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New investors likely get into investing having practically no idea where to start. You’ve heard great things, about people making thousands in a day from a growth stock. You’ve also likely heard of people losing just as much. It can make investing both exciting and terrifying.
But that’s only if you take the approach of quick gains. Instead, new investors should think about their long-term goals. Finding ways to create solid growth that in the long run will give you more money than some trendy growth stock ever could.
Where to start
If you’re a new investor starting completely fresh, I would look at exchange-traded funds (ETF). These funds offer you a portfolio already set and ready to go. Rather than pick and choose from a bunch of stocks, you have an entire team behind the ETF managing that for you.
There are ETFs focused on industries, commodities, countries, dividend yields — you name it. But to get a solid mix, I would consider starting out with an ETF that focuses on the S&P/TSX Composite Index top 60.
The TSX 60 are the top-performing stocks on the TSX today. New investors get direct access for a fraction of what the TSX costs. Further, you’ll receive the same performance that the TSX does, which, long term, trends up and up.
Which ETF to pick
Remember when I talked about that team of management behind an ETF? That’s great and all, but they’re still people. A group of people making their investment decisions based on experience, true, but also on gut feelings. Furthermore, these people need to be paid. That usually means you have to pay some kind of management fee.
That’s why new investors should consider Horizons S&P/TSX 60 Index ETF (TSX:HXT). This ETF is run by artificial intelligence that chooses which of the top 60 TSX stocks will do well based on data — not gut feelings. And because it’s a program, management fees are insanely low at 0.07%.
Horizons has done quite well for new investors over the last few years. Year to date, it’s up 4%, and in the last year, it’s up 21%. Over the last five years, it’s grown 69%. Compared to the TSX itself, it’s grown 39% in the last five years, 16% in the last year, and 4% year to date.
It’s clear that the Horizons TSX 60 ETF is a strong choice, even outperforming the TSX over the last few years. And that continues today. Its use of artificial intelligence brings down costs and makes solid choices based on data collection. That leaves any guesswork out of the equation and allows investors to sleep well at night knowing their funds are being taken care of.
While growth stocks can be fun, they can also be scary. Frankly, investing should be boring. And while you might be bored by Horizons at first, a decade down the line, you’ll be positively giddy.