Beginner’s Guide to Investing

Hey there! So, you’re thinking about investing? That’s awesome! Whether you’re eyeing that shiny new truck or dreaming of a future with a few more zeroes in your bank account, we’re here to help. 

But hey, we get it: the world of investing can seem like a foreign country where everyone speaks in confusing acronyms. RRSP? ETF? IPO? Don’t worry, we’re not going to leave you stranded in that foreign country without a map. Let’s break it down step by step. And don’t worry, we promise to make it fun, easy, and, dare we say, even a little entertaining.

Start with the Basics

First things first: what does it even mean to invest? Simply put, investing is putting your money somewhere that will (hopefully) make more money over time. Imagine if you planted a little seed in the garden, and with the right care and patience, it grew into a big, juicy apple tree. Your money works in a similar way. You plant it in investments like stocks, bonds, mutual funds, or GICs, and with time (and a little luck), it can grow.

What’s Your Goal?

Before you jump into the investment world, think about what you want to achieve. Are you saving for retirement? (That’s your RRSP.) Do you want to buy a cottage or travel to Europe someday? (That’s more of a TFSA kinda thing.) Or maybe you just want to see your money grow for future adventures.  

Whatever your goal is, understanding it is the first step to choosing the right investment strategy. And trust us, there’s no one-size-fits-all, which is why we’re here to help guide you.

Why Should You Invest?

Maybe you’re thinking, “But I could just keep my money in my trusty ol’ savings account, right?” Sure, but here’s the thing: inflation (that’s the rising cost of stuff) can eat away at the value of your money over time. In other words, your savings account might be growing, but it’s not growing fast enough to keep up with the rising cost of that morning coffee.

Investing helps your money grow at a rate that (hopefully) beats inflation, which means you’re not just keeping up — you’re getting ahead. Plus, it can be pretty fun to watch your money work for you.  

How Much Should You Invest?

If you’re wondering, “How much do I need to start investing?” The answer is: it depends! But don’t worry, you don’t need a huge pile of cash to get started. Some investments can be started with as little as $50. (Yes, really!) The key is to start with what you’re comfortable with and work your way up over time. A little bit today could mean a lot more tomorrow. 

Investments for Beginners

If you’re just starting out with investing, it's smart to keep things simple and not jump into anything too complex or risky. Here are some beginner-friendly investments that can help set you on the right path for growing your money:

Mutual Funds

Similar to index funds, mutual funds pool your money with other investors to buy a mix of stocks, bonds, or other investments. A professional fund manager chooses what to invest in, making it a great option if you’re not ready to pick stocks yourself.

Why it’s great for beginners: It's a hands-off investment, and you don’t need to choose individual stocks or bonds. You get professional management and diversification.

High-Interest Savings Accounts or / Term Deposits / GICs (Guaranteed Investment Certificates)

If you're ultra-cautious and want a very low-risk option to start with, a high-interest savings account or GIC is a good place to park your money while you learn. GICs are like a savings account with a guaranteed return over a set period of time.

Why it’s great for beginners: Very low risk, guaranteed return, and easy to understand.

Robo-Advisors

A robo-advisor is an online platform that creates and manages an investment portfolio for you based on your financial goals and risk tolerance. It’s automated and designed to make investing easier and more affordable. Think of it like a financial advisor in your pocket, except it’s more affordable and less intimidating.

Why it’s great for beginners: It does most of the work for you, and you can get started with low amounts of money.

Want to try out Qtrade Guided Portfolios®? Get Started!

Options For More Seasoned Investors

Index Funds (or Exchange-Traded Funds - ETFs)

These are like the all-you-can-eat buffet of the investing world. An index fund or ETF is a basket of stocks or bonds that tracks a particular market index (like the S&P 500, which represents 500 of the largest U.S. companies). Instead of picking individual stocks, you’re buying a piece of a lot of companies, which helps to diversify your investment and reduce risk.

Low fees, simple to understand, and they automatically spread your risk across many companies.

Dividend Stocks

Dividend stocks are shares of companies that pay you a portion of their profits (in the form of dividends) regularly. These stocks can provide a nice, steady stream of income, which is great for beginners who want some stability.

Steady income, and if you choose good companies, they can increase in value over time, too. It's like getting paid to own stocks!

Bonds (or Bond Funds)

If you're looking for something lower risk than stocks, bonds are a great option. When you buy a bond, you're lending money to a government or corporation, and they promise to pay you back with interest. Bonds can be less volatile than stocks, making them a safer choice for conservative investors.

Less risk than stocks, and they can provide a steady income stream. Good for balancing out a portfolio.

The Golden Rule: Diversification

Imagine you’re at the farm market, and you’ve got your eggs in one basket. What happens if you trip? Disaster. Same thing goes for investing. It’s important to diversify — that means not putting all your money into one stock or bond. Spread it out, mix it up, and protect yourself from big losses. You shouldn’t put all your eggs in one basket—but with Prosperity, you can keep them all under one roof, thanks to a variety of investment options that fit your goals and comfort level.

We’ve Got Your Back

Alright, now that you’ve got the basics, it’s time to take action! Here at Prosperity Credit Union, we’re all about helping our neighbors (that’s you!) grow their money. Whether you’re just dipping your toes into the world of investing or you’re ready to dive in, we’ve got the tools and the know-how to guide you every step of the way.

Plus, we offer tons of resources to help you understand the best investment strategies for your situation. You don’t have to do this alone — we’re here to help, every step of the way.

Get Started Today!

Ready to take the plunge? Call us, visit one of our branches across rural Saskatchewan, or even set up a meeting online. Our friendly team will help you make a plan that’s right for you, no matter where you’re starting from.

Happy investing, neighbor!

Disclaimer: While we’re happy to share this info with you, please keep in mind that investing involves risk. Make sure to do your own research and consult with a financial expert if you need help with specific decisions. Prosperity Credit Union is here to support you, but we’re not fortune tellers.

*Mutual funds and other securities are offered through Aviso Wealth, a division of Aviso Financial Inc. Unless otherwise stated, mutual funds, other securities and cash balances are not covered by the Canada Deposit Insurance Corporation or by any other government deposit insurer that insures deposits in credit unions. Qtrade Guided Portfolios is a division of Aviso Financial Inc.