When it comes to building long-term wealth in your TFSA, one of the simplest and most effective strategies is to focus on owning high-quality Canadian ETFs that you never feel the need to sell.
Because while a lot of investors spend time trying to pick the perfect stocks, time the market, or constantly adjust their portfolio, often the more you try to do, the harder you make it on yourself.
Investing can quickly become much more complicated, and more importantly, it makes it harder to stay consistent.
That’s why building the core of your portfolio with a few reliable, broad-based ETFs is one of the best ways to invest, since it simplifies everything.
Canadian ETFs give you instant diversification and allow you to stay focused on the long term without constantly second-guessing your decisions.
So, if you’re a long-term investor looking to build a reliable TFSA portfolio, these three Canadian ETFs are easily some of the best to buy, and three I’d be more than comfortable owning for decades.
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Building a core TFSA portfolio with broad-market Canadian ETFs
The foundation of any long-term portfolio should be broad exposure to high-quality businesses, which is why two of the top Canadian ETFs I’d start with are the iShares Core S&P 500 Index ETF (CAD-Hedged) (TSX:XSP) and the iShares S&P/TSX 60 Index ETF (TSX:XIU).
For example, the XSP is one of the best and easiest investments you can make. You’re getting exposure to 500 of the largest companies in the U.S., many of which generate revenue globally.
And over the long haul, there’s no question the S&P 500 has been one of the most consistent indices to own. That’s why it’s such a strong core holding. You don’t need to pick winners or try to time anything. You just need to stay invested.
At the same time, though, it still makes sense to have exposure to Canada, which is why I’d pair the XSP with the XIU ETF. Unlike the XSP, though, instead of offering exposure to the entire TSX, the XIU focuses on the 60 largest companies in the country.
And historically, those large-cap, blue-chip stocks have been more reliable and, over the long haul, have outperformed the broader index.
That’s not surprising, though. The largest companies in Canada are some of the most stable. They generate more consistent cash flow. And they’re the types of businesses you can actually hold through different market environments.
That’s why the XSP and XIU are two of the best ETFs to buy and never consider selling. When combined, they offer exposure to both the global economy and Canada’s strongest companies.
Adding targeted exposure without overcomplicating your portfolio
Once you’ve built that core, you can start to be intentional about where you add exposure.
And that’s why another Canadian ETF I’d buy for my TFSA and never consider selling is the BMO Equal Weight Banks ETF (TSX:ZEB).
Instead of trying to pick which Canadian bank will outperform, the ZEB gives you exposure to the entire sector.
That matters because Canadian banks operate in a highly concentrated industry, which makes them all high-quality businesses that benefit from similar long-term trends.
Over time, though, the leaders can change, which is what makes it difficult for retail investors to consistently pick the best performer. So rather than trying to guess which one will come out ahead, owning the entire group can be the simpler and more effective approach.
Now, this doesn’t have to be banks. It can be any sector you understand well and want exposure to. But the idea is the same.
Instead of picking individual names in areas where performance rotates, it can make more sense to just own the whole space and adjust your exposure at the sector level.
And over time, layering these funds on top of a core like XSP and XIU gives you a portfolio that’s diversified, simple, and easy to stick with for the long haul, which is exactly why these three Canadian ETFs are some of the best to buy in a TFSA and never consider selling.
