Are you wondering what to do with this year’s TFSA or RRSP contribution? I have some great picks you should consider. (Spoiler Alert: If you have read Beat the Bank, you won’t be surprised that my “Top Picks” may be pretty consistent from year to year!)

Unlike most “experts”, I do not base my picks on market forecasts. As Jeff Sommer stated in a New York Times/Globe and Mail article, “Specific forecasts – such as how high or low the market will go in a given year should be treated as fiction.”

Tom Bradley of Steadyhand Investments made an interesting observation in this National Post article. Over the past 60 years a portfolio of 50% Canadian stocks and 50% global stocks produced an average annual return of 9.6% but in only 2 of those 60 years did the return fall between 8% to 11%. In other words, annual returns are almost never average.

Returns will always be unpredictable. In addition to minimizing fees, the key to successful investing is selecting the right mix of stocks versus bonds in your portfolio adjusting that mix over time as your circumstances, goals, time frames and ability to handle risk change. Do not allow the percentage of stocks in your portfolio to be at a level which would cause you to panic and sell if the market takes a big dive. I know that is easy to say and hard to do because future circumstances and your responses are uncertain. But it is important that you think about it this way (see Chapter 9 of Beat the Bank).

Here is what I said in last year’s “Top Picks” newsletter:

Everyone’s circumstances are different and I don’t know yours so these picks may NOT be right for you. But if you are investing for the long term through an online brokerage account and want to keep it super simple, I suggest you consider one of Vanguard’s “Asset Allocation” ETFs (VCNS, VBAL and VGRO). These brilliantly simple “balanced” ETFs are highlighted on pages 176-177 of Beat the Bank. If one of these ETFs matches your desired stock/bond split (discussed in Chapter 9), you could buy it now and keep adding to it over time. For instance, if your desired stock/bond split is 60/40, you could buy VBAL.

No investment is perfect and every investment has risk but if you want a low cost, automatically balanced, globally diversified investment portfolio with one holding, these ETFs are hard to beat!

My ETF Top Picks produced the following total returns in 2019:

 

VGRO: 17.7%

VBAL: 14.8%

VCNS: 12.1%

Vanguard has since expanded their balanced ETF line up while RBC iShares and BMO now offer similarly excellent balanced ETFs. Here are the stock/bond weightings and tickers for all three of these providers:

Stocks Bonds Vanguard RBC iShares BMO
80% 20% VGRO XGRO ZGRO
60% 40% VBAL XBAL ZBAL
40% 60% VCNS XCNS ZCON
20% 80% VCIP XINC

 

Based on simplicity, low cost and the range of weightings between stocks and bonds, these balanced, “all-in-one” ETFs are once again my top picks for Canadian investors in 2020.

Upcoming Webinars

I will be hosting another “Beat the Bank Basics” webinar later this month. I also plan to host an “Ask Me Anything” webinar session in February. Details on both webinars to follow.

If you have any questions just email me at larry@larrybates.ca.

Lastly, a special thanks to all of you who have recommended my book to family and friends. Because of you, thousands more Canadians are learning how to Beat the Bank!

Happy New Year!