Model ETF Portfolios

Canadian investors may find it difficult to find an advisor who advocates index investing. The good news is there are many low-cost, broadly diversified and tax-efficient ETFs available to DIY investors. The bad news is there are now too many choices

To make this decision easier for newbie investors, I’ve included a step-by-step process below, along with sample portfolios with various asset mixes. Since a number of these ETFs have limited performance data, I’ve calculated their hypothetical past performance using index returns minus the current fees.

Step 1: Choose your portfolio’s asset allocation.

Vanguard Canada has provided this online questionnaire to help you determine the right asset mix for your different investing goals.

Step 2: Choose your portfolio’s complexity.

I’ve included the Vanguard and iShares Asset Allocation ETFs under the “light” portfolio option. These simple one-fund solutions are ideal for the majority of DIY investors.

However, if you’re a more experienced investor with a larger portfolio, you may be able to save on product fees and foreign withholding taxes by turning up your portfolio’s complexity to “ridiculous”

Step 3: Purchase your ETFs.

If you’re still not confident enough to place your first ETF trades, watching these tutorials may help to reduce some of the anxiety.

Step 4: Rebalance your ETF portfolio.

Set-it and forget it is a myth (unless you’re investing in a single asset allocation ETF). When you do need to rebalance your portfolio, let these downloadable calculators do the heavy lifting for you.