A Beginner’s Guide to Investing Money

From the stock market to cryptocurrency, Barry Choi breaks down everything you should know.

You invest your money into the markets in hopes it’ll grow in value in the future. Safe investments have a lower return, but you’ll unlikely lose money. If you invest in something riskier such as stocks, you have a greater chance of higher returns. The idea is to find that balance in your comfort zone.

How can we start investing?

  • Mutual funds through your bank or investment advisor: Gives you a one-on-one experience
  • Through a Robo-Advisor: Lower fees, but most things are automated
  • On your own: Requires the most work, but costs the least

How much do we need to start?

You can invest whatever you’re comfortable with! That could be $25 a month or $20,000. Including investing – or rather savings – as part of your monthly budget is ideal (RRSP, TFSA, RESP).

*Tip: Automate things to make investing easier. Set things up so $25 is automatically withdrawn every month. Increase that amount as you get used to it.

TLDR: Robo-Advisors

Despite the name, it’s not actual robots managing your money, it’s algorithms. All the purchasing decisions are done automatically, so there are no emotional decisions.
According to Barry, they’re a great option for people who want a hands-off approach while minimizing fees.

Investing on your own

Anyone can invest on their own, they just need to take the time to understand things. Reading one book on personal finance will change your mindset. That’s all you need! If you can follow a recipe, you can learn to invest on your own. The advantage of investing on your own is you have complete control and you’ll pay fewer fees.

When to work with an investment advisor

It’s really up to you! There are a lot of great advisors out there, you just need to ensure they’re looking out for your best interests. Ask them what their fees are what service you’re getting in return. The average mutual fund has a fee of 2.5%. So for example, if you have $100,000 invested, you’re paying $2,500 a year in fees. Many advisors only call you once a year.

What’s up with cryptocurrency?

Cryptocurrency is the hot topic and everyone is talking about it. But Barry says investing in it is essentially gambling. Go ahead and invest a part of your portfolio in it, but understand you could lose it all (or see massive gains). Don’t make it your only investment, and don’t even think about it as a strategy to pay for your kids’ post-secondary education.