How to Start Investing: Beginner’s Guide

Investing doesn’t have to be daunting. Once you strip away the jargon and wrap your head around a few key concepts, it’s actually quite easy. So if you’re a complete novice when it comes to investing in stocks or anything else, this guide will help you understand the basics and show you how to start investing.

What is investing?

Investing is buying assets like stocks or property in the hope that they will increase in value over time. Buy an asset now, then make a profit in the future when you sell it at a higher price—that’s the strategy in a nutshell.

Some investments also provide an ongoing source of income while you own them. For example, you can collect rent from an investment property, or receive regular dividend payments from stocks you own.

Investing is different to saving, which is when you tuck your cash away safe and sound in a bank account. Saving comes with less risk than investing, but it doesn’t offer the same potential for high returns. Saving is also better suited to short-term financial goals, as the money is easily accessible whenever you need it.

Are you ready to invest?

You want to start investing, but are you financially ready? Could the money you plan to invest be put to a better use instead?

There are two key things you should do before buying your first investment:

• Build your emergency fund. If you were hit with an unexpected bill or lost your job, would you have enough money in your emergency fund to get by? It’s generally recommended that you have enough money in your savings to cover at least three months of living expenses, so build up your financial safety net first.
• Pay off high-interest debt. Credit card and personal loan debt can come with interest rates in the double digits. Using your extra cash to pay off that debt before you start investing will put you in a better financial position in the long run.

Once you’ve got your finances in shape, you’re ready to get started.

How to start investing: Step-by-step guide

Follow these eight steps to learn how to start investing:

Step 1: Set your financial goals

Why do you want to start investing? What do you want to achieve, and in what time frame do you want to achieve it?

Maybe you want enough money to retire early. Maybe you want to build wealth to pass on to your children. Maybe you want investments that can provide a source of passive income. Or maybe you just want the potential for higher returns than you can get from a savings account.

Whatever the case may be, now is the time to set clear investment goals. And remember: these goals may change over time, so don’t be afraid to revisit them regularly.

Step 2: Work out how much risk you can tolerate

Investing comes with risk. The higher the risk, the higher the potential reward—but the potential losses are greater too. For example, bonds and GICs are low-risk investments, while stocks come with a higher level of risk.

So ask yourself: How much risk am I willing to take on? Will you be happy for steady returns with minimal risk, or do you want to target maximum profits and try to outperform the market?

Your financial goals and investment timeframe will impact your risk tolerance. If you’re investing with the aim of buying a house in a few years’ time, for example, you probably won’t have the flexibility to ride out a short-term market downturn.

If that’s the case, a low-risk investment that provides a guaranteed return will be a better choice.

But if you’re investing long-term to fund a comfortable retirement, you’ll probably be able to risk some short-term losses for higher long-term returns.

Step 3: Choose an investment strategy

Will you manage your own portfolio, or let someone else do it for you?

Some people prefer to have complete control over their investments. If that’s you, you’ll want to open a self-directed trading account. Self-directed investing puts the power in your hands, and it lets you avoid paying any management or advice fees. Of course, you’ll need to be comfortable choosing investments and managing them on your own.

If you’d prefer to take a hands-off approach, you could get a financial advisor to choose investments for you. There are a couple of ways to do this:

• Use a human advisor. Contact your bank or credit union to connect with an advisor to manage your investments. Alternatively, you can find an advisor through a stockbroker, insurance company or independent financial advice firm. Your advisor will speak with you about your goals, timeframe and risk tolerance before recommending an investment strategy. This can provide peace of mind if you’re not comfortable managing your investments, but the downside is that you’ll pay advice and management fees.
• Use a robo-advisor. Robo-advisors like Wealthsimple Invest and Questwealth Portfolios offer an affordable alternative to traditional human advisors. Once you complete a quick questionnaire about your financial goals and how much risk you’re willing to accept, the robo-advisor’s algorithms will match you with an investment portfolio that meets your needs. The robo-advisor will then manage your portfolio for a much lower fee than a human advisor. The level of human oversight also varies depending on the platform you choose, so you’ll need to consider whether you’re comfortable leaving your investments in the “hands” of a robo-advice service.

Step 4: Choose an account type

To start investing, you’ll need to open an account to hold your investment funds and receive any returns. Selecting the right account type is essential because it determines how your earnings are taxed.

In a standard, non-registered trading account, you’ll pay tax on the investment income you earn. But if you invest through a registered account, you may be able to reduce or defer your tax payments—or maybe avoid paying tax on your investment income altogether.

