Perhaps you’ve just moved to Canada, or just turned 18, and can now start a Tax-Free Savings Account.
Maybe you’ve just gotten your first full-time job and are looking at a Registered Retirement Savings Plan to save on taxes.
Or maybe you are thinking about buying a home and using the First Home Savings Account. Either way, you might be wondering how to start investing.
Understandably, it can be hard to know what to buy when you’re new to investing. Here’s my favourite index fund that makes it easy for anyone, even if you have no experience with investing, to get started.
Why an index fund?
Your main goal should be to grow your wealth steadily over time, aiming to keep up with the market rather than trying to outdo it. It’s crucial that your investments are well-diversified, which means spreading them across different areas:
11 sectors: Your investments should cover a range of sectors, such as technology, healthcare, finance, consumer goods, and energy. This ensures you’re not putting all your eggs in one basket, as different sectors react differently to market changes.
Geographical regions: A mix of investments from the U.S., developed countries (like Germany, Australia, and Japan), and emerging markets (such as China, India, and Brazil) can help balance your portfolio. Different regions may grow at different rates, offering a safeguard against local downturns.
Market caps: Including companies of various sizes, from large caps (big, stable companies) to mid-caps (medium-sized companies with growth potential) and small caps (smaller companies with higher growth and risk potential), helps ensure your portfolio captures a broad range of investment opportunities.
Weighting: Market cap weighting in an index fund means larger companies have a bigger impact on your investment’s performance, aligning your results more closely with the broader market trends.
Attempting to manually pick stocks that meet all these criteria can be time-consuming and costly. An index fund simplifies this process, offering a diversified portfolio with just one investment.
My favourite index fund
If you’re just starting out, I suggest Vanguard FTSE Global All Cap ex Canada Index ETF (TSX:VXC) for beginners. It’s an exchange-traded fund (ETF), which means you can purchase its shares just like you would with any company’s stock through your brokerage app.
When you invest in VXC, your money goes into a mix of four Vanguard ETFs, giving you broad exposure to stocks from the U.S., developed markets outside the U.S., and emerging markets. Altogether, this fund provides access to more than 11,400 global stocks, offering a wide range of investment opportunities.
What’s really appealing about VXC is its cost-effectiveness. The management expense ratio (MER) is only 0.22% annually. To put it into perspective, investing $10,000 in VXC would result in yearly fees of approximately $22.
However, VXC purposely omits Canadian stocks. I think this is a good trait, as you can complement it with a few Canadian stock picks to scratch that itch. Consider making VXC, say, 90% of your portfolio while selecting a few blue-chip Canadian dividend stocks (and the Fool has some excellent suggestions down below!)
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
