When I started investing, at 18 years old, I was only earning around $9 an hour. Even though I did not have rent or big girl bills hovering over my head, I still was not making BANK when I started investing. You can start investing with whatever you have and watch it grow into something more. The biggest trees never start big, they start from a small seed and once planted, they have the potential to grow into something bigger. Take this same principle into investing. Plant that $50 every month and watch it grow into something bigger.
I am NODODY’S financial advisor, I am just a girl who has done her research, found what works for her and has decided to share it with my audience.
I have divided this blog into three categories to help you on your investment journey- research, strategy and invest. However, if you are yet to get your emergency fund going, let’s start there by reading through this blog and implementing those strategies then, we can talk investments.
“But Reni, I don’t know where to start, Reni where do I put the money, what platform do I use to invest? What do I invest in?” I gotchu!
The first place to start with ANYTHING new is ALWAYS research. I can tell you all that I know but in order to be 100 percent sure of your decision, I would suggest that you do your own research. I have provided various resources in this section to guide you along your journey.
I have divided the research section into three sub-categories: choosing an account, choosing a platform and choosing your specific investment.
So, bestie, you cannot invest from your regular savings or chequing account. I know, I know, that’s CRAZY. But, there are two types of investment accounts, registered and non-registered. Registered accounts in Canada include Registered Education Savings Plan (RESP), Registered Retirement Income Fund (RRIF), Registered Retirement Savings Plan (RRSP) and Tax-Free Savings Account (TFSA). Non-registered accounts have no restrictions as to how much you can invest or withdraw. With a non-registered account, however, you are taxed at a marginal tax rate. A marginal tax rate is the amount of additional tax paid for every additional dollar earned as income. You are new to this so we shall not put you through all of that.
Then what account should I open? A Tax-Free Savings Account, bestie. Why not the other Registered investment accounts? Because those are there for a specific purpose, like retirement or your child’s post-secondary education. Currently, we are getting you to invest to build wealth and to warm you up to the stock market. I suggest that you start with a TFSA because all your gains from the stock market will be tax-free.
The banks will ALWAYS recommend that you invest in Mutual Funds where they manage your investments however, this has some downsides to it. For one, the bank is not a Non-profit organization. They too are trying to secure the bag. They will charge you management fees, operational costs, an arm, a leg. You are not weak in the knees, please stand up so you can maximize your returns.
Next, you need to choose a platform where you would like to use to start your investments. There is not a stock market section at the back of No Frills, unfortunately, so you do have to choose a virtual platform to shop around for stocks.
I would suggest you use Wealthsimple. Simply because as a beginner, I do not want you to be paying commissions on your purchases. With a major bank like TD, there is a flat rate commission of $9.99 on each US and Canadian purchase. We are trying to increase the size of the bag, can’t have the big boys dipping into it. Wealthsimple has commission-free trades when you purchase Canadian stocks.
Another perk of using Wealthsimple is that you can purchase fractional shares while most other brokerages do not. For example, an Amazon share costs 2,936.35 USD but you only have $100. On TD, you would not be able to buy Amazon until you get that $2,936.35. With Wealthsimple, you are able to purchase $100 worth of shares which will give you ownership to a fraction of the share. It may seem small but I think it is a great start. Use this link to create your new Wealthsimple account and it will let them know that I sent you. You’ll also get $50 free!
What Stock Should I Invest in?
Choosing a stock as someone who does not have money to blow is a very daunting task, I get it. I have been investing for a while now and it is still something that I have to put a lot of thought into because nobody wants to lose money. When going into investing we have to accept that it is a risk, and nothing is 100 percent certain.
To help you figure out what stock you should invest in, I would suggest you use a platform called INVRS. INVRS is a platform built by DIY investors for DIY investors. INVRS connects you to DIY investors from all over the globe to help you conduct collaborative research on the stock market. The platform provides full coverage of all North American stocks and funds to help you decide what stock is best based on your personal investment goals. Use this link to learn more about INVRS.
Before you start investing you need a plan. You have already done the grunt work, opening an account, choosing a platform, researching specific stocks that you would like to invest in. Now it is time to figure out a method to the madness.
Here is what I suggest – Dollar-Cost Averaging. Dollar-Cost Averaging is where you divide the total amount of money you have to invest across your purchases in order to reduce the impact of the changing price of stocks on your overall purchase.
One of the biggest concerns for first-time investors is uncertainty around making a profit on their investments. This method employs discipline and strategy to yield the best possible results.
What I suggest is to take 20 percent of your income every month and invest it into the market by using the Dollar Cost Averaging strategy. Instead of trying to time the market, I choose to invest in it regularly. Thanks to Wealthsimple, you do not need a ton of money to do this. You can invest in partial shares every month or full shares that fit within your budget. The goal is to constantly be dripping into the market and not to wait around for a special time.
The final step is just to go for it! You have done your research, you have committed to a strategy, now it is time to invest. I am rooting for you.