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Many Canadians have money to invest. They just don’t know what to do with it.

That’s the conclusion of a new report by Bank of Nova Scotia on investor sentiment.

The survey, released last week, found that 55 per cent of Canadian investors feel optimistic about their financial future, but many remain cautious. Most people (70 per cent) admit it’s hard to know what to do when it comes to their investments in the current environment, while 33 per cent say they are holding off on investing right now because of uncertainty caused by the pandemic.

For Canadians thinking of retiring, 72 per cent report feeling worried they are not saving enough for retirement, one-third (32 per cent) say they won’t be able to retire when they had planned because of the pandemic and 28 per cent report they won’t be able to pay off their debt before retirement.

All in all, the report presents a picture of a population that is confused and uncertain what to do in the current circumstances.

As with all financial institution surveys of this type, the report concludes by recommending people seek financial counselling – preferably Scotiabank’s own advisers, although, of course, the report isn’t crass enough to say that in so many words.

Don’t get me wrong. Financial advisers can be very helpful, especially in times like these. But in some cases, they are highly motivated to sell their employer’s product. This is especially true in the case of mutual funds offered by financial institutions.

A good financial adviser will assess your personal situation carefully and make independent recommendations based on your age, goals, tax status, and risk tolerance.

Investors who are confused about where to put money right now and are sitting on the sidelines should go back to first principles. Make a plan based on the factors I just outlined and stick with it. Don’t sit around waiting for an “ideal” time to invest. It will never happen.

If you’re unconvinced, think back to last March and the pandemic-driven crash of the stock markets. In retrospect, that was an “ideal” time to buy, with share prices at multiyear lows. But how many people actually had the nerve to act in the face of the economic uncertainty caused by a once-in-a-century disease? Not many.

The coronavirus is still with us today, and some experts are saying it may become a reality we need to live with for years, as it morphs into new variants. We can’t wait around, hoping it will go away soon. It may not.

So, let me suggest four exchange-traded funds that you can invest in now, despite the market uncertainty. These will provide income and modest capital growth for years to come, with limited downside risk.

BMO S&P/TSX Equal Weight Banks Index ETF (ZEB-T)

You can’t go far wrong investing in Canadian banks. The shares may drop temporarily, as they did last year as low interest rates and default provisions ate into profits. But that’s happened before (look at 2008) and the banks always rally back. The fact our banking system is a tightly regulated oligarchy helps a lot.

This ETF is a pure play on our Big Six banks. The portfolio is a more-or-less equally weighted basket of their stocks. Scotiabank is the largest position, with 18.2 per cent of the portfolio. National Bank of Canada is the smallest, at just under 15 per cent.

The fund was launched in October, 2009, and has generated an average compound rate of return of 9.9 per cent since (to Dec. 31). The fund makes monthly distribution payments of 10 cents a unit ($1.20 a year), to yield 4.1 per cent, based on Monday’s closing price of $29.12. The management expense ratio (MER) is 0.61 per cent.

Consumer Staples Select Sector SPDR ETF (XLP-A)

The companies in this ETF produce products that are found in every refrigerator, bathroom and laundry room. The fund also contains shares in the companies that distribute those products.

The portfolio includes stocks such as Procter & Gamble Co., Colgate-Palmolive Co., PepsiCo Inc., Coca-Cola Co., Walmart Inc., Costco Wholesale Corp., Altria Group Inc. and Estée Lauder Cos. Inc. It had a 10-year average annual total return of 11.7 per cent to Dec. 31.

This ETF makes quarterly distributions. In 2020, these totalled US$1.69. Based on the current price of US$64.15, the yield is 2.6 per cent. The MER is very low, at 0.13 per cent.

BMO Equal Weight Utilities Index ETF (ZUT-T)

Unless we want to live without electricity and gas, we’ll always need utilities. The stocks are usually dull but dependable. No big gainers in this category, just steady income flow and modest growth.

ZUT invests in a portfolio of Canadian securities such as Brookfield Renewable Partners LP, Brookfield Infrastructure Partners LP, Boralex Inc., TransAlta Renewables Inc., Hydro One Ltd. and Northland Power Inc. These companies derive much of their revenue from regulated contracts, providing predictable cash flow and downside protection. Several of the stocks are in the green energy sector, which has been performing well recently.

The fund was up 28.3 per cent in 2020 but the 10-year average annual compound rate of return of just over 9 per cent is what we should more typically expect.

Monthly distributions are 7 cents a unit (84 cents a year), to yield 3.2 per cent at the current price of $26. The MER is 0.61 per cent.

iShares Core Balanced ETF Portfolio (XBAL-T)

Finally, consider adding this global balanced fund to provide international diversification and some exposure to bonds (the portfolio is about 63 per cent stocks, 37 per cent bonds). XBAL a fund of funds, holding assets in eight basic iShares funds. The largest positions are in ETFs that track the S&P 500 and the FTSE Canada Universe Bond Index.

This ETF was launched in 2007. In 2020, it generated a return of 10.6 per cent. The 10-year average annual compound rate of return is 6.2 per cent. Distributions are paid quarterly and can vary significantly. In 2020, investors received just over 52 cents a unit. That works out to a yield of 2 per cent at the current price of $25.85. The MER is 0.2 per cent.

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