The 3 ETFs I’d Buy With $1,000 and Hold Forever

You can easily create a diversified global stock portfolio via these three low-cost ETFs.

For an exchange-traded fund (ETF) to be a “buy and hold forever” for me, it needs to do just two things: be broadly diversified and have a low management expense ratio (MER).

That’s it. Checking off these two boxes can set you up for long-term success without overcomplicating your portfolio. With that in mind, here’s how I’d split a $1,000 investment among three ETFs that fit the bill.

ETF chart stocks

Image source: Getty Images

$600 in U.S. stocks

I’d allocate 60% of this portfolio—$600—to U.S. stocks using BMO S&P 500 Index ETF (TSX: ZSP).

This ETF holds 500 large-cap U.S. stocks selected by a ruleset and committee based on size, liquidity, and earnings quality.

The portfolio is market-cap weighted, meaning larger companies make up a bigger share of the ETF. This structure ensures you’re investing in some of the most established and well-known names in the U.S. economy.

Best of all, ZSP comes with a very low MER of just 0.09%, keeping more of your money working for you.

$300 in international stocks

The U.S. market is great, but you don’t want to bet on it outperforming forever.

That’s why I’d allocate 30%—or $300—of this portfolio to international stocks from outside the U.S. using BMO MSCI EAFE Index ETF (TSX: ZEA).

EAFE stands for Europe, Australasia, and the Far East. This ETF covers developed markets across countries like Japan, Germany, Switzerland, the United Kingdom, France, and Australia, giving you exposure to a broader global economy.

At an MER of 0.22%, ZEA is pricier than some domestic options. However, that’s normal for international ETFs, and it’s still a very affordable way to add global diversification to your portfolio.

$100 in Canadian stocks

The final piece of the puzzle is a 10% allocation to our domestic stock market.

Of course, you could omit this if you’d rather pick individual Canadian stocks, but if you want a hands-off approach, BMO S&P/TSX 60 Index ETF (TSX: ZCN) is perfect for the role.

This ETF tracks 60 of the largest Canadian companies, with a natural tilt toward financials and energy. That allocation offsets the tech, healthcare, and industrials focus of ZSP and ZEA perfectly, giving you a well-rounded portfolio.

Its MER comes in between ZSP and ZEA at 0.15%, and it also pays a tax-efficient 2.72% distribution yield.

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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