INVESTING IN S&P 500 CANADA

[iancjh]

hi im 20 yrs old currently looking to invest the money i made, im new to investing but looking forward to making a lifetime investment in s&p500 here in canada, can somebody give a few tips when starting out also which bank/broker will help me do this investment w the best possible fees/growth, im in Canada btw, Ontario.

 

[displacedspirit]

@iancjh Step 1 - open a brokerage account. You can do so at any of the big 5 banks. They charge a lot for fees, but if you’re purchasing infrequently, it shouldn’t matter. If you’re purchasing more frequently, go for a discount broker like Questrade.

Step 1a - for you I’d recommend a tfsa over rrsp.

step 2 - purchase an SP500 ETF. An etf is, in simple terms, a stock that tracks the returns of an index or other benchmark. You can google sp500 etf and you will get a lot of examples. But VFV, VSP, etc) if you’re interested you can look into whether or not you want a cad hedged one or not. But some would argue it doesn’t really matter over the long term.

My suggestion to you is to read a book on the topic. I would suggest “I will teach you to be rich” by ramit sethi

I have read 100s of books on finance, have a masters in finance, and I would say that book is most appropriate in your situation. It is one of my favourites, and if you get it In Audiobook format, he’s an amazing narrator and it’s an easy listen.

all the best

Edit: edited to opine on tfsa or rrsp

 

[infinitas1985]

@iancjh Get an account with any broker, and simply buy $SPY or $VOO (pretty much the same)... ideally within an RRSP so you don't pay taxes now.

 

[tmc1284]

@infinitas1985 At 20 years old a tfsa is most likely better. RRSP is best close to your peak earning years. It is unlikely his or her peak earning years yet.

 

[infinitas1985]

@tmc1284 I prefer the RRSP option as there's less temptation to get the money out and will allow for the gains to compound for 50 insane years. OP will be very rich.

 

[tmc1284]

@infinitas1985 Your gains can compound for just as long in a tfsa and not have future tax. If you are undisciplined maybe RRSP is better, but it is less efficient at his or her age.

 

[infinitas1985]

@tmc1284 For what he is likely to invest, I don't see the inefficiencies; and the risk of wanting to take the gains out is very high.

 

[pt8214]

@infinitas1985 I'd you think you will make more money in the future then saving RRSP contribution space for then and using TFSA until then can get you a bigger return. Also if you do hold for 40 years the tax saving in withdrawal from a TFSA vs RRSP will be much higher that the tax refund today.

To each their own, but at 20 unless you're high income chances are RRSP room will give you a better return later.

 

[duglasholiday]

@infinitas1985 the taxes to be paid will also be compounded in a RRSP. Just pay taxes now and take out that compounded amount out tax free later.