ETF Investing for Canadians

If you’ve ever felt overwhelmed by the number of investing options in Canada—TFSA, RRSP, Canadian vs. U.S. ETFs, dividend vs. growth—you’re not alone.

After quite a bit of research, testing, and refining, I’ve built a monthly investing strategy that’s simple, effective, and designed for long-term wealth creation. In this article, I’ll walk you through everything:

• What is an ETF?

• What ETFs I invest in and why

• Why I buy them using Interactive Brokers

• Why I use U.S.-listed ETFs

• The tools I use to research and backtest

What Is an ETF? A Quick Overview

An ETF, or Exchange-Traded Fund, is a basket of investments (like stocks or bonds) bundled into one tradable asset.

"Think of it like a shopping cart of stocks—you’re not just buying one company, you're buying hundreds."

For example, one ETF might give you exposure to 500 large U.S. companies (like Apple, Microsoft, Amazon, and Johnson & Johnson), while another might target just Canadian dividend stocks or global tech.

Why ETFs? Because they offer instant diversification, low fees, and are perfect for passive, long-term investing. For someone who doesn’t want to constantly research and rebalance individual stocks, ETFs are a game changer.

My Portfolio: Just Two ETFs

I invest in two U.S.-listed ETFs every single month:

• VOO – Vanguard S&P 500 ETF (50%)

• QQQ – Invesco Nasdaq-100 ETF (50%)

That’s it. No Canadian dividend funds, no bonds (for now), no crypto. My strategy is built for long-term growth.

Why VOO? VOO tracks the S&P 500—500 of the largest public companies in the U.S. It’s incredibly diversified across sectors like technology, healthcare, financials, and industrials. It has an average annual return of about 10% over the long term and comes with a low expense ratio of 0.03%.

Why QQQ? QQQ focuses on the Nasdaq-100, which is heavily tilted toward growth and technology companies. You get exposure to Apple, Amazon, Nvidia, Meta, and Tesla. It’s more volatile than VOO but has historically delivered higher returns—roughly 13–14% annually over the last decade.

I chose a 50/50 split to balance the broad-market stability of VOO with the high-growth potential of QQQ.

I backtested this portfolio using historical data, and it performed better than either ETF alone, offering a higher CAGR and more balanced drawdowns.

Why I Didn’t Choose VFV

Many Canadian investors opt for VFV, which is the Canadian-listed version of the S&P 500. I seriously considered it too. But ultimately, I chose VOO for a few key reasons:

• Lower MER: VFV has a management expense ratio (MER) of 0.08%, compared to VOO’s 0.03%. That may seem small, but over decades, those fees compound.

• Lower Dividend Yield: VFV’s yield is slightly lower due to foreign withholding tax and structure.

  
  

  Yes, currency conversion is a cost but the broker I invest with provides a near spot conversion from CAD to USD. (more on this below)

  
  

How I Buy: Using TFSA on Interactive Brokers

I buy both VOO and QQQ through Interactive Brokers (IBKR) inside my TFSA account.

Why IBKR?

• They allow you to buy U.S.-listed ETFs inside registered accounts.

• Currency conversion from CAD to USD is cheap and close to market rate.

• The platform is incredibly efficient once you get used to it.

Here’s my monthly process:

1. Deposit CAD into IBKR.

2. Use IBKR’s FX tool to convert CAD to USD.

3. Buy VOO and QQQ in my TFSA account.

4. Repeat every month.

IBKR gives me better exchange rates with minimal slippage, so I don’t worry much about currency conversion costs.

How I Researched These ETFs

When I first started building my strategy, I didn’t just choose popular ETFs at random. My process was surprisingly simple:

I went to ETFRC.com and listed all major U.S.-listed ETFs. I then filtered out all leveraged ETFs and those that focused too narrowly on a specific sector. I sorted by YTD, 1-year, 2-year, 5-year, and 20-year returns. Then, I focused on broad market ETFs that consistently performed well across those timeframes.

From this, it became obvious that for long-term growth, VOO and QQQ made the most sense. To double-check, I used Portfolio Visualizer to backtest a few different combinations:

1. Portfolio 1: 50% VOO / 50% QQQ

2. Portfolio 2: 40% VOO / 40% QQQ / 20% SCHD (Dividend Focused)

3. Portfolio 3: 40% VOO / 40% QQQ / 20% BND (Bond ETF for risk reduction)

While the portfolios with SCHD or BND had slightly lower drawdowns and volatility, the 50/50 VOO-QQQ mix offered the best return for my risk appetite. It’s a moderate-risk, high-return portfolio that suits my long-term goals.

Portfolio Comparison

Asset Breakdown of 3 portfolio's backtested

Backtesting return comparison of the 3 portfolios

What About Currency Risk? (CAD to USD)

Yes, I invest in USD even though I earn in CAD. That means I’m exposed to currency fluctuations. But here’s my take:

• I’m investing for 20–30 years, not 2–3.

• U.S. markets have consistently outperformed Canadian markets.

• I’m okay with short-term currency swings in exchange for better ETF options and lower fees.

Could I use Canadian-listed ETFs? Sure. But many of them are just wrappers with higher MERs and currency hedging I don’t need. If I wanted to hedge currency, I’d rather do it myself.

With IBKR, I convert my CAD to USD using their FX tool, which gives close-to-market rates. No need to use Norbert’s Gambit or pay 1.5–2% in hidden conversion fees like at big banks.

Final Thoughts on Investing in ETFs for Canadians

Investing doesn’t need to be complicated. I chose two ETFs. I invest in them monthly. I ignore market noise. I do some light rebalancing every year. That’s it.

If you’re trying to build your own ETF strategy, here’s my advice:

• Start with your goals: growth, income, diversification?

• Use ETFRC to find options that match your criteria.

• Test them with Portfolio Visualizer before committing.

• Pick a broker that gives you access to the ETFs you really want (For anyone looking into ETF Investing for Canadians, this step is crucial—some brokers don’t offer all U.S. or international ETFs)

• Stay consistent.

For me, that meant VOO and QQQ. For you, it might mean something else—but if you follow a process backed by data and simplicity, you’re already ahead of most investors.

Stay focused, stay long term—and keep investing.