If you’re wondering whether now is a good time to start investing in Canada, the answer is yes, provided you’re investing money you can leave in the market for years.
And with investments like the iShares Core S&P/TSX Capped Composite Index ETF (TSX: XIC), you don’t need to find one perfect stock before you can begin.
After all, there’s always a reason to hesitate. When stocks have rallied, it’s understandable to worry that you’ve missed the opportunity. And when they’re falling, waiting for conditions to improve can seem like the safer choice.
However, neither situation tells you much about whether you’re personally ready to start building a portfolio.
That’s why, rather than waiting for the market to look perfect, it makes more sense to understand what you can afford to invest and which investments can help you build wealth over the long haul.
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What to consider before you start investing
One of the first things to consider is how long you can leave your money invested.
Stocks can fluctuate considerably in the short term, so money you’ll need for an upcoming expense should generally stay out of the market.
Furthermore, having an emergency fund and paying down expensive debt can put you in a much stronger position to invest consistently without having to sell stocks whenever an unexpected expense comes up.
It’s also worth considering which account to use. A TFSA allows your investments to grow tax-free, while eligible RRSP contributions can reduce your taxable income and allow your investments to grow tax-deferred.
Plus, you don’t have to make one massive investment to get started. Investing a manageable amount each payday or month allows you to build your portfolio gradually while reducing the pressure to choose the perfect day to buy.
Because once you have a plan you can consistently follow, investing becomes something you can keep doing through different market conditions, giving your money more time to compound.
Two Canadian investments to consider for the long haul
If you’re looking for a straightforward place to start, XIC gives you exposure to more than 200 Canadian holdings through a single investment.
It follows the broad Canadian stock market, giving you access to businesses across several industries without limiting your portfolio to one sector or only companies paying generous dividends.
That makes it a useful foundation for the Canadian portion of your portfolio, especially while you’re still learning about individual businesses.
However, as you become more comfortable researching stocks, you can also choose to put additional money into companies whose competitive advantages and growth potential particularly appeal to you.
For example, Canadian National Railway (TSX: CNR) is one of the most important transportation businesses in North America.
Its massive railway network connects Canada’s Atlantic and Pacific coasts with the U.S. Midwest and Gulf Coast, helping move everything from grain and energy products to manufactured goods.
That infrastructure would be incredibly difficult and expensive to replicate, giving CN Rail a significant competitive advantage.
Furthermore, it has opportunities to grow by attracting more freight to its network and improving how efficiently it moves those goods, allowing it to generate more earnings from the infrastructure it already owns.
In fact, CN Rail increased its adjusted earnings per share by roughly 45% between 2020 and 2025, showing the kind of earnings growth investors can benefit from when they give a high-quality business years to grow.
Demand can still weaken in the near term when the economy slows. However, its essential role in North American trade gives investors a reason to look well beyond the next quarter.
It’s also worth noting that XIC already owns CN Rail, so if you choose to own both, you’re increasing your exposure to the company. However, buying the stock separately allows you to put more of your money into a business whose long-term potential particularly appeals to you, while keeping the ETF as the diversified foundation of your portfolio.
And whether you start with an ETF or individual stocks, finding high-quality investments you understand and giving them years to grow can put you in a much better position to build wealth than continually waiting for the perfect opportunity to begin.
