3 Canadian ETFs to Buy and Keep in Your TFSA Forever

Do you want to build a rock-solid retirement portfolio for 2025? Exchange-traded funds (ETFs) could be your ideal investment vehicle that forms the heart of your nest egg, and you could fuel your high-conviction growth or value stock bets around them. Placed in a Tax-Free Savings Account (TFSA), Canadian ETFs offer professional management, instant diversification and inexpensive access to a wide range of assets for a fraction of the cost of building a portfolio. starting from scratch.

The three Canadian ETFs I would recommend for your TFSA are iShares S&P/TSX 60 ETF (TSX:XIU), Vanguard FTSE Canadian ALL Cap Index ETF (TSX:VCN), and BMO Global Bond ETF (TSX:ZAG).

Let’s take a closer look at each offer.

iShares S&P/TSX 60 ETF

The iShares S&P/TSX 60 Index ETF is one of the first ETFs to trade on Canadian financial markets. Since its inception in 1990, the fund has accumulated more than $16.5 billion in assets under management. It provides immediate access to a portfolio of the 60 largest Canadian companies that dominate their respective sectors.

The S&P/TSX 60 index slightly outperformed the overall index. S&P/TSX Composite Index over several long-term investment horizons over the past five, 10 and 20 years. TSX 60 companies are well established in their respective markets, maintain strong balance sheets and offer lower investment risks thanks to their proven business models and competitive strengths.

^TSX data by YCharts

Given a management expense ratio (MER) of 0.18%, investors should expect to pay approximately $1.80 in annual management fees for every $1,000 invested.

The XIU ETF pays quarterly dividends with a respectable dividend yield of 3.3%. It could be part of your core portfolio in a TFSA.

Vanguard FTSE Canadian ALL Cap Index ETF

The Vanguard FTSE Canadian ALL Cap Index ETF is one of the cheapest ETFs you can buy and hold to access a large portfolio of 165 Canadian stocks. The $8.5 billion passively managed fund provides exposure to large, mid and small cap Canadian companies, allowing investors to gain greater exposure to the local economy.

The VCN ETF has had good historical performance. A hypothetical investment of $10,000 could have grown to almost $18,000 over the past five years, or $28,000 since its inception in 2013.

With an MER of 0.05%, investors pay approximately $0.50 in annual management fees on every $1,000 invested to achieve market-in-line returns. Distributions from the ETF have returned 2.5% over the past 12 months, with the quarterly cash payment due in January expected to return 3% annually.

Buy a fixed income ETF: BMO Global Bond ETF

Individual retirement portfolios benefit from the capital preservation and low-risk income qualities of bond securities. BMO Global Bond Index ETF provides access to a $9.9 billion professionally managed portfolio of investment-grade Canadian federal, provincial and corporate bonds.

The fund has diversified holdings across 1,643 high-quality fixed income assets. Its total value has gained 8.5% over the past year as interest rates decline and could increase further if the Bank of Canada cuts rates again in 2025. The ETF is generally expected to reduce the risk profile total of your portfolio and provide an anchor for your retirement nest egg. .

With a low expense ratio of 0.09%, investors benefit from professional management of a complex bond portfolio at a favorable price. Most remarkably, the ETF converts regular semi-annual bond coupons into monthly income distributions – an essential service for retirement portfolios – with an annual yield of 3.5%.

The ZAG ETF is eligible for investment in your registered portfolios, including the TFSA.

What investors should remember

The Canadian exchange-traded funds highlighted above could be core holdings in your TFSA or your overall portfolio, around which you can build up your favorite stocks (or high-conviction crypto assets). ETFs will save you time researching and monitoring assets, and you can devote your valuable attention and resources to finding the safe bets, high-growth stocks, or undervalued assets that will multiply your capital over time. long term.