INDEX FUNDS, EXPLAINED

You feel it, don’t you?

That sense that your money, sitting in a savings account, could be doing more. Don’t ignore that feeling—it’s telling you the truth.

While savings accounts often struggle to keep pace with inflation, the Canadian stock market (S&P/TSX Composite Index) has historically delivered average annual returns of over 9% for the last 60 years.

The sidelines don’t suit you—neither does missing out on that growth. Opening a trading account is the definitive step in building the future you want: it transforms you from a person who thinks about investing to being an investor.

This guide will get you from the starting line to on your way, without the jargon.

Step 1: How to choose the right brokerage for trading

In Canada, you have three basic models to choose from. The choice you make isn’t just an aesthetic one, either, it has a direct impact on the value of your trades.

• The old-school route (big banks)

For a long time, this was the only path out there—but not anymore. And that’s good news because at banks, you’ll typically pay high trading fees (around $10 per trade) which makes every trade you do less valuable.

• The entry-level choices

As tech has improved, more and more modern trading platforms have emerged that offer simple apps. These cater to first-time users, but simplicity has its limits, and soon enough, an entry-level platform will also limit you to entry-level trading outcomes.

• The investor’s choice

Questrade is built for people who don’t just think about their goals, they actually strive to reach them—which is to say, if you’re reading this, it’s built for people like you. Don’t just take our word for it, though.

Canadians trust Questrade with over $50 billion in assets under administration, a number that just keeps growing each year. Not only that, but for three-straight years, Questrade has earned the title of Money Sense’s best online broker in Canada.

Why Questrade? You get the best of all worlds. The security of an old-school bank, zero trading commissions and fractional shares like the entry-level alternatives, and a trading platform that’s fully loaded with research tools to make finding trades easier.

Step 2: How to select the right investment account

The best place to start is to not think about the account at all. Instead, develop a clear sense of your “why”—the reason you’re investing in the first place.

Once you know what that is, all you have to do is select the account that syncs up with your purpose.

• If your goal is a first home:

The First Home Savings Account (FHSA) is made for you. Your contributions will be tax-deductible, and when you withdraw the funds for a qualifying down payment, the money—including all the investment growth—is tax-free.

• If your goal is retirement:

The Registered Retirement Savings Plan (RRSP) is your long-term savings powerhouse. Contributions are tax-deductible, giving you immediate tax relief and more capital to invest. The money grows tax-deferred until you retire, when you’ll likely be in a lower tax bracket.

• If your goal is helping your kid pay for school:

A Registered Education Savings Plan (RESP) helps you save for your child’s post-secondary expenses. The government provides matching grants on a portion of your contributions, giving your savings an immediate and significant boost.

• If your priority is flexibility:

A Tax-Free Savings Account (TFSA) is a cornerstone for Canadian investors. Every dollar it earns in profit is yours to keep, tax-free, forever. It’s perfect for medium-to-long-term goals because you can withdraw the money whenever you want, for whatever you want.

• If you want to make bigger trades:

Not only does a Margin account have no contribution limits but it gives you the unique ability to use borrowed money to make bigger trades—a powerful resource for investors ready to take the next step.

• If you maxed out your other accounts:
  

Like a Margin account, a Cash account has no contribution limits—letting you invest as much as you want, as often as you want. You won’t have access to borrowed funds, just your own money, putting it back to work in the market.

Step 3: Gather your info, then you’re good to go

This is it—the last bit of prep. Gather these three things, and you’ll be ready to go.

1. Your Social Insurance Number (SIN)
2. A digital photo of your driver’s license or other government-issued ID
3. Your bank account information to connect for electronic funding

Step 4: How to complete your account application

The last, fast step. At Questrade, all you need to do is fill out a simple online form that takes less than 15 minutes.

Follow the prompts, fill in your details, and you’ll be that much closer to achieving your “why.”

This is your moment

You've seen how simple the process is, and you know the potential that's waiting. The only thing separating you from being an investor is one small, simple action. It’s time to close the gap between the future you’ve been thinking about and the one you’re actively building.