If you’ve got $21,000 sitting in your Tax-Free Savings Account (TFSA), picking the right investment strategy can make all the difference—and your age plays a huge role in that decision. Time horizon and risk tolerance are the two key factors to consider.
Time horizon refers to how long you plan to invest before needing the money, and risk tolerance is your ability (both emotionally and financially) to handle the ups and downs of the market. Together, these determine your asset allocation—the mix of stocks and bonds in your portfolio.
Thanks to all-in-one exchange-traded funds (ETFs), you no longer need to cobble together the perfect asset mix yourself. BMO Global Asset Management offers a suite of diversified global ETFs with built-in stock and bond exposure, automatically balanced for different risk profiles.
Each charges a low 0.20% management expense ratio (MER), making them cost-effective choices for long-term investors. Here’s how to match the right BMO asset allocation ETF to your stage of life
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Ages 18-30: 100% equities for maximum growth
When you’re just starting out, time is your greatest asset. A longer time horizon means you can afford to take on more volatility in pursuit of higher returns.
That’s why an all-equity portfolio is usually the best bet. Stocks tend to outperform bonds over the long run, especially when you can ride out short-term dips.
BMO All-Equity ETF (TSX: ZEQT) is tailor-made for this phase. It gives you global diversification across Canadian, U.S., and international stocks, all in one simple ETF—ideal for young investors focused on maximizing growth.
Ages 31-50: Balancing growth with a bit of safety
As your income grows and life responsibilities pile up, it makes sense to start dialling down the risk slightly. A portfolio that’s 80% equities and 20% bonds offers a solid balance between growth and stability.
You’ll still capture most of the upside from stocks, while the bond portion adds some cushioning during market downturns. This way, you don’t lose as much if a bear market hits.
BMO Growth ETF (TSX: ZGRO) hits this sweet spot. It automatically maintains this mix and rebalances for you, making it a great fit for busy professionals who want to grow their TFSA without having to micromanage it.
Ages +51: Prioritizing stability and income
As you approach retirement or simply want to take less risk, reducing equity exposure becomes smart. A 60/40 allocation—60% stocks and 40% bonds—helps you preserve capital while still allowing for some growth.
This kind of portfolio is better suited for those who may need to start drawing on their TFSA in the near future, such as retirees looking to augment the Canada Pension Plan and Old Age Security payments.
BMO Balanced ETF (TSX: ZBAL) provides exactly this allocation and is rebalanced automatically, giving you hands-off peace of mind as you prioritize income and lower volatility in your later investing years.
