The following model portfolios can help you get started as a Couch Potato investor. Each option includes four or five different asset mixes: you should choose the one best suited to your risk profile. Conservative investors should allocate more to bonds and less to stocks, while aggressive investors can do the opposite.

When considering the three options below, consider not only the cost, but also the complexity. ETF portfolios have much lower management fees than the mutual fund options, but they are more difficult (and may be more expensive) to maintain. Always consider the trade-off between lower cost and greater convenience, and dont be fooled into thinking that simple is unsophisticated .

The model portfolio PDFs include 20-year performance records (from 1995 through 2014), including the lowest 12-month return during that period. Pay special attention to this number and make sure you can stomach a loss that large: the surest way to blow up your investment plan is to sell in a panic during a bear market. Note that the data include actual fund returns when available and index returns (minus fees) when necessary. Past performance is no guarantee of future results .

Option 1: Tangerine Investment Funds

The simplest way to get started with indexing is with one of the Tangerine Investment Funds. which are available online directly through Tangerine. There are no annual fees, no minimum account size and once youre set up the funds are virtually maintenance-free.

Consider the Tangerine funds if:

• youre looking for a simple solution for an RRSP or TFSA
• your portfolio is relatively small (under $50,000 or so)
• you dont want to open a discount brokerage account
• you make automatic monthly contributions from your bank account

• you want a single fund that is rebalanced automatically

For complete information on getting started with Tangerine see our white paper, The One-Fund Solution .

Option 2: TD e-Series Funds

TDs e-Series funds have lower fees than the Tangerine funds, and you can customize your portfolio with any asset allocation. They are an ideal alternative to ETFs for investors who want more convenience at only slightly higher cost. Unfortunately, the e-Series funds are only available through an online account with TD Canada Trust or (preferably) a TD Direct Investing discount brokerage account.

Consider the TD e-Series funds if:

• your account is at least $25,000 (annual fees apply on smaller RRSP balances)
• you like the convenience of mutual funds but want more flexibility than a balanced fund can offer
• you are comfortable using a discount brokerage to place mutual fund orders
• you make automatic monthly contributions from your bank account
• youre usually unable to make trades when the stock exchanges are open
• you are willing to rebalance your portfolio every year or so

Option 3: ETFs

Exchange-traded funds offer extremely low management fees and much greater variety than index mutual funds. However, they are more difficult to buy and sell, and most brokerages charge commissions of about $10 per trade. Thats why its important to consider more than just management fees when making the choice between index mutual funds and ETFs .

The three largest ETF providers in Canada—iShares. BMO and Vanguard —all have a range of low-cost products that are suitable for building Couch Potato portfolios. However, the Vanguard ETFs we have chosen allow you to get extremely broad diversification with just three funds.

Consider ETFs if:

• your portfolio is at least $50,000 or so
• you contribute infrequent lump sums rather than small monthly amounts
• you have the discipline to keep trading to a minimum
• you are comfortable using a discount brokerage to trade on stock exchanges during normal hours
• you have multiple accounts (RRSPs, TFSAs, non-registered) and want the greatest flexibility when it comes to tax-efficiency
• you are willing to rebalance your portfolio every year or so