Popular account options include:

• Registered Retirement Savings Plan (RRSP): RRSPs offer the benefit of tax-deductible contributions and growth—you only have to pay tax when you withdraw funds (when you are retired and therefore in a lower income tax bracket). These types of accounts are meant for long-term investment, because you’re heavily taxed on any pre-retirement withdrawals. You can have your investments professionally managed, self-managed or selected and maintained by a robo-advisor. Since this is a registered account, you cannot day-trade in an RRSP.
• Tax-Free Savings Account (TFSA): While RRSPs let you make tax-deductible contributions, TFSAs let you make tax-free withdrawals. This means 100% of your returns are yours to keep, and you can’t deduct TFSA deposits from your income tax. Like RRSPs, you can have your investments managed for you, or you can self-manage. Day trading is not allowed in a TFSA.

There are also registered accounts designed for different financial goals, like saving for your kids’ education, so it’s worth researching your options before opening an account.

Step 5: Choose a trading platform

Now that you’re ready to get started, you’ll need to open what’s known as a brokerage account. This is an online trading account you can use to buy and sell stocks and other investments.

You can open an account with:

• An independent or discount brokerage. Examples include Questrade, Wealthsimple, Qtrade, Interactive Brokers and Moomoo.
• A bank brokerage. Examples include RBC Direct Investing, TD Direct Investing, BMO InvestorLine, CIBC Investor’s Edge and Scotia iTrade.

Choosing a bank brokerage is convenient if you want to keep all your finances in one place. But if you want the lowest trading fees, you’ll find them at an independent or discount broker. Some even offer fee-free stock trading.

You can find out how to choose a trading platform in our guide to opening a stock trading account, but you basically need to look for a platform that has:

• Low or no fees
• The investments you want to buy
• A user-friendly online portal and mobile app

Once you’ve chosen a broker, sign up for an account by providing your personal info, contact details and proof of ID.

Compare stock trading platforms in Canada

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Finder Score	Available Asset Types	Account Types	Stock Trading Fee	Monthly Account Fee
Promoted 9.1 Excellent Qtrade Direct Investing	9.1 Excellent	Stocks, Bonds, Options, Mutual Funds, ETFs, GICs, IPOs	RRSP, RESP, RRIF, TFSA, Personal, Joint, FHSA, Margin	$0	$0	$80 Reward Finder Rewards: Join Finder then open a new Qtrade Direct Investing account through Finder as a new Qtrade client and fund it with a deposit that settles by the end of the promotion to receive an $80 digital Visa gift card. Ends 30 Nov 2026. T&Cs apply. Earn up to $5,000 in cashback (+$100 quick-pay bonus) when you open and fund a new Qtrade account. Valid until January 5, 2027. T&Cs apply.	Go to site View details Compare product selection Compare	loading
Promoted 9.6 Excellent Questrade	9.6 Excellent	Stocks, Bonds, Options, Mutual Funds, Index Funds, ETFs, Forex, GICs, Precious Metals, IPOs	RRSP, RESP, RRIF, TFSA, Personal, Joint, FHSA, Margin	$0	$0	Get $50 cash back when you open a Questrade self-directed investing account through Finder. T&Cs apply.	Go to site View details Compare product selection Compare	loading
7.9 Great CIBC Investor's Edge	7.9 Great	Stocks, Bonds, Options, Mutual Funds, ETFs, GICs, Precious Metals, IPOs	RRSP, RESP, RRIF, TFSA, Personal, Joint, Business, FHSA, Margin	$6.95	$0 if conditions are met, or $100	Young investors 18 to 24 get free online Canadian and US stock and ETF trades and a $0 annual fee using CIBC Investor’s Edge and a chequing account with CIBC Smart Start. T&Cs apply.	Go to site View details Compare product selection Compare	loading
8.6 Great Wealthsimple Investing	8.6 Great	Stocks, Options, ETFs, Cryptocurrency	RRSP, RESP, RRIF, TFSA, Personal, FHSA, Margin	$0	$0	Get a 1% match cash bonus on eligible $25,000+ transfers from other financial institutions to your Wealthsimple Self-directed Investing and Managed Investing accounts. T&Cs apply.	Go to site View details Compare product selection Compare	loading
8.2 Great BMO InvestorLine Self-Directed	8.2 Great	Stocks, Bonds, Options, Mutual Funds, ETFs, GICs, Precious Metals, IPOs	RRSP, RESP, RRIF, TFSA, Personal, Joint, FHSA, Margin	$0	$0	Get up to $20,000 cash back. Plus, get a chance to win $300,000. Apply by March 1, 2027. T&Cs apply.	Go to site View details Compare product selection Compare	loading
6.2 Standard GoSmart by RBC Direct Investing	6.2 Standard	Stocks, ETFs	RRSP, TFSA, FHSA	$0 - $9.95	$0	Open your first GoSmart account and earn up to 7,500 Avion points when you invest. Valid until January 11, 2027. T&Cs apply.	Go to site View details Compare product selection Compare	loading
9.4 Excellent Interactive Brokers	9.4 Excellent	Stocks, Bonds, Options, Index Funds, ETFs, Forex, Currencies, Futures	RRSP, TFSA, Personal, Joint, Business, FHSA, Margin	Min $1.00, Max 0.5%	$0	Continue View details Compare product selection Compare	loading
8.6 Great Moomoo	8.6 Great	Stocks, Options, ETFs	RRSP, TFSA, Personal, Margin	$1.49/stock	$0	Continue View details Compare product selection Compare	loading
8 Great Webull	8 Great	Stocks, ETFs	RRSP, TFSA, Personal, Margin	$0	$10/year	Continue View details Compare product selection Compare	loading

