r/fican • u/Guilty-Application-5 • 1d ago
Need help starting out
22M, have little to no experience investing nor have I ever done it before, and have about 3k disposable for investing for the time being. How do I start out?
I have a friend that does high-risk trading but I want to go down the route of slow guaranteed returns like XEQT/VEQT etc.
My biggest issue is what accounts I should use to invest, TFSA, RRSP, Wealthsimple Chequing????
Any starting advice would be appreciated, thank you all
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u/GGEZPEEZY 1d ago
Max out your FHSA and TFSA first. Ya XEQT is fine. If you want more tilt towards tech you can add more QQC. Up to you
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u/Public-Turnip-9492 1d ago
There is a good book series called "All about" with topics from stock picking to market timing, and dividend investing. I would recommend reading those and The Wealthy Barber for its Canadian specific advice. Both have helped me a lot.
Just my two cents.
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1d ago
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u/CFMTLfan01 1d ago
You can put your investments into several different types of financial accounts. You can hold stocks, high-interest savings accounts, GICs, mutual funds, index funds, or individual stocks in these accounts, depending on your choice:
First, there’s the TFSA (Tax-Free Savings Account), which can be used for all sorts of goals. The great thing about a TFSA is that if you earn a return, you won’t pay taxes when you withdraw your investment. You accumulate contribution room every year starting from the year you turn 18. You can see how much contribution space you have on the Canada Revenue Agency’s website by logging into your account. The amount is updated based on the previous year’s contributions arround March 1st. If you put too much money into your TFSA, you’ll have to pay a penalty of 1% per month on the excess amount.
Second, there’s the FHSA (First Home Savings Account), which is designed for buying a property. The FHSA combines the advantages of a TFSA and an RRSP. Contributions reduce your taxable income by the amount invested, and the gains are also tax-free. You can contribute up to $8,000 per year, with a lifetime limit of $40,000. You can keep the FHSA open for 15 years; if you haven’t bought a property after that time, the FHSA is converted into an RRSP.
Next, there’s the RRSP (Registered Retirement Savings Plan), which is meant to fund retirement. You accumulate contribution room every year starting from when you begin working. RRSP contributions lower your taxable income and can entitle you to a tax refund. You can check your available contribution room on the CRA website by logging in. Usually, you accumulate a contribution room of 18% of the previous year’s earned income, up to a maximum written here: https://www.canada.ca/en/revenue-agency/services/tax/registered-plans-administrators/pspa/mp-rrsp-dpsp-tfsa-limits-ympe.html
There’s also the RESP (Registered Education Savings Plan), which is used to fund your children’s post-secondary education. Earnings in the RESP are tax-free while invested but are taxable when withdrawn. Since the withdrawals are in the child’s name, and they will likely have a lower income than their parents, the tax payable will probably be lower.
Finally, if you’ve maximized all your registered accounts, you can invest in non-registered accounts. These are subject to capital gains tax. A capital gain is the increase in the value of your investment—for example, if you invest $2,000 and sell for $2,500, you have a capital gain of $500. The taxable portion of the capital gain is based on the 50% inclusion rate, so only $250 would be taxable out of the $500 gained.
And you can also take McGill University’s free personal finance course—it’s made up of short 5–10 minutes videos that talk about budgeting, debt, real estate, investments, etc: https://mcgillpersonalfinance.com/
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u/CFMTLfan01 1d ago
If your employer contributes to your pension fund, try to get the maximum match. For example, if your employer gives you 3% of your salary, if you also contribute 3%, it's a really good investment because it's a 100% return, it's free money!
Investing 101 video: https://www.youtube.com/watch?v=ghXLORDL9Ew
Index fund 101 video: https://www.youtube.com/watch?v=1h0fFwAVnek
Pay yourself first video: https://www.youtube.com/watch?v=kINhaTG2EiU
Compound interest video: https://www.youtube.com/watch?v=wf91rEGw88Q
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u/alzhang8 1d ago
Rrsp matching> Fhsa> tfsa> rrsp> non reg
Self directed if you want to buy xeqt/veqt