How to Invest in an ETF & Which One Do I Pick?

Now that you know what an ETF is, you may be wondering, “How do I actually invest in one?” Well, we’ve got you covered! ETFs are one of the easiest ways to start investing, and getting started is just as simple. 

Step 1) Open your investment account

ETFs trade the same way as a normal stock, so you simply buy them using your online TFSA brokerage account, which is the best beginners investing account option. Once your account is set up you’ll need to deposit funds into it from your banking account - you can start small, even $100! A common misconception about investing is that you need thousands of dollars to get started, but this is not true. Investing doesn’t require a big initial investment, you can build your account at your own pace. 

Step 2) Choosing the right ETF

There are many ETF account options to choose from, so we've narrowed down our favourites for you so you don’t have to. 

1. VFV - Vanguard S&P500 Idex ETF 

The Vanguard S&P500 ETF holds the top 500 companies in the US and is the most popular ETF in Canada including companies like Apple, Microsoft, and Amazon. This provides you safety and high average returns as it always tracks the best US companies, making it our top recommendation.

2. VDY - Vanguard High Yield Dividend Index

Vanguard’s Dividend Index holds the top returning dividend stocks in Canada including companies like TD Bank, Manulife Financial, and Suncor Energy. This allows you to collect dividend payments monthly, providing additional regular income rather than just making money when you sell. 

3. XEQT - iShares Core Equity ETF

Managed by one of the top investment firms, BlackRock’s iShares ETF holds 10,000 companies around the world across sectors including healthcare, technology, consumer goods and more. This provides you with safety from international diversification (spreading risk amongst a lot of companies around the world, so if some do poorly, it balances out). 

Step 3) Sit back, reinvest, and grow your wealth!

The beauty of an ETF is once you've invested, you don’t need to check up on them all the time as you would a short-term trade. ETFs are designed for long-term growth, so you can check in periodically without stressing about day-to-day market fluctuations. Instead, continue putting money into your ETF, aiming for $100/ month or honestly whatever you can afford. Let this your money grow over time, with better results seen with increased holding time to enjoy the magic of compound interest (your money grows exponentially by compounding on your gains for longer holding periods). This being said, start early… start now!

Investing in ETFs is a great way to grow your money while keeping things simple. Remember, the most important part is to get started—small steps today can lead to big financial wins tomorrow! Let’s get our bag girls.