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Step 6: Choose your investments

Now it’s time to decide what you actually want to invest in, so let’s take a look at your main options.

• Stocks
• ETFs
• Mutual funds
• Bonds
• GICs
• Other investments

Stocks

A stock is a share of ownership in a company. The old cliche is to think of a company as a pie: a stock represents a tiny slice of that pie.

There are two ways you can make money investing in stocks:

• Price increases. The aim here is to sell a stock for a higher price than what you paid when you bought it. Let’s say you buy 100 shares priced at $5 each ($500) and then sell them for a total of $1,000 when they reach $10 each—that’s a profit of $500.
• Dividends. A dividend is a portion of a company’s profits paid out to shareholders. Dividends can be paid out quarterly (most common), monthly, half-yearly or annually, but not all companies pay dividends. The size of the dividend you receive depends on how much stock you own—if you own 100 shares and the company pays a dividend of 50 cents per share, you’ll get $50.

ETFs

ETF stands for exchange-traded fund. An ETF is an investment fund that pools together investor money to buy a basket of assets, such as stocks, bonds and precious metals. ETFs trade on stock exchanges like the Toronto Stock Exchange, and when you buy a unit of an ETF, you get exposure to all the assets it holds.

You make money from ETFs in the same ways you profit from stocks: from an increase in price over time, or regular payments (known as distributions) from the fund’s income.

Most ETFs are passive investments, but there are some actively managed funds that aim to beat the market.

The most popular ETFs are often designed to track the performance of different stock indexes, such as the S&P 500 in the USA or the S&P/TSX Composite Index in Canada. These are known as index funds, and if you buy an ETF that tracks the S&P 500, you’re effectively investing in all 500 stocks featured in that index.

You will need to pay fund management fees, but these are generally less than 0.25% for index funds.

Mutual funds

Like an ETF, a mutual fund is a professionally managed investment fund that holds a wide range of assets. They can be passive or actively managed, but actively managed funds that aim to outperform the market are more common.

Mutual funds don’t trade on stock exchanges but can be bought and sold at the end of each trading day. And just like ETFs, they offer the possibility to profit from capital gains as well as distributions.

ETFs vs mutual funds: Which should I pick?

ETFs are generally cheaper, have low minimum investments, and can be easily bought and sold on stock exchanges. They’re a good choice for most investors.

But you may want to consider mutual funds if you want an actively managed fund, or if you like the convenience of being able to set up automatic investments. Some people also see the fact that mutual funds are traded at the end of the trading day as a bonus, allowing you to take some of the emotion out of your investment decisions. You can read more on the difference between ETFs and mutual funds in our guide.

Bonds

A bond is a loan and you are the lender. You loan money out to a government or company, and in return they pay you regular interest. They also return the initial amount of money to you at the end of the loan term, which is when the bond reaches maturity.

Bonds are generally seen as a lower-risk investment than stocks, but corporate bonds come with more risk than government bonds. It’s also worth noting that instead of buying individual bonds, you can also invest in bonds through an ETF or mutual fund.

Learn more in our full guide to bonds.

GICs

A GIC is a guaranteed investment certificate. This type of investment lets you earn a guaranteed interest rate on the money you deposit for a set period. GIC terms range anywhere from a month to 10 years, and when the term ends, you receive any interest you’ve earned as well as the money you deposited.

GICs offer a low-risk way to get a guaranteed return. They don’t have the same upside potential as stocks, but they’re widely accessible and can add stability to your portfolio. The downside is that, with most GICs, you can’t access your money before the term ends without penalty.

