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You don’t need to be an active stock picker, always on the hunt for value or the hottest trade of the time. In fact, it may be better to take a more passive, hands-off approach if you’re one to chase trends, momentum stocks, and all the sort in an effort to “buy low and sell high” or, as is more commonplace today, “buy high with the hope of selling higher.”
Indeed, there’s nothing that’s tougher in the investment world than to learn of someone you know getting rich off a certain stock. Perhaps it’s the artificial intelligence (AI) play or some cryptocurrency you cannot stop hearing about from those talking heads on television, or maybe it’s a stock your friend can’t stop bragging about. Indeed, following the herd is not a great well to make the smartest risk-adjusted investments. Any emotion, whether it be excessive greed, fear, or anything in between, can lead you to make moves that end in a pool of tears.
Undoubtedly, you must think about investments before buying, even if it means running the risk of missing out on the next upside surge following a company’s coming earnings report. At the end of the day, it’s far better to be prepared and to have a game plan before picking up shares of any company.
Passive investing may make sense for beginner investors
For many, the preparation and amount of homework (yes, there can be quite a bit!) is too time-intensive for some. And there’s nothing wrong with that. There are so many great mutual funds, index funds, and exchange-traded funds (ETFs) that allow you to participate in the growth of America, Canada, or pretty much any nation (or investment theme) you could think of!
In this piece, we’ll look at a top ETF offering that I view as a great buy with an extra $2,000 or so. Preferably, it’d be best to purchase in a TFSA (Tax-Free Savings Account) or RRSP (Registered Retirement Savings Plan). But if they’re maxed out, and you’re looking to put an extra $2,000 in the non-registered account to work, there’s no issue with picking up shares of the following ETF in such a taxable account, either.
Enter one of Vanguard’s cheapest and most potent Canadian ETFs
Without further ado, consider Vanguard FTSE Canada All Cap Index ETF (TSX:VCN), one of the better ways to play the Canadian stock market. Of course, it’s Vanguard, so you just know you’re getting the lowest fees around. With a 0.05% management expense ratio (MER), the VCN is one of the cheapest Canadian ETFs I’ve come across of late.
What does the rock-bottom fee get you? Some very broad exposure to Canada’s stock market. You’re getting all the favourite large-caps (the big banks), as well as a good amount of exposure to Canada’s tech titans, which, I believe, tend to be underrepresented in some of the Canadian ETFs. On average, VCN has a lower price-to-earnings ratio (currently at 19.5 times) versus the S&P 500, making the VCN a great way to shift to value if you’re in the belief that America’s market has become relatively more expensive.
With a big name on Bay and Wall Street in Brian Belski pointing investors toward the TSX over the S&P 500, I’d say there’s never been a better time to buy Canadian with your next big investment.