INDEX FUNDS, EXPLAINED

First, why invest at all and is it for you?

Your money has to do a lot—especially in a world where the cost of living is always rising. To build a life where you really live and don’t just pay bills each month, investing is irreplaceable.

It has the power to turn paydays into plane tickets, taking you places that once were only real to you in your imagination. It can transform that raise you got (that didn’t feel big enough) into a down payment. It even has the power to make retirement a realistic goal (yes, even in this economy).

Most importantly: investing is not just for the wealthy. It’s for new grads trying to balance first apartments with student loans, for parents who want their kids to chase dreams as big as their imaginations, for the 30 year olds who want to retire faster instead of working 30 more years.

In other words: since you’re reading this, it’s for you.

Investing vs. saving: what's the difference?

This is one of those concepts that, once you get it, you’ll wish you understood it earlier—no matter how early in life you understand it.

• Saving is for short-term, predictable spending. You put money in a safe place, like a high-interest savings account, where it's readily accessible and won't lose value. The trade-off is that it won't grow much, either.
• Investing is for bigger goals. You use your money to buy assets—like stocks or ETFs—that have the potential to generate significant growth over time. The trade-off is that, like anything else you can own, the value goes up and down.

Put a different way: saving is like parking your money in a secure garage. Investing is like getting your money onto a highway designed for growth. There’s nothing inherently wrong with garages—they have a purpose—but to get where you want to go faster, you need the highway.

Quick tips for beginner investors

If you only take away a few key ideas today, make them these.

• Ready is what you’ll feel in hindsight. This is true of investing, and also of anything else that feels big or scary or ambitious. Confidence comes from trying, from learning, from doing. The sooner you start, the sooner you’ll realize you were more ready than you thought.
• Don’t fear time, befriend it. The most powerful force in investing is time. It gives your investments more opportunities to grow, and the science of compounding to kick in.
• One is a powerful number. A common misconception is that you need a lot of money to start investing—you don’t, especially with fractional shares. These let you buy part of a stock instead of a full one. All you need is $1 to buy into even big-name companies.
• Habits beat motivation. Motivation matters, too, but it has a tendency to be a friend that doesn’t remember to text back. You know it’s there, it’s just not always there when you want it. Train yourself to look at your portfolio at set times (like paydays, for example) so that the act of investing is like brushing your teeth—just another part of your routine.
• Automation beats habits. Habits are reliable, but pliable. Automation, though, that’s fixed. There are ways to automate big parts of your investing strategy, including when deposits come out of your bank account. You can take it even further, getting a Questwealth Portfolio that is adjusted as the market changes for you.
• Focus on what you can actually control. You can't control what the market does day-to-day. But you can control how much you save, the fees you pay, and how you react to market news. Focus your energy there.

How to define your “why”  (and turn daydreams into destinations)

This might seem basic, but the way you do define your why makes a dramatic, tangible difference. Research shows the specificity of your goals has a direct impact on how likely you are to actually reach them.

In a widely cited study by psychology professor Dr. Gail Matthews, the simple act of writing your goals down makes you 42% more likely to achieve those goals!

Let that sink in. Just by taking a minute to define your goals in writing, you make them real—and reachable. It gives your wish a blueprint, and turns that daydream into a destination.

But you can harness that 42% boost even more effectively. The most effective goals are made with the SMART framework, which takes a broad idea and sharpens it into something measurable, achievable, relevant, and time-bound.

Here’s what that looks like in practice:

• Your starting goal: "I want to own my first home."
• Your SMARTer goal: "I will invest $500 per month for the next five years to reach my goal of $40,000 for a down payment on my first home."

• Your starting goal: "I should have an emergency fund."
• Your SMARTer goal: "I will build a $10,000 emergency fund within 18 months by setting aside $150 every paycheque."

• Your starting goal: “I want to retire young enough to enjoy it.”
• Your SMARTer goal: “I will invest 10% of my salary into my RRSP every year to build a $1 million portfolio by the time I am 65."

Figuring out, specifying, and putting in writing this “why” isn’t just part of a to-do list. It’s the foundation of every step after. With it, you’ll have a guiding, motivating purpose as you continue to learn investing.

How to master the psychology of investing

Investing doesn’t just happen in an app. It happens in your head, your heart—it’s an experience. Your portfolio goes up and there’s a rush of joy; the market goes down and there’s a wave of worry.

Mindsets—more than the market’s ups and downs—are critical for successful investing. Because one of these you have control over, and one of them you just have to accept.

Here’s a practical toolkit for the mental side of investing.

• For when the market dips (and it will), take a deep breath and zoom out.