Other investments

There are several other types of assets you could invest in, including options, futures, foreign currency, or even the volatile world of cryptocurrency. But these assets are more complicated and come with a high level of risk, so they’re not suitable for beginners.

Step 7: Make your first investment

Now it’s time to deposit funds into your trading account and make your first investment. The exact steps you need to take vary slightly depending on the platform you choose, but this part is relatively simple.

It’s basically a matter of:

1. Searching for the asset you want to buy.
2. Entering the amount of money you want to invest.
3. Reviewing all transaction details (including any fees) before confirming your order.

And that’s it—you’re officially investing your funds.

Step 8: Make regular contributions

The key to helping your nest egg grow is to keep making regular investments. If you can afford it, aim to transfer a set amount from each paycheque over to your trading account every time you get paid.

Some brokers even allow you to set up recurring buy orders on a weekly, bi-weekly or monthly basis. Every time your pay drops into your bank account, it’s then automatically invested in the asset of your choice—no need for you to lift another finger.

When is the best time to start investing?

The short answer: as soon as possible! It can be tempting to try to wait for a market downturn to pick up stocks at a discount, but succeeding at that is a whole lot easier said than done.

There’s an old saying in the investing world: time in the market beats timing the market. Even the world’s leading fund managers can’t predict with any certainty what the future holds, so the chances of buying at exactly the right time are extremely slim. Instead, you’re better off starting as early as possible, investing regularly regardless of day-to-day market news, and sticking to a long-term plan.

There are two reasons why investing sooner will set you up better in the long run:

• Compounding. The compounding effect occurs because the interest you make continues to earn interest. Because of the power of compounding, the earlier you invest, the more you’ll make in returns. Reinvesting the interest or dividends you make means that your money grows faster over time — it snowballs.
• Inflation. Inflation is the increase in the price of goods and services, which effectively means the value of money falls over time. According to the Bank of Canada’s inflation calculator, a shopping cart of goods that cost $50 back in 2006 would cost $77.15 in 2026. Rather than leaving your cash in a bank account or tucking it under a mattress, investing allows you to keep pace with, or hopefully beat, inflation.

Example: Why it pays to start investing sooner rather than later

Let’s assume you have $1,000 to invest, you will invest an extra $100 at the beginning of each month, and you get an average annual return of 7%. The table below shows how much difference it makes if you start investing when you’re 25 years old or 32. As you can see, starting your investment journey 7 years earlier means you’ll be over $75,000 better off by your 60th birthday.

How much does it cost to start investing?

There’s a common misconception that you need thousands of dollars to start investing, but that’s simply not true. An increasing number of Canadian trading platforms now let you invest in fractional shares, which means you can still invest in a company if you can’t afford the full price of a single stock. On some platforms, you can start investing with as little as $1.

However, there are a few different fees you need to watch out for:

• Account fees. Discount brokerages typically don’t charge account fees, but some big bank brokerages charge an annual fee (usually around $100) if you don’t meet a minimum balance requirement.
• Trading fees. Also known as brokerage fees, trading fees are charged when you buy or sell an investment. Some brokers charge flat fees of up to $10 per trade, while others charge a fee per share you buy. But an increasing number of platforms offer $0 commission trading, so you can start investing without it costing you a cent.
• Management fees. Invest in an ETF or mutual fund and you’ll need to pay management fees. These generally range from 0.03% for index ETFs through to around 1% – 3% for mutual funds. Management fees for robo-advisor managed portfolios commonly range from around 0.2% to 0.8%.
• Foreign exchange fees. If you want to invest in US stocks or other international markets, you’ll also need to consider currency conversion costs. While some brokers have low FX costs that might only cost you $1 or $2 per trade, others charge a 1.50% fee each time you convert from one currency to another.

Will I need to pay tax on my investments?

Your tax obligations vary depending on whether you invest through a registered or non-registered account.

For example, a TFSA lets you generate tax-free income, while you can defer tax on investment income earned in an RRSP until you make a withdrawal.

But any investment income you earn in a non-registered account will be taxed. How it is taxed varies depending on:

• The type of investment income (for example, capital gains you make when you sell a stock for a profit are taxed differently to interest you earn from a GIC)
• Whether you’re an investor or a day trader
• Your tax bracket

It can all seem a little confusing at first, but your accountant can steer you in the right direction. You can also learn more in our guide to how stocks are taxed in Canada.

How should a beginner start investing?

The best approach for a beginner is to keep it simple.

