Our First Etf – I’m From Canada Eh?
Our First Etf
We got our first Etf a week or 2 ago.
I hope 2020 has been treating you well so far. I haven’t made a post for my goals yet, but one that I knew I wanted to do this year was get into a Etf to help diversify our portfolio even more.
What is a Etf You may ask?
According to Wikipedia – An exchange-traded fund (ETF) is an investment fund traded on stock exchanges, much like stocks. An ETF holds assets such as stocks, commodities, or bonds and generally operates with an arbitrage mechanism designed to keep it trading close to its net asset value, although deviations can occasionally occur. Most ETFs track an index, such as a stock index or bond index. ETFs may be attractive as investments because of their low costs, tax efficiency, and stock-like features.
Essentially it’s a great low cost way to get a large basket of stocks and pay a very minimal fee to achieve this.
Warren Buffet himself remains bullish on etf’s and says most investors should go this route.
I still love the dividend growth investing route but want to work on our international exposure and get access to these high growth tech stocks as well – some of them don’t pay a dividend.
One of the easiest ways to improve in this department is a ex Canada etf. That means a etf that doesn’t have any Canadian stocks in it. I plan on holding the best Canadian dividend growth stocks individually in our tfsa’s and resp’s for tax efficiency. Clearly by maxing all those accounts we would be incredibly overweight in Canadian stocks. A typical situation for us Canadian’s. Home town bias kind of stuff.
Which Etf did we choose?
With sooooo many different etf’s out there, it’s hard to pick one. Certain etf’s focus on dividend growth stocks, pay monthly etc etc. Clearly those caught my interest, but lacked in the technology sector. I really feel we will continue to see massive growth amongst those kind of companies as we get into ai, smart homes, robots and more. (I just came back from the landscape show and 5 vendors had smart lawnmowers, last year there was probably 1)
Which companies will be the top dog? Of course you got those top tech stocks, but things are always changing.
I looked into a couple that I knew other’s were holding and I also asked twitter for suggestions on great Ex Canada etf’s. I decided that xaw.to was the etf for us at this point in time.
Xaw.to Fund Summary
One of my goals this year was to start a etf and contribute at least $250 to it each month moving forward. You may ask 250? That’s nothing and not worth the trading fees!
Well I also started a account with questrade this month. They offer commission free etf purchases! well not 100% free think I paid 14 cents for my first purchase. They also offer a lot cheaper trading fees for stocks, which I’m still debating moving all my accounts over to now. I gotta play around with the questrade dashboard a little more and decide.
Insert Plug Here –
But wait there’s more… what if I told you I recently became a questrade affiliate and if you sign up with my link below you get 50$ in free trades? haha wow amazing right.
Disclosure – The link below is a affiliate link meaning at no additional cost to you If you click and sign up I will earn a little commission.
What a guy eh? =)
You need 1,000 bucks to start a account with questrade so our first purchase was for 35 shares of xaw.to for just under $1,000 with a yield on cost of just north of 2%. We added roughly $20.00 to our forward dividends. Like I mentioned earlier I plan on adding to this position every month going forward.
Well there you have it, I am now in the etf game. It feels good and I look forward to seeing how this does. Its great to get so much exposure through one fund across the world. Now to beef up this position so I can at least start dripping it.
What are your thoughts? Do you own any etf’s?
Hey I’m Rob, creator of Passive Canadian Income.
In 2011 me and my wife had almost $60,000 in debt and a negative $7,000 Net Worth. Through hard work and financial education we paid all that off. Now we are focusing on increasing our Passive Income Streams to make the money work for us. Feel Free to Follow along the Journey by clicking the Social Media links below or subscribing to get notified of new posts on the sidebar.