New Year, New Financial Goals: How to Start Investing in the Stock Market

Here’s an easy way beginners can get started with investing in stocks.

Tony Dong, MSc, CETF®

Author Bio Tony turned a series of marijuana stock losses in 2017 into a self-employment venture, focused on helping retail investors build better portfolios with exchange-traded funds (ETFs). He is the founder of ETF Portfolio Blueprint and the Lead ETF Analyst for ETF Central, a partnership between Trackinsight and the New York Stock Exchange. He also currently writes freelance for MoneySense, U.S. News & World Report, Kiplinger, and 24/7 Wall St., and runs an investing-focused newsletter called The Dumb Money Dispatch with 3,300+ subscribers. Outside of finance, Tony owns a small ranch in rural British Columbia, raising goats and chickens, and also volunteers as a wildland firefighter in his local community. His background includes service in the Canadian Armed Forces as a reservist and stints in corporate security. Education Master of Science (MSc) in Enterprise Risk Management, Columbia University Bachelor of Arts (BA) in Criminology, Simon Fraser University Certified ETF Advisor (CETF®), The ETF Institute Securities Industry Essentials (SIE), FINRA Canadian Securities Course (CSC), Canadian Securities Institute Areas of Expertise ETFs, mutual funds, Berkshire Hathaway, indexing, dividend stocks, royalty trusts, REITs, infrastructure, aerospace & defence, passive income investing, portfolio construction, risk management, RRSPs & TFSAs. Social Media Profiles https://www.linkedin.com/in/tzld96/ https://www.youtube.com/@okanaganhomesteader Favorite Investment Quote "Rule No. 1: Never lose money. Rule No. 2: Never forget Rule No. 1." - Warren Buffett

Published January 30, 2024 11:45 am EST

This is the perfect time to set fresh financial goals. If your money has been sitting in savings accounts, you might be enjoying some risk-free interest, but the truth is, these options offer limited growth potential in the long run.

To truly grow your wealth, it’s essential to embrace some level of risk — and the stock market is one of the most effective places to do that. However, diving into stocks doesn’t mean you have to spend hours researching and picking individual companies.

There’s a smarter, more straightforward approach: betting on the global stock market as a whole to rise. This method spreads out your risk across a vast array of companies and industries, making it a more balanced way to step into the world of stock market investing.

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Open a brokerage account

If you haven’t already, one of the first steps to start investing in the stock market is to open a Tax-Free Savings Account (TFSA). The TFSA is an invaluable tool for Canadian investors, offering a unique blend of flexibility and tax efficiency.

In a TFSA, your capital gains, dividends, and other investment earnings grow completely tax-free. This means you won’t have to pay any taxes on the money you make from your investments inside this account. Additionally, each year you get new contribution room; for 2024, it’s $7,000.

When it comes to opening a TFSA, there are several brokerage options available. One particularly user-friendly option is Wealthsimple. I personally like it it because it offers zero-commission trades on Canadian stocks and exchange-traded funds (ETFs).

Buy the right ETF

When you’ve opened your TFSA and are ready to invest, a great ETF choice for beginners in my opinion is Vanguard All-Equity ETF Portfolio (TSX: VEQT).

VEQT’s appeal lies in its extensive diversification, as it includes over 12,000 global stocks from a variety of sectors. This level of diversification is a significant advantage, as it spreads your investment across the global economy, mitigating the risks associated with investing in individual stocks or specific sectors.

Additionally, VEQT is known for its affordability, with a management expense ratio of only 0.24%. Finally, another key benefit of VEQT is the simplicity it brings to stock investing. It eliminates the need to research and choose individual stocks, as it offers broad market exposure in one investment.

Practice good behaviours

Finally, as you embark on your investing journey, it’s essential to adopt good investment behaviors that can significantly enhance your long-term success. Here are a few key tips to consider:

Setting up automatic dividend reinvestments: Many ETFs, including VEQT, pay dividends. By setting up a Dividend-Reinvestment Plan (DRIP), you automatically use these dividends to purchase more shares of the ETF. This strategy harnesses the power of compounding, allowing your investment to grow more efficiently over time.

Buying consistently at a set time: Implement a strategy known as dollar-cost averaging. This involves investing a fixed amount of money at regular intervals, regardless of the ETF’s price. This approach can help you avoid trying to time the market, which is often a futile exercise and can lead to more disciplined and consistent investment habits.

Avoid panic selling: The stock market can be volatile, and it’s natural to feel uneasy during periods of market downturns. However, panic selling during these times can lock in losses and disrupt your long-term investment strategy. It’s important to stay focused on your long-term goals and not react impulsively to short-term market fluctuations.