In a perfect world, each time you checked your portfolio it would all be green and every stock would be up. But that’s not how the market works. In those moments when your balance drops, let yourself feel the discomfort, and then let yourself see more than it.

Instead of focusing on one day of performance, look at the 20-year chart of the market. You’ll see peaks and valleys and one clear, overriding trend: growth.

Market downturns are a normal feature, not a bug, and in time, you’ll come to appreciate them for an opportunity, too. Because in time, the storm always ends.

• For when there are too many choices, shrink it to the smallest one.

Each choice that feels big (like picking your first investment) is the sum of several smaller ones. If the big one feels too big, chip away at the little ones first.

When you’re searching for what to watch, and everything that has ever been filmed can be streamed, where do you start? You’ll scroll a bit. Maybe something catches your eye, but maybe it doesn’t. And then you narrow it down: movie, not a show; action not drama.

Picking investments is the same way.

Keep trimming the choice until it’s small enough to make. And if that trimming reveals you don’t feel ready to dive into stocks yet, that’s okay. Many beginners get their start with diversified ETFs, letting their money grow while they grow more comfortable.

• For when there are too many choices, shrink it to the smallest one.

The goal of your first investment isn’t to make a fortune—it’s to prove to yourself you can do it.  Remember all the times you started something despite being unsure, then choose an amount that’s in your comfort zone—$100, $50, even $25.

The confidence you build from taking action is the most valuable return you'll get at the start.

• For when there are too many choices, shrink it to the smallest one.

Scroll online long enough (read: maybe 30 seconds) and you’ll come across people claiming they got rich quick with one easy trick. And of course they’ll post that. Your attention is their payday—and big numbers are hard to look away from.

The purpose of investing isn’t fast wealth, it’s lasting wealth. You’re building something for today, tomorrow, for the rest of your life. So keep scrolling (or close that app altogether), remember your why, and focus on your progress—no one else’s.

How to actually start investing (in 3 easy steps)

You have the facts, the tips, the mindset—so what’s left? The practical part. Your first steps for investing in Canada start here.

Step 1: Choose your platform

This is your base camp for online investing. In Canada, you have two main choices:

1. Self-directed brokerage: You are in control. You choose your investments and make your own trades. This path offers the most flexibility and, if you opt for a platform like Questrade instead of a bank, much lower fees.
2. Robo-advisor (or managed investing): You answer questions about your goals and risk tolerance, and a portfolio is built and managed for you. It's a "hands-off" approach.

At Questrade, we offer both. You can discover the ins and outs of our self-directed accounts or see how our Questwealth Portfolios work.

Step 2: Open your first account

This is the most important practical step. You’ll get to select an account that holds your investments and, depending on what you choose, even shield your investments from taxes. The two most powerful accounts for Canadians are:

• Tax-Free Savings Account (TFSA): A staple for almost every Canadian investor. Any growth or income your investments generate inside a TFSA is 100% tax-free for life. It's incredibly flexible and perfect for nearly any savings goal.
• Registered Retirement Savings Plan (RRSP): Your primary account for retirement savings. Your contributions are tax-deductible, which means you get a tax break today for saving for your future self.

You can open an account online from your phone in minutes—the same minutes that would just vanish if you went back to scrolling other apps.

Step 3: Select your first investment

This is the "what" in "what is an investment?". As we've covered, the simplest and most effective starting point is an all-in-one asset allocation ETF. Think of it as a professionally curated basket of thousands of investments from around the world.

By buying just one thing, you are instantly and globally diversified.

How to stay the course (your long-term strategy)

Investing isn't a one-time act, it’s a lifestyle—something that sticks with you as you grow and change. There are different ways to approach that lifestyle, but these are core building blocks:

1. Pay yourself first. Set up automatic contributions from your bank account to your investment account every single payday. This is the single most effective way to build wealth over time, streamlining how investing blends into your life.
2. Be patient. Wealth isn't built overnight. It's built by steady, consistent choices. You need to trust the process, trust your plan, and let the magic of compound growth do the heavy lifting.
3. Check in, don't check out. It's wise to review your portfolio to ensure it's still aligned with your goals. But remember: daily fluctuations are just noise. When it gets loud, drown it out by returning your focus to your why.

From curiosity to confidence, your path starts here.

There’s no mix quite like it: curiosity, courage, a little uncertainty—which is, really, just a prerequisite for being courageous.

It’s the beginning of things. It’s where you are now, having read this. And it’s where you’ll look back on, after taking your first small, meaningful steps, realizing that you’re more of an investor than you’ve ever been before.