Many people put off investing because they think you need a lot of money—thousands of dollars! to start investing. This just isn’t true. You can start investing for as little as $5 per month.
The key to building wealth is developing good habits—like regularly putting money away every month. If you make investing a habit now, you’ll be in a much stronger financial position down the road.
Let’s say that you have $100 set aside, and you’re ready to enter the world of investing. Or maybe you don’t. Maybe you only have $5 extra a week, and you’d like to get into investing? In this blog, I will walk you through getting started as an investor and show you how to maximize your returns while minimizing your costs.
Lower your cost & Tax
When opening the investment account, consider the cost of opening a bank account and brokerage account. Consider using Questrade & Wealthsimple for Canadian. Interactive Brokers, Etrade, and Robinhood.
Under those discount brokerage, consider opening a tax sheltered account such as Roth IRA for US, TFSA & RRSP for Canadians. Reducing cost and taxes will significantly grow your investment faster!
doesnot work for money, but money work for them – Robert T. Kiyosaki
Option 1: ROBO-ADVISORS
Robo-advisors were created to make investing as simple and accessible as possible. No prior investment experience is required and set-up is easy. Let their automated intelligence track your investments in the background, and pay lower fees in the process
- WealthFront – You can start investing here for as little as $500, and they charge $0 in fees on your first $10,000
- Betterment – You can start investing here with $100, but they charge 0.35% up to your first $10,000 with auto-deposit, or $3/mo without auto-deposit
- Wealthsimple – The first $5,000 is free. Less than $100,000 will have a .5% fee.
- BMO SmartFolio – First $15,000 is managed free.
- Questrade Portfolio IQ – $1,000-$99,999- 0.25%
Option 2: Mutual FUNDS
Mutual funds are investment securities that allow you to invest in a portfolio of stocks and bonds with a single transaction, making them perfect for new investors.
Popular mutual funds include index funds, which follow the performance of a particular stock market index, and money market funds, which invest in short-term, low-risk assets.
US Mutual Funds
- Vanguard 500 Index Fund Admiral Shares – Has a low fee of .04%! The 500 Index Fund is a low-cost way to gain diversified exposure to the U.S. equity market.
- Fidelity® 500 Index Fund – Has a low fee of 0.015%.
Canadian Mutual Funds
- Tangerine Investment Funds – Current Management Expense Ratio: 1.07%. They 5 Mutual funds: Balanced Income, Balance, Balance Growth, Dividend, Equity Growth
- TD’s e-Series funds have lower fees than the Tangerine funds, and you can customize your portfolio with any asset allocation.
Option 3: ETF
An ETF is a basket of securities — stocks, bonds, commodities or some combination of these — that you buy and sell through a broker. They combine the diversification benefits of mutual funds with the trading ease of stocks and are available at various risk levels.
Many ETFs also have options available for investors to use income, speculation, or hedging strategies
Recommended ETFs provider
- BlackRock’s iShares ETFs – iShares, by BlackRock, is the largest ETF company in the world and IVV is it’s
biggestfund. IVV tracks the S&P 500 index and has extremely low expenses at just 0.04 percent, which is among the lowest that tracks the S&P 500.
- Vanguard ETFs – The original pioneer of indexing, Vanguard has some of the best ETFs with high assets on the market. Like their popular mutual fund, Vanguard Total Stock Market Index (VTSMX), VTI tracks the Dow Jones U.S. Total Stock Market Index, which includes the entire U.S. stock market of over 3,500 stocks. The expense ratio for VTI is extremely low at 0.04
- State Street Global Advisors’ SPDR ETFs – This fund is the oldest ETF on the market. SPY tracks the S&P 500 index, which includes about 500 of the largest U.S. stocks. SPY has an expense ratio of 0.09
percent,or $9 for every $10,000 invested.
- BMO ETF (Canadian only) – BMO GAM manages more than $320-billion in assets and is the second-largest ETF provider in Canada, with more than $48.6-billion in ETF