Once you cross 45 years old, retirement suddenly feels a lot closer. That’s when many investors begin to wonder if they have enough saved in their TFSA and RRSP accounts to cover their retirement.
They also begin to wonder how their TFSA and RRSP accounts compare to other Canadians around that same age.
Comparisons can be useful, but they disregard the basic fact that people have different incomes, contributions, and responsibilities.
And perhaps more importantly, a 45-year-old reviewing their TFSA and RRSP accounts still has two full decades to invest before retirement. With the right investments, that leaves plenty of time for contributions, reinvested dividends, and compounding to make a difference.
Here’s a trio to consider adding to TFSA and RRSP accounts today to get that compounding started.
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Get broad exposure to Canadian stocks from a single fund
ETFs are great ways for investors to spread out risk and buy the market. One option for investors to consider that does exactly that is the iShares Core S&P/TSX Capped Composite Index ETF (TSX: XIC).
The fund provides a strong foundation for a long-term portfolio by tracking a broad index of Canadian stocks. This provides exposure to some of the largest companies in Canada across different segments under a single ticker.
Specifically, the fund includes businesses from the financial, energy, industrial, materials, and telecommunications sectors. This diversification reduces the impact that one poorly performing stock could have on the entire portfolio.
In terms of income, the ETF offers a 2% yield, which provides some income, even if that’s not the goal of the fund.
The ETF’s main appeal is its combination of broad market exposure and long-term growth potential.
Diversify your portfolio with some long-term U.S. growth
Canadian stocks and ETFs provide plenty of opportunities for investors, but they rely heavily on the Canadian market and are concentrated in just a few sectors.
That’s where the BMO S&P 500 Index ETF (TSX: ZSP) can help. The fund provides exposure to 500 of the largest U.S. companies, including businesses operating in technology, healthcare, financial services, and consumer markets.
Like XIC, the BMO S&P 500 Index is focused on growth potential, so the yield offered is considerably lower. As of the time of writing, the fund offers a yield of just 0.76%.
Again, the main focus of this ETF is growth and international diversification.
Fortunately, at age 45, investors still have enough time to benefit from the long-term growth of the U.S. market.
Strengthen your portfolio’s income
A final pick for investors looking at their TFSA and RRSP accounts is Enbridge (TSX: ENB).
Enbridge is one of the largest energy infrastructure companies on the continent. The company operates pipelines, renewable power assets, and a natural gas utility.
The sheer necessity of the service provided by those segments makes Enbridge a defensive option for any portfolio.
Even better, those businesses generate a reliable and recurring source of revenue, which allows Enbridge to invest in growth and pay a handsome dividend. As of the time of writing, that dividend carries a yield of 4.9%.
Adding to that appeal is Enbridge’s dividend growth. The company has provided investors with consecutive annual increases to that payout for over three decades without fail.
That dividend history makes Enbridge an appealing long-term income option for TFSA and RRSP accounts.
What should a typical 45-year-old have in TFSA and RRSP accounts?
The TFSA was introduced in 2009, meaning today’s typical 45-year-old has been eligible to contribute since its inception.
But despite the potential $109,000 in contribution room, TFSA balances for Canadians around age 45 are generally estimated at roughly $20,000.
RRSP balances vary more widely. Some estimates place the median near $70,000, while average balances can exceed $150,000 because larger accounts pull the figure higher.
Fortunately, 45-year-old investors who have balances they feel are below where they should be still have two decades to grow those accounts.
And that’s where the trio of options mentioned above can provide long-term growth and income as part of a larger, well-diversified portfolio.
