How to start investing for beginners (2024)

“How can I start investing today?” is a question we hear a lot. And with good reason. Investments play an essential role in a successful financial future. But before you take the plunge Warren Buffett style – to really understand if you’re ready to invest – make sure you know the investing basics: what it is, when to start, how to invest to reach your personal financial goals, and more!

What is investing?

Investing for beginners can be quite simple in theory. When you earn money, you have three options: spend it, save it, invest it. Let’s quickly explore these options.

  • When you spend– a necessary act to pay for goods, services and living expenses – your money is gone. You won’t get it back.
  • When you save– whether it’s in a bank account or under your mattress – your money loses purchasing power over time, because the cost of goods rise (also known as inflation).
  • When you invest– the act of contributing money to a specific endeavour – your money has an opportunity to earn a financial return. In other words? By investing the money you’re not using today, you can grow it for tomorrow.

By definition, investing is lending your money to others, who use it to further their ventures. In return, they promise to repay you with interest or give you a stake in that venture (also called a “share” or “stock”). If the venture increases in value, so does your stake, which you can cash in for a profit. But, beware, there’s also a possibility that the venture will lose value. So, investing also comes with the risk of losses.

Understanding your risk tolerancecan help you determine your personal investment style – and your ability to withstand losses. The basic investment principle of risk and return is this: higher risk brings higher potential returns, and lower risks brings lower potential returns.

When should you invest?

Before you consider how to start investing, ask yourself, “Am I ready to start investing?” You may have disposable income available, but that doesn’t mean investing is always the best use for your funds. First, make sure that you consider the following factors:

  • Establishing an emergency fund.Avoid investing only to end up in a situation where you need to take the money out for an emergency. As a general rule, it’s a good idea to have three-to-six months’ worth of expenses saved and easily accessible to cover unexpected expenses and/or events.
  • Securing appropriate life and health insurance.Check if you have coverage at work. From there, aCo-operatorsfinancial representativecan help you fill in any gaps that you may have in your insurance coverage.
  • Setting up a willand selecting a power of attorney.It’s safer (both legally and financially speaking) to go through a lawyer, rather than relying on a handwritten document.
  • Paying down your debts.Do you have a mortgage, car loan and/or student debt? If the interest on your debt payments exceeds your potential investment earnings, it might be prudent to pay down your debts before allocating money to investments.

Got those bases covered? Great! You’re ready to start. And the sooner, the better. Becausemarkets have proven to trend upward over time, investing today means that you’ll “get in” for less now than you would if you begin at a later time, down the road.

Investing early and regularly also allows you to take advantage of something called compounding. Here’s an example of how it works:

Let’s say that, beginning at age 20, you invest $2,400 a year for 10 years, earning 5% (after fees). At age 65, your investment will be worth $174,837.22.

Alternatively, suppose that you start at age 35 and invest $2,400 a year for 10 years, earning the same 5% (after fees). At age 65, you will have earned only $84,099.69 – a difference of more than $90,000!

That’s the power of compounding.

What are your goals?

A good investment plan is rooted in your personal goals. Think about what you’re investing for: A big purchase, like a home or a dream vacation? A comfortable retirement? A little of both? (This article can help you prioritize your savings goals.)

Whatever your goals, there are smart investment choices that can help you get there, according to your investing comfort and timelines. This becomes your investment plan. And, once you have one, it’s important to stick to it – evenwhen markets are down– to successfully reach those goals.

What should you invest in?

Deciding where to put your money can be overwhelming. Let’s address a common source of confusion: the difference between investment accounts and investment vehicles.

  • Investment accountshold the investments that you buy and sell enroute to achieving your financial goals. You’ll need to open an investment account before you start investing. You can choose between registered (such as RRSPs and TFSAs) and non-registered options.
  • Investment vehiclesare the investment products that you choose to invest your money in. These can includesegregated funds and mutual funds, ETFs and index funds, stocks and GICs.

As examples, you may choose to set up an RRSP and invest in segregated funds. Or you might set up a TFSA and invest in mutual funds. Again, the investment accounts and vehicles you choose depend on your goals, risk tolerance and time horizon. Your level of understanding and experience around investing – as well as current market trends – can also play a role in your choices.

At Co-operators, we offer:

Investment Accounts


Looking for compounded growth on your retirement savings, while lowering your annual tax bill? ARegistered Retirement Savings Planis a popular way to save for your golden years. You can even use the funds to purchase your first home or to further your education.


Whether you’re saving for short-term needs – like a car, a home renovation or a vacation – or you’re looking to supplement your retirement income down the road, aTax-Free Savings Accountcan help. You’ll enjoy the flexibility and tax-free growth.


Want a head start on saving for a child’s university or college tuition? ARegistered Education Savings Plan, boosted by government grants, can cover a portion or all of their expenses.


If you’re looking to secure the long-term financial security of a person with a disability, aRegistered Disability Savings Planis a great way to do it. Like RESPs, these accounts are eligible for government grants.


