I know for a fact some of you are still sitting on plenty of unused Tax-Free Savings Account (TFSA), Registered Retirement Savings Plan (RRSP), or First Home Savings Account (FHSA) room, even as we move through the second half of 2025. One common reason I hear is hesitation: both the U.S. and Canadian markets are sitting at all-time highs.
On the surface, that worry makes sense. Nobody wants to feel like the last sucker buying in before a crash. But remember, we’re not talking about a single stock. We’re talking about the S&P 500 and the S&P/TSX 60, two of the most longstanding and hard-to-beat equity benchmarks in the world. I can think of a dozen worse investments than owning either, even at today’s levels.
That said, I know many investors won’t be easily convinced. If you’re stuck between the rock of record-high markets and the hard place of wanting to put cash to work, here are two practical solutions.
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Dollar cost average into Index ETFs
For 2025, you have $7,000 in new TFSA room, $8,000 in FHSA room, and up to 18% of your earned income in RRSP room, up to a max of around $31,500 depending on your salary. There’s no rule saying you need to dump it all into the market at once.
Vanguard research shows that lump sum investing has historically outperformed dollar cost averaging about two-thirds of the time. But that statistic glosses over the behavioural side.
If you put a month’s salary into the market and it drops 5% the next day, the panic of seeing that loss can easily push you to sell, which defeats the entire purpose. If you know that kind of swing might spook you, spreading contributions out may be the smarter choice.
For simple, broad exposure, dollar cost averaging into BMO S&P/TSX 60 Index ETF (TSX:ZIU) or BMO S&P 500 Index ETF (TSX:ZSP) works well.
Most brokerages let you set up automatic contributions from your bank account and recurring ETF purchases, sometimes even fractional, to keep the process completely hands-off and emotion-free.
Invest in value ETFs
If you’re still not comfortable buying at market highs, another option is to tilt toward value. Instead of owning the biggest U.S. and Canadian stocks through ZSP and ZIU, you could consider BMO MSCI USA Value Index ETF (TSX:ZVU) and BMO MSCI Canada Value Index ETF (TSX:ZVC).
These ETFs don’t just weight companies by size. They apply value screens like price-to-book, price-to-forward earnings, and enterprise value-to-cash-flow from operations to select and weight holdings. In practice, this means you’re buying cheaper companies relative to their fundamentals, rather than piling into whatever stock has the biggest market cap.
The downside is cost and performance. ZVCU’s management expense ratio is 0.33% versus 0.09% for ZSP, and ZVC charges 0.40% compared to ZIU’s 0.18%. Both funds have also historically lagged their broad market counterparts. But if your main concern is valuations at all-time highs, value ETFs are the closest thing to a “buy low” strategy available in a passive wrapper.
