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iShares Russell 2000 Growth ETF (IWO)
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iShares S&P/TSX SmallCap Index ETF (XCS)
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Vanguard S&P 500 Index ETF (VFV)
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ISHARES TRUST (IUSG)
I'm currently developing a plan to align with my goal of purchasing my first home in about eight years, alongside a long-term investment strategy. I’m seeking your insight on how a person in this situation could responsibly proceed (I understand that nothing here is considered actionable financial advice).
I'm currently contributing $400 biweekly to my FHSA, aiming to reach the $16,000 contribution limit this year. I also have approximately $5,000 in my TFSA, with all funds currently held in cash in both accounts.
For the FHSA, I’m considering investing in a high-growth American ETF, such as VFV, IUSG, or IWO, to balance growth and risk over the eight-year horizon. However, I would only like to invest in CAD (I'm not sure which ones only allow USD). Could you provide guidance on which ETF might be the most suitable for this approach, and why? If you have other recommendations, I would appreciate your insights.
For my TFSA, I'm interested in an aggressive investment strategy, potentially utilizing one of your growth or balanced portfolios. Given my exposure to cryptocurrency, I aim to diversify into equities for greater stability while still pursuing substantial growth over the next 45 years. I'm comfortable with higher volatility during this period. With $5,000 currently in my TFSA, would you recommend specific securities or a strategy that balances high growth with diversification?
While I’d prefer to follow your portfolio exactly, my current funds are only 5% of the $100,000 needed to follow it exactly. As an alternative, I'm considering selecting stocks from your portfolio and eventually investing evenly across the entire growth portfolio when my TFSA grows to an appropriate amount. Given my current $5,000 and my $100 bi-weekly contributions, which companies would you recommend selecting from within those two portfolios? Should I allocate $1,000 each to five different stocks or focus on three stocks with an initial $1,600 investment in each (the more I diversify on such a small number the less the potential return)? Your advice on which equities to select for both approaches and your opinion on the most responsible approach would be greatly appreciated.
Thank you in advance! :)
Eight years is certainly a decent time frame. Of the ETFs listed, VFV trades in C$ and we think it would be quite fine. The others are more growth oriented (smaller market caps) and thus may be more volatile. A longer timeframe might be better for these, plus they are US$ traded. For a 45-year TFSA of course there is a lot more flexibility. With a small amount to start, we would prefer an ETF over individual securities. Stocks can be added as more contributions are made. Our growth portfolio would be growth-focused, of course, but it would be hard to properly diversify with $5,000 starting off. If we have to stick with C$ funds, XCS is where we would lean to to start for a high-growth focus. With this as a base we would be happy to add individual securities from our portfolio as money rolls in. We might start with GSY, CSU, BN, TVK for a mix. Some brokers can now buy fractional shares, and we have no issue buying 'small' amounts of stock, but only if commission is essentially zero (available at some firms). When there is a charge, say of $10 commission, a $1,000 trade incurs a 1% fee, and we would prefer larger amounts if this is the case.
Authors of this answer, directors, partners and/or officers of 5i Research and/or affiliated companies have a financial or other interest in VFV.