Investing in 3 simple steps
You don’t need a lot of money or skills to start investing.
Here are the basic steps:
- Open a brokerage account.
- Buy a low cost, global stock index fund.
- Continue to build your investment knowledge.
That’s it. 😀 In the YouTube video below I show how to get started building a portfolio using these steps.
The video is mainly for people who live in the U.S.
But as a Canadian, here is what I would do to start investing today. 🙂
- Sign up for a trading account with Wealthsimple Trade.
They have $0 trading commission, and you can invest with their app. There are a few different account types to choose from. If you make less than $80,000 a year it’s probably better to start with a TFSA. Open an RRSP if you have a higher income. Use a Personal taxable account if you’ve already maxed out the contribution room in both of your tax-advantaged accounts.
- Buy XEQT (iShares Core Equity ETF)
This is a Canadian ETF, similar to VT in the United States. XEQT trades on the Toronto Stock Exchange in Canadian dollars. Buy as many as you can afford. 100% of your portfolio when starting out should be in this fund.
- Keep on learning.
Read investment books, online articles, business news, or anything else you have time for. Investing is a long term journey and you can adjust your portfolio accordingly over time.
Why a global equity ETF is the best asset for new investors
This 3 step strategy is designed to give you the best chance to retire with the most amount of money. It has historically outperform the vast majority of investors out there and requires no investment knowledge to start.
Investing for beginners
A global stock index fund is the go-to investment for anyone starting to invest for their retirement.
But this is analogous to suggesting people go on the mediterranean diet if they want to be healthy. It’s not a bad generic advice. But everyone’s bodys, habits, and lifestyles are different. So over time, once someone learns more about their own bodies and nutrition, they may decide to adopt a modified version of the diet, or choose something else entirely. Treat investment the same way. 🙂
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Random Useless Fact:
Everyone has a bias.
For those a little less venturesome there is always FIE
iShares Canadian Financial Monthly Income ETF Common Class (FIE.TO)
Except for the dip last year, an excellent buying opportunity, they are a fairly stable ETF.
Nice dividend, did not miss last year. You buy for the stability, not the growth. And if you want to reinvest then you can always drip the returns rather than paying brokerage fees.
That’s a pretty good yield on FIE. The distributions can be easily reinvested back into the fund. Thanks for sharing. 🙂
I’ll definitely look into what comprise XEQT and see if it’s something I can add to my portfolio.For future videos, any thoughts about sustainable investing? I’m looking on ways on how to measure ESG score of a stock or ETF for free but I can’t find much information other than in Yahoo Finance.
Thanks again for the videos. I wouldn’t miss any of it.
I haven’t done much research into ESG investing. I hear it’s growing very quickly. I may look into it in the future. It would be nice to compare companies by how they stack up ESG wise.
In terms of XEQT, this image below shows its top 10 holdings. It’s similar to other global index funds like VEQT, or VT.
Holdings by country:
Hey PP Gal, have you seen this video from Ben Felix about ESG investing? He makes it clear that ESG investing is anything but clear! https://youtu.be/weVAN2HxXjk
Liquid—great advice to start with XEQT. That’s what I would recommend to new DIY investors as well. For beginners, not needing to rebalance is such a nice advantage.
Thanks for the resource Chrissy. Keeping things simple is more likely to get people started. 🙂
Thanks Liquid Independence and Chrissy for replying. I’ll watch the video of Ben Felix and do more research before investing a little to test the water. Also I am a new subscriber on your podcast Explore FI Canada. I am glad to listen to more podcasts focusing on Canadian investing & living.
And who doesn’t love Japan? Anime, ramen, minimalism, etc. Someday I’ll visit Tokyo Disneyland as I’ve been to Disneyland in the US.
What’s the one place that a tourist must visit in Japan? That is also not crowded by tourist?
Hi PP Gal! Thanks for being a listener! There’s not enough Canadian FIRE content out there, so we’re happy to hear we’re helping to fill the gap.
I LOVE Japan. We very sad that we can’t visit yet. Hopefully soon, but I think it won’t be until this time next year that we’ll be going again. 🙁
We had such an amazing time everywhere we went in Japan. I would recommend Kyoto (even though it’s mobbed with tourists). It’s possible to avoid the crowds by heading out early in the morning.
I would highly recommend doing the Philosopher’s Path. It’s a lovely, peaceful walk and we encountered zero tourists on it on the weekday morning we went (in March 2018). The Kyoto Manga Museum is also a must if you want to have your anime portrait done (that’s where my avatar is from)!
I must be missing something here. XEQT shows a yield of 1.76%. There are lots of other ETF’s with better returns. Why wouldn’t you put money there instead?
Thanks!
You’re correct. XEQT has a low yield. But the price of each XEQT unit has gained about 25% over the last year.
Another ETF may have a 4% yield. But the price of each unit may not go up as fast as XEQT.
Adding together both the yield and price appreciation will give you a better idea of an investment’s total return. 🙂
Got it! While I’m not a COMPLETE beginner, I am still learning. As far as I can see, both XDIV and XEI have shown comparable growth with higher yields. I really need to do more research/study but am loving your blog for simplifying what can sometimes sound like Greek from other investment types.
Keep up the good work!