VXC:CC - How to Build the Perfect Portfolio With Just $50
2024-05-08 20:00:00 ET
Canadians wanting to invest are certainly feeling the heat right now. They want to invest and make more money, but that’s pretty difficult if you don’t have any cash to spare. However, it’s never too late to start investing. And it is certainly never too little to get you started.
So today, we’re going to see how Canadians can get started investing with just $50. That’s right, only $50. And no, I’m not going to recommend that you then go on and invest in penny stocks or other risky investments. Instead, we’ll find a safe and secure way to put that money to work.
Make it automatic
If you’ve decided $50 fits within your investment budget, then lock it in. Treat that payment as a bill payment towards your future self each and every month. You can do this by creating automated payments that will go straight into your investment account.
I would then recommend that if you’re seriously strapped for cash, you put that $50 into a Tax-Free Savings Account (TFSA). That way, should an emergency arise you can still access the cash – all without incurring any taxes from taking out your earnings.
But hopefully, it doesn’t come to that. Instead, each month put that $50 aside and watch it grow. In fact, by the end of a year you would have $600! And after a decade, $6,000!
Not good enough?
Now that’s through savings alone. But obviously if you want to retire with these savings, $600 isn’t going to cut it. Which is why you’re going to want to put that money to work. You can do this by creating a diversified portfolio that will pay towards your future.
If you’re new to investing, I would recommend a solid mix of exchange-traded funds (ETF). Specifically, I would look for one ETF that offers growth, one that offers dividends , and one that offers a solid long-term base.
ETF options
Three options I would consider that offer diversification and exposure to growth and dividends are as follows. First, the iShares S&P/TSX Capped Information Technology Index ETF ( TSX:XIT ). XIT primarily invests in Canadian companies within the technology sector. This sector has shown significant growth potential over the years, driven by innovation, digital transformation, and increasing reliance on technology across industries. Shares are already up 52% since the October bottom.
For dividends, iShares Core MSCI Canadian Quality Dividend Index ETF ( TSX:XDIV ) is an excellent option, with a 4.78% dividend yield and shares up 15% since the October bottom. XDIV is designed to track the performance of the MSCI Canada Custom ESG Select Dividend Index , which consists of Canadian companies that have a history of paying dividends. These companies typically have stable cash flows and a commitment to returning value to shareholders through dividends. You can then go on to use those dividends to reinvest right back into your investments.
Finally, for diversification that provides a solid long-term base, consider the Vanguard FTSE Global All Cap ex Canada Index ETF ( TSX:VXC ). By investing in VXC, you gain exposure to thousands of companies across various regions, sectors, and countries, providing extensive diversification. The ETF includes holdings from major developed economies such as the United States, Europe, Japan, the United Kingdom, and Australia, as well as emerging markets in Asia, Latin America, and Africa. This comprehensive market coverage allows investors to participate in the growth potential of economies around the world. And again, you get a nice dividend of 1.55%, with shares up 22% since October.
Bottom line
You don’t have to put a ton aside to make your money work for you. Even just $50 a month can create growth through returns and dividends that can be used to reinvest. And with the work of these ETFs, you can look forward to growth that you won’t have to constantly worry about it. That will certainly help you rest easy knowing your future is in tact.
The post How to Build the Perfect Portfolio With Just $50 appeared first on The Motley Fool Canada .
Fool contributor Amy Legate-Wolfe has positions in the Vanguard FTSE Global All Cap Ex Canada Index ETF. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy .
2024