If youre interested in becoming a Couch Potato, you must first decide whether you will be investing only once a year or through regular monthly contributions.

If youre investing once a year, you should use exchange-traded funds or ETFs. These are index-fund-like investments that trade like stocks on major stock exchanges. Many ETFs charge ultra-low management fees (think 0.3% or less), but to buy or sell them you have to pay a brokerage fee just as if you were buying a stock. The fees arent huge in themselves — $30 is typical — and if youre investing once a year, they are a minor annoyance when you consider the low management fees youre paying.

On the other hand, if you want to contribute monthly, paying $30 a pop for each transaction can send your overall bill soaring. Youre better off to use index mutual funds. Youll pay a bit more in management fees, but you wont face brokerage fees on every contribution.

For purposes of illustration, well assume youre using our Global Couch Potato strategy (for other strategies, see Meet the potato family ).

Once-a-year investors. Open a discount brokerage account. Deposit your money, then divide the total amount by five, and buy these ETFs:

The first pile

• (20% of your money) goes in the iShares Canadian Composite Index Fund [TSX: XIC]. (Weve decided to replace the i60 Fund recommended in previous articles with this new, more diversified fund, but if you already have the i60, theres no need to switch.)

The second pile

A third pile

Both the fourth and fifth piles

Once a year, buy and sell your ETFs (or add new money) to get your portfolio back to its 20%-20%-20%-40% split.

The net result of all this is a very low-cost portfolio that has 60% of its money invested in a wide range of stocks in Canada, the U.S. and around the world, and 40% invested in Canadian bonds.

Monthly contributors. For purposes of illustration, well use TD eFunds, because theyre particularly cheap. As above, you start by transferring your money into the account and splitting it up into five piles:

One pile

• (20% of your money) goes in the TD Canadian Index Fund.

The second pile

• (20%) goes in the TD U.S. Index Fund.

The third pile

• (20%) goes in the TD International Index Fund.

Both the fourth and fifth piles

• (40%) go in the TD Canadian Bond Index Fund.