How to Start Investing in 2026
How to Start Investing in 2026 Quick Answer: How to Start Investing How to start investing in 2026 in one paragraph: Build your financial foundation first emergency fund + no high
How to Start Investing in 2026
Quick Answer: How to Start Investing
How to start investing in 2026 in one paragraph: Build your financial foundation first (emergency fund + no high-interest debt), then open a tax-advantaged account (TFSA or RRSP in Canada; Roth IRA or 401(k) in the USA), choose a brokerage with low fees, buy a broad market index ETF, and automate monthly contributions. The entire process can be completed in a week. What matters most is starting — even small amounts invested consistently over time build meaningful wealth through compound growth.
Key insight: The average investor spends more time researching a phone purchase than setting up a long-term investment account. Simplicity and action beat analysis paralysis every time.
Step-by-Step Investing Setup
Starting to invest does not require financial expertise, a large sum of money, or a financial advisor. The following step-by-step framework walks you through the entire process of going from zero to an active investment account.
Step 1: Complete the Pre-Investment Checklist
Before opening a brokerage account, confirm that your financial foundation is in place. Investing on a shaky foundation creates real financial risk.
Pre-Investment Checklist:
- [ Emergency fund: Do you have 3–6 months of essential expenses saved in a liquid account?
- [ High-interest debt: Have you paid off credit card debt (typically 19–22% APR) and other high-interest obligations?
- [ Stable cash flow: Do you have consistent income that covers your expenses and leaves discretionary room?
- [ Investment horizon: Are the funds you plan to invest not needed for at least 5 years?
- [ Basic literacy: Do you understand what an ETF is, what a management fee is, and how a TFSA/Roth IRA works?
- [ Legal age: Are you 18 or older (required to open most investment accounts)?
If any of these are not in place, address them before investing. Notably, paying off a credit card at 20% interest delivers a guaranteed 20% return — superior to any realistic investment strategy.
Step 2: Define Your Investment Goals
Investment goals determine your account type, time horizon, and asset allocation. Without clear goals, you are flying blind.
Common investment goals and their characteristics:
| Goal | Time Horizon | Appropriate Account | Suggested Risk Level |
|---|---|---|---|
| Retirement | 20–40 years | RRSP, TFSA, Roth IRA, 401(k) | Moderate to aggressive |
| First home | 3–7 years | FHSA, TFSA (Canada), savings | Conservative to moderate |
| Financial independence (FIRE) | 10–20 years | TFSA, RRSP, taxable | Aggressive |
| Child's education | 5–18 years | RESP (Canada), 529 (USA) | Moderate to aggressive |
| General wealth building | Ongoing | TFSA, taxable brokerage | Based on horizon |
Write down your goals explicitly: what you are saving for, how many years until you need the money, and your target amount. Use the [BankDeMark Investment Calculator(/calculators/investment-calculator) or [Retirement Calculator(/calculators/retirement-calculator) to reverse-engineer how much you need to contribute monthly to hit your target.
Step 3: Understand Your Risk Tolerance
Risk tolerance determines how your money is allocated between growth assets (stocks) and defensive assets (bonds, cash). It has two components that both matter:
Financial risk capacity: Can you absorb potential losses without jeopardizing your lifestyle or other financial goals? A person with a stable income, no near-term large expenses, and a long investment horizon has high financial capacity.
Psychological risk tolerance: Can you stay calm and not sell when your portfolio drops 20–30%? Some investors overestimate their emotional tolerance until they experience a real downturn.
Take an honest assessment of both. Your asset allocation should reflect the lower of the two.
Step 4: Open a Tax-Advantaged Account
Account selection has a significant impact on long-term wealth accumulation through tax sheltering. Open your account before buying investments.
Canada — Priority Order:
- FHSA (if buying a first home within the next 15 years)
- TFSA (the most flexible registered account — use for any long-term goal)
- RRSP (especially valuable for higher income earners seeking current-year tax deductions)
- Non-Registered Brokerage Account (for investing beyond registered limits)
USA — Priority Order:
- 401(k) to the employer match (guaranteed immediate return on matched contributions)
- Roth IRA to the annual limit
- Traditional IRA (if income limits prevent Roth contributions)
- 401(k) to the annual maximum
- Taxable brokerage (for investing beyond all tax-advantaged limits)
Step 5: Choose a Brokerage Platform
Your brokerage is the platform through which you buy and sell investments. Key selection criteria are covered in the next section.
Step 6: Fund Your Account and Make Your First Purchase
Connect your bank account to your brokerage, transfer your initial investment, and place your first order for your chosen ETF. Most platforms allow you to place a market order (buy at current price) or limit order (buy only if price drops to a specified level).
For beginners, a market order on a liquid, broad-market ETF is typically appropriate. Limit orders make more sense for less liquid or volatile securities.
Step 7: Automate Ongoing Contributions
Set up a recurring transfer from your bank account to your brokerage on the same day each pay period. Set up an automatic purchase order for the same ETF. This eliminates the need to remember to invest and removes the psychological barrier of deciding "whether now is a good time to buy."
