The Beginner’s Canada Portfolio: 1 ETF + 3 Stocks

So, you’re new to investing. It can be an incredibly difficult place to start. The market is completely overwhelming, and it can be hard to know whether to put a ton of cash in stocks or keep most of it in cash and hope for 2% growth. Well, beginner Canadian investors can certainly do better — especially when considering this exchange-traded fund (ETF) and three beginner stocks. So, let’s get into how we can make this beginner portfolio work for you.

The investments

Let’s get right into the options. Investors may want to consider iShares MSCI USA Quality Factor ETF (TSX: XQLT), Royal Bank of Canada (TSX: RY), Brookfield Asset Management (TSX: BAM), and Nutrien (TSX: NTR) for solid long-term holds. Here’s how they work together.

XQLT is a great global core investment. It’s a one-punch pass that gives you exposure to high-quality U.S. large and mid-cap stocks. These offer up a high return on equity (ROE), stable earnings, and lower leverage. In the long run, returns have been solid with a modest 0.31% management expense ratio (MER). It’s not paying much in income, but it’s a growth engine that makes it a solid core investment.

As to the rest, RY is Canada’s premier bank and largest cap stock. It’s off a fresh record quarter, and its HSBC Canada synergies have started to flow in. Plus, a 3% dividend yield and buybacks don’t hurt. BAM is another solid option here, a capital-light, fee-light asset manager with a 2.9% dividend. Its assets also include infrastructure investments, a growing field for investors to latch onto. Then there’s NTR, focusing on fertilizers used to support global food demand. It trades at just 11 times earnings, with a 3.8% yield on deck.

Working together

All three of these are just off new earnings and guidance, some of them hitting records and raising guidance. A great mix at this point would be to consider 40% in XQLT, 25% in RY, 15% in BAM, and 20% in NTR. This gives investors a broad global equity exposure, two world-class financial institutions, and real-economy cyclical investments. It balances it all within one simple portfolio.

Furthermore, investors can receive a blended yield of around 2.2% from the mix of investments. And held in a Tax-Free Savings Account (TFSA) really puts that investment to work. This provides tax-free compounding and no tax on any U.S. dividends paid through the Canadian ETF. Granted, it’s always smart to rebalance once or twice a year to make sure our percentages align with your goals. Overall, this is an ideal set-and-forget portfolio for beginners.

Bottom line

If you’re looking to get in on a strong beginner portfolio, these four can create a strong start. You gain global diversification and some of the strongest stocks on the TSX today. However, you can also create a passive-income stream that lasts. For example, here’s $50,000 divided into the above portfolio structure.

Whether you choose to reinvest or spend that cash flow is up to you. But overall, if you’re looking for a stable and growing beginner portfolio, this is exactly where I’d start.