How to Invest $20,000 in Canada
Smart Account Allocation
| Priority |
Account |
Amount |
Why |
| 1st |
TFSA |
$7,000 |
Tax-free growth forever |
| 2nd |
FHSA (if eligible) |
$8,000 |
Tax deduction + tax-free for home purchase |
| 3rd |
RRSP (if income > $55K) |
$5,000 |
Immediate tax refund |
| Alt |
Non-registered |
Remainder |
After registered accounts filled |
Portfolio Strategies for $20,000
Strategy 1: Simple & Effective
| Account |
Investment |
Amount |
| TFSA |
XEQT |
$7,000 |
| FHSA |
XGRO |
$8,000 |
| RRSP |
XEQT |
$5,000 |
Total cost: $0 in commissions. $40/year in MER fees.
Projected growth (7% avg):
| Years |
Value |
| 5 |
~$28,000 |
| 10 |
~$39,300 |
| 20 |
~$77,400 |
| 30 |
~$152,200 |
Strategy 2: Growth + Income Blend
| Account |
Investment |
Amount |
Role |
| TFSA |
XEQT |
$5,000 |
Growth |
| TFSA |
VDY |
$2,000 |
Canadian dividends |
| FHSA |
XGRO |
$8,000 |
Tax-sheltered balanced |
| RRSP |
VFV (S&P 500) |
$3,000 |
US growth |
| HISA |
EQ Bank |
$2,000 |
Emergency top-up |
Strategy 3: Home Buyer Focus
Saving for a home purchase in 3-5 years:
| Account |
Investment |
Amount |
Risk |
| FHSA |
GIC (2-year) |
$8,000 |
None |
| TFSA |
HISA |
$5,000 |
None |
| TFSA |
XBAL |
$5,000 |
Moderate |
| Savings |
HISA |
$2,000 |
None |
Why: Down payment money should prioritize capital preservation over growth.
Strategy 4: Dividend Income Portfolio
| Investment |
Amount |
Yield |
Annual Income |
| VDY |
$5,000 |
4.5% |
$225 |
| ZWB |
$4,000 |
7.5% |
$300 |
| RY |
$3,000 |
3.8% |
$114 |
| ENB |
$3,000 |
6.5% |
$195 |
| BNS |
$3,000 |
6.0% |
$180 |
| GIC (1yr) |
$2,000 |
4.5% |
$90 |
| Total |
$20,000 |
~5.5% |
$1,104/yr |
Strategy 5: Diversified Multi-ETF
| ETF |
Amount |
Role |
MER |
| VFV |
$6,000 |
US S&P 500 |
0.09% |
| XIC |
$5,000 |
Canadian market |
0.06% |
| XEF |
$4,000 |
International developed |
0.22% |
| XEC |
$2,000 |
Emerging markets |
0.26% |
| ZAG |
$3,000 |
Canadian bonds |
0.09% |
| Total |
$20,000 |
Global portfolio |
~0.12% |
Growth of $20,000 + Monthly Contributions
| Monthly Contribution |
10 Years |
20 Years |
30 Years |
| $0 (lump sum only) |
$39,300 |
$77,400 |
$152,200 |
| $200/month |
$73,600 |
$181,000 |
$396,000 |
| $500/month |
$125,000 |
$336,000 |
$758,000 |
| $1,000/month |
$210,000 |
$595,000 |
$1,365,000 |
Assumes 7% average annual return.
Tax Efficiency
| Income Type |
TFSA |
RRSP |
Non-Registered |
| Capital gains |
Tax-free |
Tax-deferred |
50% taxable |
| Canadian dividends |
Tax-free |
Tax-deferred |
Dividend tax credit |
| US dividends |
15% withholding |
No withholding |
Foreign tax credit |
| Interest income |
Tax-free |
Tax-deferred |
Fully taxable |
| Best investments |
Growth ETFs |
US/international ETFs |
Canadian dividend stocks |
What to Avoid
| Mistake |
Impact |
| Keeping $20K in a chequing account |
Losing ~$600-800/yr to inflation |
| Paying 2% MER mutual fund fees |
Costs $400/yr vs $40 for ETFs |
| Investing without emergency fund |
May need to sell at a loss |
| Over-concentrating in one stock |
One company going down takes everything |
| Ignoring FHSA if buying first home |
Missing $8,000/yr tax-sheltered room |