce back, you can afford that diversification. So, let’s look at two to consider.
XAW ETF
First up, let’s get into an ETF that provides you with a diverse range of long-term income. Since Canadians tend to invest close to home, I would go with an ETF providing long-term gains, dividends, as well as global exposure. And, of course, with a low management fee.
One to consider in this case would be iShares Core MSCI All Country World ex Canada Index ETF (TSX: XAW). This ETF focuses on global exposure, tracking the S&P World Development Index. It holds a 0.2% expense ratio and provides quarterly dividends at a 1.59% yield as of writing.
This fund is perfect for those wanting exposure to other major countries such as the United States, Japan, France, Germany, and the United Kingdom. It tends to invest in large, well-established companies in developed markets. What’s more, shares have performed well. Shares are up 21% in the last year, and almost 10% year to date!
All-in-all, this is a strong ETF to consider if you want diversified growth over the next decade or more, while bringing in dividends as well.
RBC stock
If you want a dividend stock that will provide you with long-term income as well, then I would go straight to the biggest stock in Canada. That’s Royal Bank of Canada (TSX: RY), which is enormous even when compared to the United States banks.
The company has offered a strong dividend for decades, and that includes during the Great Recession in 2008. What’s more, it’s proven that it can bounce back to pre-fall prices within a year of hitting 52-week lows. Even in the most dire of circumstances.
The company continues to expand through wealth management and emerging markets, providing even more long-term growth. All while exposing investors to a divided yield of 4.05% as of writing. So of the dividend stocks out there, this is certainly my top pick.
