How to choose your asset allocation

Most new investors put their energy into hunting for the right fund. The decision doing most of the work is simpler than that: how much of your money goes in stocks, and how much goes in bonds. Stocks grow your money over the long run and bounce around a lot on the way. Bonds grow more slowly and keep things steadier. Every portfolio is a trade between the two.

The right mix comes down to two things: when you'll need the money, and how big a drop you can sit through without selling. Money you'll need within about five years shouldn't be riding the stock market, since there have been plenty of stretches where stocks crashed and took five years or more to climb back. And a mix that's perfect on paper is useless if you panic and sell at the bottom, so be honest about how you'd handle watching your portfolio drop 20%.

A risk questionnaire is the best place to start. Do one before you pick anything, and treat the number it gives you as a first draft: your timeline, how steady your income is, and what other savings you have can all move it. If you're torn, err toward more bonds. Sleeping at night is worth a little expected return.

One fund can do the whole job. An asset allocation ETF holds thousands of stocks and bonds from around the world in the ratio on its label, and it rebalances itself, so a 60/40 fund stays a 60/40 fund without you touching it. Every ticker below links to the fund's official page, where you'll find its ETF Facts and prospectus.

The number under each fund is its MER, the yearly fee taken out of the fund's returns before you see them. These MERs change constantly; check the fund's page for the exact percentage.

Any of these providers will do the job. Pick one and move on.

To buy one you need an account at a brokerage, the right account type for your goal (for most people a TFSA, RRSP, or FHSA; I wrote about which account to fund first), and the ticker from the table. From there it's searching the ticker, entering how much to buy, and submitting the order. The guides below walk through those exact screens on each platform. Brokerages change their apps and websites over time, so these might not be the exact steps by the time you place your order, but they should get you very close. If the first order makes you nervous, you're normal; start small until it feels routine.