If you wish to make any cash available in the market, it’s important to take dangers. In order for you no danger, you’ll be utilizing one thing like a Assured Funding Certificates, the place your principal is protected, however returns hardly ever exceed the risk-free fee. Over lengthy durations, the true hazard is falling behind inflation, the place a greenback right this moment buys meaningfully much less sooner or later even after nominal progress.
There isn’t any inventory market return with out danger, however danger may be taken intelligently. Staying broadly diversified, holding charges low, and proudly owning worthwhile blue-chip corporations has traditionally been a dependable method. Utilizing that framework, right here is an easy technique constructed round a single BMO exchange-traded fund (ETF) that has traditionally turned a $20,000 funding into roughly $75,000, web of taxes.
What we’re investing in
The benchmark right here is the S&P 500. It’s a U.S. index of 500 large-cap corporations chosen by way of an outlined methodology and overseen by a committee. To qualify, corporations should meet minimal measurement and liquidity thresholds and show a historical past of optimistic earnings.
The result’s a broad slice of the U.S. financial system. Expertise, healthcare, and financials dominate, however the index additionally consists of publicity to client staples, client discretionary, utilities, power, actual property, and the remainder of the 11 sectors. You aren’t betting on one business or one firm. You’re shopping for the productive core of company America.
Index ETFs make this method accessible. These funds merely purchase all the businesses within the index. If you buy one unit, you obtain fractional publicity to each inventory inside it. As a result of there isn’t a inventory selecting concerned, prices keep low.
The ETF to select
My most well-liked possibility right here is BMO S&P 500 Index ETF (TSX:ZSP). It supplies full S&P 500 publicity for a really low 0.09% expense ratio.
Primarily based on historic information, from January 2016 to December 2025, a $20,000 funding in ZSP with all dividends reinvested compounded at an annualized fee of 14.37%. That will have grown to roughly $76,567 by the tip of the interval.
That end result assumes three issues. First, you by no means panic bought throughout market drawdowns. Second, each dividend was reinvested because it was paid. Third, there was no tax. That final level is crucial. To make this technique work as meant, ZSP must be held inside a registered account, similar to a Tax-Free Financial savings Account.
