A tax-free savings account (TFSA) gives Canadian investors a great way to build wealth over the long haul. Without the worry of incurring taxes on profits from long-term investments, it’s an excellent way to grow your savings over the years.
Using an exchange-traded fund (ETF) can be particularly advantageous within the fund as it gives investors some good diversification and helps to minimize overall risk. One ETF to consider holding within a TFSA is the Vanguard FTSE Canada All Cap Index ETF (TSX:VCN).
The fund invests in Canadian equities, including small, mid, and large-cap stocks. It is passively managed which means the fees aren’t high for investors. The fund’s management fee is just 0.05%, which is incredibly minor and won’t have much of an impact on investor returns.
There are 172 stocks in the ETF with a median market cap of $54 billion. And at an average price-to-earnings multiple of 15.8, the fund contains some decently priced stocks. The top holdings in the fund include some of the best and safest long-term stocks on the Toronto Stock Exchange, including Royal Bank of Canada (TSX:RY)(NYSE:RY), Toronto-Dominion Bank (TSX:TD)(NYSE:TD), and Shopify (TSX:SHOP)(NYSE:SHOP). Those are the only stocks that individually account for more than 4% of the fund’s overall weight.
The ETF yields 3% and over the past five years it has risen by 36%. When including dividend payments, its total return over that stretch is 56%. For TFSA investors, this fund can give you some solid diversification and the opportunity to generate great long-term gains for your portfolio.