Keep investing during retirement with aRegistered Retirement Income Fund. These accounts hold the funds from your RRSP once you reach retirement age, providing a set amount every month.


Registered accounts – like those listed above – have rules around how much you can contribute within a given time frame. If you’ve maxed out your eligible contributions on the registered side, a non-registered account allows you to continue investing as much and as often as you’d like. Keep in mind, non-registered accounts are subject to tax every year.

Investment Vehicles

Mutual funds

If you want diversification, professional management and the potential for growth,mutual funds may be for you. They pool money from many individual investors to purchase a larger variety of stocks, bonds and other assets.

Segregated funds

Like mutual funds,segregated fundsare diverse, professionally managed investments that can help your money grow. In exchange for a slightly higher fee, you receive added benefits, including a guarantee on your principal contributions, even if the markets underperform.


Annuitiesare low risk investments that use your accumulated savings to provide a guaranteed income for life – or a specific length of time. They’re set up to disperse a predetermined amount per month, based on your desired lifestyle and ongoing expenses.

How to invest your money

A popular way to start is to treat your savings plan like one of your monthly bills, by setting up automatic deposits from your chequing account. This “pay yourself first” strategy ensures you’ll contribute regularly and helps you budget for the expense. Starting a monthly savings plan also allows you to take advantage ofdollar cost averaging,which helps lessen the impact of volatility on your investments.

When it comes to your choice of investments and your overall investment plan, the phrase “go big or go home” should never apply. In many cases, in fact, it pays to start small. That’s because a little adds up to a lot over the long term. Investing even a small amount regularly, like $50 a month, can have a big impact. By starting small, you can put money toward your retirement, take advantage of compounding and reduce the amount of tax you pay each year. Then, once you get comfortable with your investment choices and you have a better understanding of how to invest according to your risk tolerance, you can increase your contributions to boost your potential returns.

While it sounds glamourous to wheel and deal like a Wall Street banker, investing in stocks requires a great deal of knowledge and effort. Many individuals prefer professionally managed investments (like mutual funds and segregated funds), allowing experienced experts to make the day-to-day investment choices in exchange for a management fee. Whenchoosing a partner to invest with, look for a company that shares your values, that offers a full suite of options, and that provides the right advice for your situation and goals. We’re always here to answer any questions that you may have.

In the meantime, happy (and safe) investing!

*In the province of Quebec, the authorized representatives are Financial Security Advisors who have been duly certified by the Autorité des marchés financiers.The information contained in this report was obtained from sources believed to be reliable; however, we cannot guarantee that it is accurate or complete and it should not be considered personal taxation advice. We are not tax advisors and we recommend that clients seek independent advice from a professional tax advisor on tax related matters. Mutual funds are offered through Co-operators Financial Investment Services Inc. to Canadian residents except those in Quebec and the territories. Segregated funds and annuities are administered by Co-operators Life Insurance Company. Co-operators Life Insurance Company and Co-operators Financial Investment Services Inc. are committed to protecting the privacy, confidentiality, accuracy and security of the personal information that we collect, use, retain and disclose in the course of conducting our business. Visit more information. Co-operators® is a registered trademark of The Co-operators Group Limited..

How to start investing for beginners (2024)


Is $100 enough to start investing? ›

Even though you can get started investing with $100 or less, it's important to realize that, eventually, you'll have to invest more money. Putting in $100 once or even a month won't help you adequately grow your wealth or fund your retirement. It's just not enough to meet your long-term wealth needs.

How much money do I need to invest to make $1000 a month? ›

Invest in Dividend Stocks

A stock portfolio focused on dividends can generate $1,000 per month or more in perpetual passive income, Mircea Iosif wrote on Medium. “For example, at a 4% dividend yield, you would need a portfolio worth $300,000.

What happens if you save $100 dollars a month for 40 years? ›

Your Retirement Savings If You Save $100 a Month in a 401(k)

If you're age 25 and have 40 years to save until retirement, depositing $100 a month into a savings account earning the current average U.S. interest rate of 0.42% APY would get you to just $52,367 in retirement savings — not great.

How much should I invest as a beginner? ›

Decide how much to invest

As a general rule of thumb, you want to aim to invest a total of 10% to 15% of your income each year for retirement. That probably sounds unrealistic now, but you can start small and work your way up to it over time. (Calculate a more specific retirement goal with our retirement calculator.)

What is a good amount to invest for beginners? ›

How much should you be investing? Some experts recommend at least 15% of your income. Setting clear investment goals can help you determine if you're investing the right amount. If you're new to investing, you might be asking yourself how much you should invest, or if you even have enough money to invest.

Is $100 a week enough to invest? ›

$100 per week adds up to $15,600 in three years

There is no sensible stock that will get you to $1,500 per year with $5,200 invested — that's a 28% yield! — but there are stocks that could get you there after three years of saving. That takes you to $15,600 in cumulative savings.

How much money is enough to start investing? ›

There's no minimum income you must earn before you can invest. But it's important for your long-term financial security to set aside money for emergencies and to have debt under control. Once you've put those plans into action, you're ready to invest.

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