Avoid complicated investments like futures and options. Skip the hassle of trying to pick individual stocks. Don’t let FOMO lead you into rash investing decisions. And don’t worry about trying to beat the market.

For most people, the best approach is typically to:

1. Pick one or two low-cost index funds.
2. Make an initial investment and continue to make recurring investments on a regular basis.
3. Take advantage of the tax benefits offered by registered accounts like TFSAs and RRSPs.
4. Buy and hold for the long-term.

Stock markets don’t go up in a straight diagonal line. You only have to look at a chart of the performance of the TSX over the past 20 years to realize that, while it’s risen over 200% in that time, there have been plenty of ups and downs along the way. So don’t fall into the trap of panic selling in a market downturn, and don’t stress over every little price fluctuation. Remember your strategy and stick to it.

Finally, keep in mind that the best investing strategy for you might be different to the best strategy for the next person. Where and how you should invest depends on your goals, your timeframe and the level of risk you’re comfortable with.

Glossary of investment terms

Blue-chip stock

Blue-chip stocks are shares of large, stable, reputable, established companies. These companies have a long history of success and often pay dividends to shareholders. Examples of Canadian blue-chip stocks include Royal Bank of Canada, Brookfield and Enbridge.

Brokerage

A brokerage firm is a trading platform that lets you buy and sell stocks and other investments. The term brokerage can also refer to the fee you pay to a platform when you place a trade.

Diversification

A key investment strategy that involves spreading your investments across different types of assets, industries and regions. Diversification is designed to manage your risk by ensuring that you don’t put all your eggs in one basket.

Dividend

A portion of company profits paid to shareholders. Dividends are usually cash payments provided on a per–share basis. They’re commonly distributed quarterly, but they can also be paid annually, semi-annually or monthly.

Dividend Reinvestment Plan (DRIP)

Signing up for a DRIP allows you to automatically reinvest any dividend payments you receive back into the company to purchase more shares.

Dollar-cost averaging

An investment strategy that involves investing a fixed amount of money in an asset on a regular basis. For example, you could invest $100 in the stock of company XYZ every week, no matter the price of the stock.

ETF

Exchange-traded fund. An ETF is a pooled investment fund that holds a collection of assets, such as stocks and bonds. Shares in an ETF can be traded on stock exchanges just like regular stocks.

Growth investing

An investing strategy focused on buying stocks in companies expected to grow at a faster rate than other companies in the same industry. These companies typically don’t pay dividends to shareholders, but instead reinvest profits to help expand their operations.

Income investing

An investing strategy focused on generating a steady stream of income, such as from interest payments or dividends. Income investors invest in assets such as bonds, GICs and dividend-paying stocks.

MER

Management expense ratio. The annual management fee charged by an investment fund such as an ETF or mutual fund.

Portfolio

A collection of assets that you buy and hold with the aim of growing wealth. Your portfolio could include stocks, bonds, cash and other assets.

Value investing

An investing strategy focused on finding stocks that are undervalued and priced lower than their real worth.

Bottom line

You don’t need to be a financial genius to start investing, and you don’t need a big chunk of spare cash either. Investing is a lot easier than you might think, and if you’re in good financial shape, the best time to start investing is right now. So set your financial goals, research different types of investments, and compare brokers to find the right trading platform for you.

Frequently asked questions

• How much money do I need to start investing?

  You can start investing with as little as $1. Some brokerages support fractional shares, which means you don't need to be able to afford the full price of a stock in order to invest in that company. If you're investing in managed portfolios through a robo-advisor, investment minimums commonly vary anywhere from $1 to $1,000 depending on the provider you choose.

• What is FIRE investing?

  FIRE stands for Financial Independence, Retire Early. It's an investment strategy where people invest as much of their employment income as they can afford. The aim is to achieve financial independence as soon as possible and retire at a young age.

• Do I need a financial advisor to start investing?

  Not necessarily. Many banks and independent brokerage firms offer self-directed trading accounts, so it's easy to start investing without the help of an advisor. That said, if you don't feel comfortable choosing your own investments, you can seek assistance from a financial advisor.

• What is the TSX?

  The TSX is the Toronto Stock Exchange. It's Canada's largest stock exchange and features over 1,500 companies.

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Written by

Tim Falk

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Tim Falk is a freelance writer for Finder. Over the course of his 20-year writing career, he has reported on a wide range of personal finance topics. Whether you're investing in stocks and ETFs, comparing savings accounts or choosing a credit card, Tim wants to make it easier for you to understand. When he’s not staring at his computer, you can usually find him exploring the great outdoors. See full bio

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