Why Gen Z investors should consider All-in-One ETFs

“Kids have it easy these days,” is a phrase just about everyone hears when they’re growing up. If you are Gen Z, the first generation never to know the world without the internet, you may have a long list of reasons to disagree. For young professionals from this age group, high inflation, soaring home prices, piles of student debt and an uncertain job market may feel anything but “easy.”

Still, as part of Gen Z, you have at least one advantage over your parents when they were at this same stage of their lives: more access to a wider selection of wealth-building tools to help you reach your goals. The All-in-One Exchange-Traded Fund (ETF) is a prime example.

All-in-One ETFs are cost-effective, diversified and liquid investments that hold, in many cases, both stocks and bonds. These types of securities were only introduced to Canada in 2018, but there is now a wide selection of funds to choose from. Whether you prioritize low fees, active management, responsible investing or exposure to alternative asset classes such as cryptocurrency, there’s at least one All-in-One ETF to meet your needs.

These investments won’t just give you the kind of instantly diversified portfolio you need to grow your money, they’re also easy to use.

Accessible diversification

While All-in-One ETFs can be a great fit for any investor, they are especially well suited to beginners with smaller portfolios. Why? Because they solve one of the biggest challenges for young investors just starting out on their investing journey: diversification.

When you only have a small amount to invest, how do you assemble a well-diversified portfolio that can allow you to navigate the market upswings and downturns? With All-in-One funds, you get access to a diversified basket of equites and fixed income, all of which can be easily accessed through a brokerage account at a bank or an online brokerage.

Through a single ETF purchase, you can acquire a premixed portfolio of assets, and you don’t have to worry about investment selection or rebalancing when you contribute to the account; it’s all done for you.

Because these are diversified investments, they may help moderate risk while giving you the opportunity to earn better, more consistent returns. As a young investor, it can be hard to see how a small investment today will make a difference ten, 20 or even 40 years down the road, but when you consider the power of compounding, a little can go a long way.

What are the benefits of All-in-One ETFs?

All-in-One ETFs are a great solution for a wide variety of investor types but have several attributes that make them uniquely suited to Gen Z investors:

Diversification. Even if you only have $500 to invest, buying an All-in-One ETF gives you exposure, through several other ETFs, to hundreds of stocks, bonds and other asset classes from around the globe. Such diversification lowers your risk while potentially generating returns greater than a savings accounts can provide.

Liquidity. There’s no commitment, no wait times and no paperwork regarding buying or selling ETFs. If you need the money that’s in your All-in-One fund any weekday when the stock market is open, you can easily get it. Just be aware of any rules about tax-advantaged registered accounts, such as a Tax-Free Savings Account (TFSA), to which you can’t recontribute what you remove until January of the year after the withdrawal.

Simplicity. Whether you’re baffled by investment choices or just don’t have the time, All-in-One ETFs make investing easy. There’s no need to revisit or rebalance your portfolio year after year. Just find a fund that matches your investing temperament, from conservative to aggressive, keep contributing to your account as savings allow, and watch your wealth grow.

Fidelity All-in-One ETFs aim to outperform.

Fidelity Investments offers a unique family of four All-in-One ETFs in Canada, ranging from conservative (FCNS, 59% fixed income), balanced (FBAL, 59% equity) and growth (FGRO, 82% equity) to equity (FEQT, 97% equity), all designed to take advantage of market opportunities. Unlike passive model ETF portfolios, Fidelity All-in-One ETFs have some active management. On the equity side, investors get exposure to style factors that can lead to outperformance. They all offer some exposure to crypto, which could provide additional diversification benefits. Indirect management fees range from 0.38% to 0.43%, regardless of the size of your account. Why the higher fees? Passively managed portfolios only tracks a stock index. For just a little more, the Gen Z investor can build a portfolio with potential to outperform the broader market instead of one that follows it, along with access to strategic multi-asset allocation and consistent portfolio rebalancing, all in one ETF purchase.

As big as the challenges facing young investors may seem, you have the tools to get ahead. Now the next time someone says Gen Z has it easy, there’s one good reason they may be right.