Turn a $20,000 TFSA Into $80,000 With This Easy ETF

Simply buying and holding this S&P 500 index ETF could make you money.

| More on:
grow money, wealth build

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Investing doesn’t have to be complicated—you don’t need to pick the perfect stocks or time the market. Honestly, just focus on three simple things: keep fees low, stay broadly diversified, and stick to your plan.

To prove it, here’s an example: a low-cost S&P 500 exchange-traded fund (ETF) that, historically, could have turned a $20,000 Tax-Free Savings Account (TFSA) investment into $81,967 with minimal effort. Let’s take a closer look.

The ETF in question

The exchange-traded fund (ETF) I’m referring to is BMO S&P 500 Index ETF (TSX:ZSP). It’s one of the best ways for Canadian investors to gain exposure to the U.S. market without over-complicating things.

Created with Highcharts 11.4.3Bmo S&P 500 Index ETF PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.ca

Here’s how it works: ZSP tracks the S&P 500 Index, which is made up of 500 large-cap U.S. companies. These companies are carefully selected by a committee based on size, liquidity, and earnings quality. The index spans all 11 sectors of the economy, giving you a balanced mix of industries.

ZSP uses a market-cap weighting methodology, meaning the largest companies in the index get the highest allocations. This structure allows you to ride the growth of America’s biggest and most successful corporations while still benefiting from diversification.

What makes ZSP even more appealing is its low cost. The management expense ratio (MER) is just 0.09%, meaning for every $10,000 you invest, you’ll pay only $9 annually in fees.

Combine that with its simplicity and historical performance, and you have an ETF that does exactly what it promises: deliver the long-term growth of the S&P 500 at a fraction of the cost of most actively managed mutual funds.

How to quadruple your money

A historical backtest shows that an investor who purchased $20,000 worth of ZSP at the start of January 2015 and held until the end of December 2024 would have achieved an annualized return of 15.15%, growing their investment to $81,967. That’s a fourfold increase in just a decade!

However, achieving this success required discipline and consistency. First, the investor had to reinvest all of ZSP’s quarterly dividends, allowing the power of compounding to take over. More importantly, they had to stay the course and resist the urge to sell during volatile periods.

And there were plenty of moments where selling might have been tempting. For example, ZSP’s value swung up or down by an average of 12.82% annually. During the COVID-19 crash, ZSP plummeted as much as -18.55% in value before recovering. Staying invested through these ups and downs was the key to achieving long-term success.

Should you invest $1,000 in Bmo S&p 500 Index Etf right now?

Before you buy stock in Bmo S&p 500 Index Etf, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Bmo S&p 500 Index Etf wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $20,697.16!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 29 percentage points since 2013*.

See the Top Stocks * Returns as of 3/20/25

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.

Confidently Navigate Market Volatility: Claim Your Free Report!

Feeling uneasy about the ups and downs of the stock market lately? You’re not alone. At The Motley Fool Canada, we get it — and we’re here to help. We’ve crafted an essential guide designed to help you through these uncertain times: "5-Step Checklist: How to Prepare Your Portfolio for Volatility."

Don't miss out on this opportunity for peace of mind. Just click below to learn how to receive your complimentary report today!

Get Our Free Report Today

More on Investing

An investor uses a tablet
Stocks for Beginners

The Smartest Canadian Stock to Buy With $250 Right Now

Are you looking for the smartest Canadian stock to buy right now? Consider this gem and avoid market volatility.

Read more »

Dividend Stocks

3 Canadian REIT Stocks to Buy and Hold for the Next Quarter-Century

These three Canadian REITs trade cheaply and are highly reliable, making them some of the best stocks you can buy…

Read more »

Electricity transmission towers with orange glowing wires against night sky
Investing

Fortis Just Might Be the Best Canadian Dividend Stock to Buy in April

Let's dive into a few reasons why Canadian utility giant Fortis (TSX:FTS) still looks like a screaming buy heading into…

Read more »

A train passes Morant's curve in Banff National Park in the Canadian Rockies.
Dividend Stocks

1 Practically Perfect Canadian Stock Down 24% to Buy Now and Hold for Life!

CNR stock is a top Canadian stock for investors, especially with shares down on the TSX today.

Read more »

a man relaxes with his feet on a pile of books
Investing

Got $7,000? How I’d Spread It Across 5 Blue-Chip Stocks for an Investing Foundation

Spreading $7,000 across these five blue-chip stocks provides a solid foundation for long-term financial success.

Read more »

The letters AI glowing on a circuit board processor.
Tech Stocks

How I’d Allocate $10,000 to AI Stocks in Today’s Market

Shopify (TSX:SHOP) is one of Canada's most compelling AI stocks.

Read more »

The TFSA is a powerful savings vehicle for Canadians who are saving for retirement.
Retirement

Top Canadian Value Stocks I’d Hold in My TFSA for the Next Decade

These Canadian value stocks have significant growth potential and will enhance your TFSA portfolio’s return in the long run.

Read more »

Canada national flag waving in wind on clear day
Dividend Stocks

The Best Canadian Stocks to Buy Right Away With $30,000

If you have $30,000 you're willing to invest, these are some of the first Canadian stocks to consider on your…

Read more »