There’s a simple, three-word answer to your questions about which investments to use in the new first home savings account: asset allocation ETFs – they’re all you need to build wealth in an FHSA, as well as in a tax-free savings account, registered retirement savings plan, registered retirement income fund, non-registered account and any other accounts you have.
Exchange-traded funds are excellent low-cost portfolio building blocks, but there are 1,000-plus funds to choose from on the TSX alone. Asset allocation ETFs bundle roughly six to 10 stock and bond ETFs into single portfolios suitable for conservative, middle-of-the-road and aggressive investors.
The rise of asset allocation ETFs is one of the greatest advancements for individual investors of the past five years. But while investors have put billions of dollars into these products, they’re still underutilized. A lot of money sitting in individual ETFs, and stocks as well, would be better off invested in a cheap, well-diversified asset allocation ETF.
The sixth and final instalment of the 2023 Globe and Mail ETF Buyer’s Guide will acquaint you with the choices available. Key points of comparison include fees, returns, top holdings and the mix of stocks, bonds and, in a couple of cases, cryptocurrency.
The ETFs presented here are “funds of funds,” which means they hold individual stock and bond ETFs from the same corporate family. Each fund has a guideline on how much of the portfolio to keep in each asset class and how often to rebalance back to those levels.
The full menu of asset allocation ETFs includes conservative, balanced, growth and all-equity versions. Because they appeal to the broadest swath of investors, we focus here on balanced and growth funds.
Click here to download an Excel version of the guide.