S&P 500 ETFs For Canadians // Passive Income Guide

S&P 500ETFs For Canadians // Passive Income Guide

First things first, let’s talk about what the S&P 500 actually is. The S&P 500, or Standard & Poor's 500, is a stock market index that tracks the performance of 500 of the largest companies listed on stock exchanges in the United States. It includes companies like Apple, Microsoft, Amazon, and Tesla, giving you a broad exposure to the U.S. economy.

The great thing about the S&P 500 is that it’s diversified across multiple sectors like technology, healthcare, financial services, consumer goods, and more. This diversification reduces your risk compared to investing in individual stocks.

Now, why should you, as a Canadian, consider investing in the S&P 500? Here are three compelling reasons:
Long-Term Growth: Historically, the S&P 500 has delivered an average annual return of about 10% over the long term. While past performance is not a guarantee of future results, it has been a solid performer, especially for long-term investors.

Diversification: Investing in the S&P 500 means you’re investing in 500 of the largest companies in the U.S., spreading your risk across various sectors. If one sector underperforms, another may pick up the slack, providing more stability.

Access to Leading Global Companies: Many of the companies in the S&P 500 are not just American leaders but global giants. By investing in the S&P 500, you gain exposure to companies that generate revenue worldwide, adding another layer of diversification to your portfolio.

So, how can we, as Canadians, invest in the S&P 500? It’s easier than you might think! Here are the most common ways:

Exchange-Traded Funds (ETFs): The simplest way to invest in the S&P 500 is through an ETF. There are Canadian-listed ETFs that track the S&P 500, like the iShares Core S&P 500 Index ETF (CAD-Hedged) (TSX: XSP) or the Vanguard S&P 500 Index ETF (TSX: VFV). These ETFs can be bought and sold on the Toronto Stock Exchange (TSX) just like any other stock. You don’t need to worry about currency conversion as some are CAD-hedged.

U.S.-Listed ETFs: If you have a USD account, you can also directly buy U.S.-listed ETFs like SPDR S&P 500 ETF Trust (NYSE: SPY) or Vanguard S&P 500 ETF (NYSE: VOO). This can sometimes be more cost-effective, but keep in mind the currency risk and any potential withholding taxes on dividends.

Mutual Funds: Some Canadian mutual funds also track the S&P 500, though they tend to have higher fees compared to ETFs. If you’re comfortable with those fees, mutual funds can be another option to consider.

Robo-Advisors: If you prefer a hands-off approach, consider using a robo-advisor like Wealthsimple or Questrade. These platforms will invest in diversified portfolios that often include S&P 500 ETFs. It’s an easy way to get exposure without worrying about choosing specific funds.

One thing to keep in mind is the tax implications. If you invest in a U.S.-listed ETF in a non-registered account, you could be subject to a 15% withholding tax on dividends. However, if you invest through a tax-advantaged account like a TFSA (Tax-Free Savings Account) or RRSP (Registered Retirement Savings Plan), the rules are different. For example, U.S. withholding tax on dividends is not applied to RRSPs, making it a tax-efficient way to invest.

To wrap things up, investing in the S&P 500 is a fantastic way to diversify your portfolio and gain exposure to the U.S. market, which has shown strong long-term growth. Whether you choose a Canadian-listed ETF, a U.S.-listed ETF, or a robo-advisor, there are plenty of options to get started.

Remember, investing always comes with risks, so it’s essential to do your own research and consider speaking with a financial advisor to ensure it aligns with your personal financial goals.

-

Hey guys, welcome to the channel I'm a full time Chartered Accountant as well as a part time Real Estate agent with a background in finance, investing, budgeting and of course, real estate.

I've been on a personal mission for the last 10 years to build multiple streams of income, including both passive and active income. On this journey, I've gained a ton of domain knowledge about personal finance and investments that I would love to share.

My goal for this channel is to help you understand basic taxes, personal finance, investing, budgeting and expense management.

[VanillaCherryBread]

I have a 3 fund portfolio but I have finally decided to invest in ETFs, alongside. I’m looking at SCHD, VOO, XLK or SCHG.

[HamiltonRb]

VFV doesn’t pay much of a dividend, so the withholding tax is not much to worry about imo, but if you want basically the same results with no withholding, buy BRK.B

[echoesoftones]

In summary for me;

Do VFV in TFSA, no fx conversion(you miss out on USD growth but preserve your CAD during loss), no tax, but you do get hit by 15% witholding tax?

Do VOO in RRSP, fx conversion (Enjoy both upside and downside of USD growth), no 15% witholding tax on return due to treaty. No tax since in RRSP for longterm?

What if you already have USD in app like "WISE", how can you invest directly in VOO? And which one is advisable between investing with wealthsimple, TD or SCOTIA. Pls advise brother. I'm completely clueless in this subject. Thanks

[lorenmathias]

Is it redundant to trade both VOO and VFV as a Canadian?
Loveee your videos!!

[AncientHues]

Good time to FOMO into NVDIA ? What are the best stocks and ETFs to buy now that the interest rates are coming down? Thx

[evansweet]

Can you confirm, If I hold VFV or ZSP in a TFSA am I subject to a 15% withholding tax on the dividend return only or both dividend as well as regular stock return?

[dor]

Very nice, what is your take on XEQT?

[AmandeepSingh-zzur]

Are ETFs recommended for FHSA? If yes which are the top 3 you would suggest ?

[charleskhedia]

Hi, I think I saw you at the mall, were you at chick fil A in west Edmonton mall on Thursday in afternoon ?

[george]

What about TD e-series? I'm with TDDI and I don't want to switch to brokers like Wealthsimple.

[Slickpete]

*What about FHSA account and withholding tax* ?

[tosinwaidi]

I am an immigrant in Canada, what is the best ETF i can invest in for a short period as a side business? I newly open my wealth simple account and hope to hit the ground running...

[Gabriel_b-tz]

I'm new to trading, and I've lost a good sum trying out strategies I found in online tutorials. I would sincerely appreciate any recommendations you have