Investing First Steps

Written by: Vivek Jacob
April 4, 2021
Investing First Steps

Investing. It can be overwhelming, I feel your pain. Financial literacy should be taught from a young age and if that were the case all of this would be normal. But it’s never too late.

Look, I know your mattress has been good to you and has provided many a good sleep but keeping your money under it ain’t it. That basic savings account with minimal interest? That’s to put money aside just so you don’t see it in your chequing account. You look around and see real estate prices through the roof and wonder how you’re ever going to afford buying a home. The cost of day-to-day living keeps rising and you already couldn’t be living more minimalist. This is why making as much of your money work for you is essential.

The first step is to take that type: entry-hyperlink id: 3GrHXuMSEE2NNJGqSM9Enx and be honest with yourself, if you’ve got enough money to spare and have your emergency savings in place, now it’s about game planning what the right fit is for you with one of (if not a mix) of the options available below:

Mutual Funds

Essentially, this involves you going to your financial service provider or answering their survey online that confirms how much risk you’re willing to take and then puts your money into a box of chocolates (companies) that come with a guide so you have a good idea of what you’re getting yourself into.

Depending on how the market is trending and your risk profile, there are managers proportionately allocating the money you give towards the fund. Yes, there are fees involved (called Management Expense Ratio or MER) and they vary based once again on your risk profile.

Exchange Traded Funds

A less expensive version of a mutual fund because it’s more passively managed and tracks a specific index, sector, or commodity instead of several companies. Think a crate of several boxes of chocolate.

What’s a market index? Let’s say there are 1,000 chocolates in this crate of chocolate boxes. The index takes the average value of all of it to tell you how that specific market is doing. The S&P 500, for example, is the average of the 500 largest publicly traded American companies. Wealthsimple allows you to personalize your ETF portfolio with “socially responsible” and “halal” investing options as well.

Stock trading

This means you’d rather manage your money yourself and want to trade stocks yourself. What can’t be said enough times is to diversify, diversify, diversify! Don’t be left holding the bag like people who invested in GameStop (GME) at $340 USD. 

Find a platform that works best for you. A bank may have a higher trading fee of $9.99 compared to Wealthsimple’s no fee option currently, but the investing tools available on each platform are also significantly different.

Cryptocurrency

If you’re just starting out investing, this is an extremely volatile place to be and I would strongly recommend that you have enough money in other places before you look at crypto.

What is crypto? It’s digital currency like Bitcoin or Ethereum (currently the two largest digital coins) that can be used to make purchases on goods and services where the option is available.

The best part of all the options above excluding crypto is they can be held within a Tax-Free Saving Account (TFSA) or Registered Retirement Savings Plan (RRSP) to maximize your earning potential. Ensure you take the time to understand how much risk you’re willing to take when looking at self-investing options and remember that it’s ok to get your feet wet, check the temperature, and get comfortable before seriously diving in.

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*The New Client 2.10% Interest Rate and $150 Cash Bonus Bundle Offer (the "Offer") is available to new Tangerine Clients who: (a) have a Client Number created between November 24, 2020 and July 31, 2021, (b) become a Tangerine Client using the Promo Code “EARNMORE”, (c) open an Applicable Savings Account within 30 days of the date their Client Number was created, and (d) open a Tangerine Chequing Account within 30 days of the date their Client Number was created (collectively the “Offer Qualifying Conditions”). The 2.10% Promotional Rate will apply to deposits made to an Eligible Client’s Applicable Savings Account(s) for 153 days (5 months) beginning on the date all Offer Qualifying Conditions have been met, to a maximum of $1,000,000 (in the currency of the Applicable Account) per Applicable Savings Account Type (for deposits to registered Applicable Savings Accounts made through a T2033 form, please see the full Offer Terms and Conditions). The Promotional Rate is an annualized rate, calculated daily and paid monthly. To be eligible for the $150 Cash Bonus, in addition to meeting all Offer Qualifying Conditions, an Eligible Client must switch their eligible payroll direct deposit for at least 3 consecutive months and must have the first payroll direct deposit received in their Tangerine Chequing Account within 60 days of Chequing Account opening. Limit of one (1) Cash Bonus per Primary Account Holder. The Offer is only applicable to Accounts where the Eligible Client is the Primary Account Holder. Offer is not transferable and can’t be combined with other promotional savings rate offers or chequing cash bonus offers. Full Offer Terms and Conditions, including definitions of any capitalized terms and a list of eligible payroll direct deposits, are available here. Offer may be changed, extended or cancelled without notice.