Where We Invest Our 2022 TFSA Contribution Limit?

January the first month of the year is TFSA season. As investors, we should pay attention to maximizing or at least start contributing to our favorite registered account in Canada – Tax Free Savings Account (TFSA). If you are 18 years old ( the age of majority in your province)  then you can start opening an account and invest in TFSA this year. If you haven’t contributed since 2009, the table below shows how much you can put in as a lump sum for 2022.

Here are the TFSA contribution limits by year since its inception.

  • 2009 – $5,000
  • 2010 – $5,000
  • 2011 – $5,000
  • 2012 – $5,000
  • 2013 – $5,500
  • 2014 – $5,500
  • 2015 – $10,000
  • 2016 – $5,500
  • 2017 – $5,500
  • 2018 – $5,500
  • 2019 – $6,000
  • 2020 – $6,000
  • 2021 – $6,000
  • 2022 – $6,000

Total contribution room = $81,500

For quite sometime, we have been investing in our TFSA, and we have been home bias in our investments focusing only in Canadian equities. Monitoring and tracking these companies are a lot easier when they are household names that you are very familiar with.

While a few of our Canadian dividend stocks already have global exposure due to the expansion of their businesses and interests in other countries. However, there are bigger economies outside Canada that we may miss out if we don’t diversify our investments. Canadian economy is only a smaller piece of the pie compared to the rest of the world. Thus, we decided to allocate our 2022 TFSA contribution limit towards investing in the international and emerging markets. Our annual goal is to put a lump sum contribution of $6000 each into our TFSA account first week in January.

Mark Seed of My Own Advisor has an excellent article on Dollar Cost Averaging vs. Lump Sum Investing.

The easiest way to invest in these companies without buying directly shares of a company is through an Exchange Traded Fund (ETF).  An ETF can be structured to track a price of an individual commodity or a group of diverse collections of securities. We’ve researched a number of ETFs and came up with this top five ETFs for selections.

Vanguard FTSE Emerging Markets All Cap Index ETF

Ticker: (VEE)

MER= 0.24%

Asset Class: International

Dividend Distribution: Quarterly


Vanguard FTSE All Developed All Cap Index ETF

Ticker: (VIU)

MER = 0.22%

Asset Class: International

Dividend Distribution: Quarterly


iShares Core MSCI All Country World ex Canada Index ETF

Ticker: (XAW)

MER = 0.22%

Asset Class: Global Equity

Dividend Distribution: Semi-annual


iShares Core S&P US Total Market Index ETF

Ticker: (XUU)

MER = 0.07%

Asset Class: US Equity

Dividend Distribution: Quarterly


BMO MSCI Emerging Markets Index ETF

Ticker: (ZEM)

MER: 0.27%

Asset Class: International

Dividend Distribution: Annually


After taking all considerations, we decided to allocate our TFSA 2022 contributions to Vanguard’s VEE and VIU ETFs. Both ETF’s have a diverse collections of equities internationally and emerging markets. Below shows the top holdings of each ETFs, companies that we won’t have not any exposure if we only continue to invest in Canadian equities. Given these points, we firmly believe that these two ETFs will complement our current TFSA portfolio.

VEE Top 10 Holdings:

  • Tencent Holdings Ltd
  • Alibaba Group Holding Ltd Ordinary Shares
  • Taiwan Semiconductor Manufacturing Co Ltd
  • Meituan
  • Taiwan Semiconductor Manufacturing Co Ltd ADR
  • Reliance Industries Ltd Shs Dematerialized
  • Naspers Ltd Class N
  • Vale SA
  • Infosys Ltd
  • China Construction Bank Corp Class H

VIU Top 10 Holdings:

  • Nestle SA
  • Samsung Electronics Co Ltd
  • ASML Holding NV
  • Roche Holding AG
  • Toyota Motor Corp
  • LVMH Moet Hennessy Louis Vuitton SE
  • Novartis AG
  • AstraZeneca PLC
  • SAP SE


How did these five ETFs perform over the last 5 years?

Ticker      MER         Total Return %                            1 YR               3 YR                5 YR

VEE         0.24%       Total Return % (NAV)                 0.14                 8.71                7.71

VIU          0.22%       Total Return % (NAV)                 9.04                10.76               8.42

XAW        0.22%       Total Return % (NAV)                18.23               16.64             12.56

XUU         0.07%       Total Return % (NAV)                25.81               21.83             15.93

ZEM         0.27%       Total Return % (NAV)              – 2.95                8.65                 8.82


Paying a minimal fee on any investment is vital to the overall return of your investment. While we believe that we can’t go wrong with any of these 5 ETFs, we feel that VEE and VIU meet our own criteria selection which reflects who we are as investors. While XAW may have performed well compared to my two picks but it could also due to majority of its holdings are in the US markets. For this reason I’d prefer to pick XUU for my US market in my RRSP account.

Moreover, aside from its lower fees VEE and VIU pay a quarterly distribution compared to XAW  (semi-annual) and ZEM (annually). Under those circumstances, as an individual stock picker like myself – it was an easier decision to pick VEE and VIU. We prefer frequent dividend payments so that we can reinvest those dividends in a timely manner.

While XUU has the least MER of 0.07% and it tracks the total US total index market, It fits well in our TFSA and our RRSP account. In addition, XUU also met our criteria just like VEE and VIU it pays quarterly distribution. While earlier in 2022 we include VEE in our emerging market ETF exposure, we felt that there is too much risk of the ETF having so much exposure in China with it’s volatile economy and government, therefore we decided to sell VEE and limit our exposure to emerging market at this time. We continue to closely monitor other emerging markets and potentially choosing and ETF with less exposure to China.

Vibrant Dreamer blog has a great analysis and his Best and Most Tax Efficient US and International ETFs Listed on TSX.


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