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Passive investing with exchange-traded funds is the best option for most investors. ETFs that track broad stock indexes are a good choice. It is clear that investors who have a low cost, globally diversified stock portfolio are more successful than most stock pickers.
It is important to diversify your portfolio and keep it low-cost. Stock picking can be fun but it can also be time-consuming and stressful. ETFs are a smart way to invest in retirement.
Today, I’ll be reviewing two great, low-cost index ETFs from iShares Investors could use this as their core portfolio.
iShares S&P/TSX 60 Index ETF
A high-risk, high-reward index favored by many investors is the S&P TSX/60. This index consists of 60 large-cap Canadian equities and is considered a benchmark for Canadian stock markets performance by institutional and retail investors.
Investors who believe in the strength of the domestic stock market may be able to buy the iShares S&P/TSX 60 Index ETF (TSX:XIU). XIU is the top Canadian ETF for tracking the S&P/TSX 60, with $11 billion in assets under management (AUM) and a high volume traded daily. This ETF is very affordable, with a management cost ratio (MER) at 0.20% and $20 annual fees for a $10,000 investment.
XIU is a large portion of Canadian blue-chip dividend-paying stocks. This means that XIU pays a good distribution. Current yield is 3.4%. You can compound your dividend gains quicker if you reinvest them. XIU offers a great combination of income and capital appreciation potential for retirees looking to earn income.
Portfolio of iShares Core Equity eTFs
The S&P/TSX 60 is a great investment, but some international diversification is good. The Canadian stock market may be unable to perform well for a prolonged period of time if you hold stocks from the developed and emerging markets, as well as the U.S.
Portfolio of iShares Core Equity eTFs The Canadian Equity ETF (TSX :XEQT), which gives instant exposure over 9,593 stocks in developed, emerging, and U.S. markets, is perhaps one of the best.
XEQT makes it easy to determine which stocks will perform well, which market size will increase more, which sector will outperform or which country will win. For an MER of 0.20%, you gain a complete stock portfolio and don’t have to worry about rebalancing it.
The Foolish Takeaway
Both XIU & XEQT are great options for young investors who have high risk tolerances and ambitious growth goals. Both ETFs can be bought only if investors are able to withstand volatility and fluctuations in portfolio value. These ETFs can be used by long-term investors who are able to make consistent contributions and remain the course.