Build Wealth Through ETF’s

When money managers and retail shareholders alike invest, they try to beat the ‘market.’ This is a benchmark that can change depending on your investing strategy and allocation to certain asset classes. In Canada, our main market is the TSX or Toronto Stock Exchange, but since many managers in Canada invest in both Canadian and U.S. stocks, they often use a TSX/S&P 500 blend. The S&P 500 is the most common benchmark in the U.S., and many regard it as the representation of the entire U.S. stock market. For those looking to take a more strategic approach, one of the best ways to build wealth through ETFs is by investing in funds that track these key market indexes, providing broad diversification and long-term growth potential.

So, depending on where the money manager is investing, they may use a different benchmark. I like to keep it simple and just use an S&P 500/TSX blend as my benchmark. Why? Because if I wanted to, I could simply buy the S&P 500 ETF (VOO) and the Canadian XIU.TO ETF, which track the S&P 500 and TSX, respectively, for a management fee of 0.05% and 0.18%. A minor expense for exposure to a balanced, long-term investment strategy that has historically outperformed most active investors.

If I didn’t think I could beat the S&P 500, why would I try? The answer is simple—I wouldn’t. Instead, I would just invest in these ETFs, and that’s exactly the investment strategy I recommend here.

If you don’t have the time or interest to pick individual stocks, ETFs are an ideal option. They offer built-in diversification, require little management, and have historically provided strong returns. Companies like Wealthsimple have gained popularity by focusing on ETF-based investing, proving that keeping it simple can be highly effective. Even Warren Buffett advocates for this approach—he has said that when he passes, 90% of his money will go into index funds, with the remaining 10% in government bonds. It’s a simple, time-tested strategy, yet few investors take advantage of it.

Let’s say you’ve decided to follow Buffett’s advice and buy the market basket of equities to let your money grow over time. That’s likely your best long-term strategy and will work for most people.

Once you start investing in index funds, the next step is staying consistent. That’s where continuous, automatic investing comes in.

This strategy involves investing a set amount each month into your portfolio—regardless of market conditions. It has two major benefits:

• Eliminates emotional decision-making – Investing automatically each month removes the temptation to time the market, which is one of the biggest mistakes investors make.
• Takes advantage of dollar-cost averaging – When prices drop, you buy more shares, and when prices rise, you buy fewer shares. Over time, this smooths out market volatility and helps maximize returns.

Another advantage of automatic investing is that it acts as a built-in saving strategy. If you set up $250 per month, you’ll naturally adjust your budget around it, and missing a contribution will feel like breaking a financial commitment. Over time, this habit compounds your wealth effortlessly.

For those looking to build wealth through ETFs, this strategy provides steady growth while minimizing risk, ensuring that you take advantage of market gains over time. The market has returned an average of just under 8% annually, making it one of the best asset classes to invest in. Instead of trying to beat the market, let the market work for you—just like Buffett suggests.

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