Step 8: Establish a Review Cadence
Review your portfolio allocation and contribution rate once or twice per year — not more frequently. At each annual review:
- Confirm your allocation matches your target (rebalance if it has drifted significantly)
- Increase your monthly contribution if your income has grown
- Reassess your time horizon and goals if anything has changed
Choosing a Brokerage
Your brokerage is the gateway to financial markets. Choosing the right one matters — but it is not a permanent decision. You can always transfer your account to a different platform if your needs change.
Key Criteria for Choosing a Brokerage
1. Regulatory standing and deposit insurance In Canada: Look for IIROC (now CIRO)-regulated dealers that are members of CIPF (Canadian Investor Protection Fund), which covers client assets up to $1 million per account category if the dealer becomes insolvent.
In the USA: Look for FINRA-regulated broker-dealers that are SIPC members, covering accounts up to $500,000 including $250,000 for cash.
2. Fees and commissions Commission-free ETF trading is now standard at most major discount brokerages. Prioritize platforms that do not charge per-trade fees on the ETFs you plan to hold. Also confirm there are no account maintenance fees or inactivity fees that would erode small account balances.
3. Investment selection Confirm the platform offers the specific ETFs you want to hold. Most major platforms carry a wide selection, but some niche funds may not be available on every platform.
4. Account types offered Ensure the platform supports the account type you need: TFSA, RRSP, FHSA, non-registered (Canada); or Roth IRA, Traditional IRA, taxable brokerage (USA).
5. User interface and mobile access For beginners, a clean, intuitive interface reduces friction and mistakes. Test the platform's demo or web interface before opening an account.
6. Educational resources Some platforms offer built-in educational content, webinars, and tools. These can be valuable for new investors.
7. Customer service quality When issues arise, can you reach a human? Check reviews for customer service responsiveness before committing.
Types of Platforms
Self-directed discount brokerages: You choose your own investments and execute your own trades. Lowest fees. Appropriate for investors who are comfortable making their own decisions.
Robo-advisors: Algorithm-driven platforms that build and manage a diversified ETF portfolio based on your risk profile. Slightly higher fees than pure self-directed (typically 0.40–0.70% annually on top of ETF fees), but fully automated. Good for investors who want hands-off management.
Full-service investment advisors: Human advisors who provide personalized advice and portfolio management. Highest fees (often 1–1.5%+ annually). Generally not necessary for simple index-based strategies, but may add value for complex financial situations.
Bank-owned brokerages: Many major banks in Canada and the USA offer brokerage accounts. Often slightly higher fees than independent platforms, but convenient for those who want banking and investing in one place.
What to Avoid
- Platforms with excessive fees, opaque pricing, or pressure to use proprietary high-fee products
- Cryptocurrency-only platforms being marketed as investment platforms (cryptocurrency speculation is not investing in the conventional sense)
- Unregulated offshore platforms or those not registered with CIRO/FINRA
Choosing Your Investments
Once your account is open, you need to decide what to buy. This is where many beginners stall — the options feel overwhelming. The reality: for most beginners, the decision is much simpler than it appears.
The Core Decision: Active vs. Passive
Active investing means selecting individual stocks or actively managed funds in an attempt to beat the market. SPIVA scorecards consistently show that a large share of active funds underperform comparable benchmarks over longer periods after fees. For individual investors without institutional research capabilities, active stock picking typically produces worse results than passive indexing.
Passive investing means owning the entire market (or a representative slice of it) through low-cost index funds. You do not try to beat the market — you simply capture market returns at minimal cost. SPIVA, Vanguard, and broad indexing research support passive indexing as a strong default strategy for many retail investors.
The Beginner's Investment Menu
For the vast majority of beginners, a simple portfolio of one to three broad market index ETFs is all you need.
Option 1: One fund (simplest) A single all-in-one asset allocation ETF holds a diversified mix of global equities and bonds and automatically rebalances to maintain the target allocation. Available in multiple risk profiles (e.g., 60/40, 80/20, 100/0 equity-to-bond ratios). Zero maintenance required.
Option 2: Two funds (slightly more control)
- A global equity ETF (broad market, thousands of companies across USA, international developed, and emerging markets)
- A bond ETF (government and/or corporate bonds for stability) You rebalance annually to your target allocation.
Option 3: Three funds (classic three-fund portfolio)
- Domestic equity ETF (your home country market)
- International equity ETF (rest of world)
- Bond ETF (fixed income) Offers slightly more control over home country weighting and bond composition.
What to Look For in an ETF
| Attribute | What to Look For |
|---|---|
| MER (Management Expense Ratio) | Under 0.25% for passive index ETFs |
| Index tracked | Broad market (total market, S&P 500, MSCI World, etc.) |
| Assets under management (AUM) | Larger AUM = more liquidity, tighter bid-ask spreads |
| Fund issuer | Established, reputable issuers with long track records |
| Distribution frequency | Quarterly or annual dividends are common |
| Currency | Match to your account's base currency where possible |
What Beginners Should Avoid
- Leveraged or inverse ETFs (amplify losses as well as gains — not suitable for long-term holding)
- Thematic or sector ETFs as a core holding (too concentrated)
- Individual stocks as a sole investment
- Penny stocks and OTC securities
- Options and derivatives
- Any investment you do not understand fully
Understanding Risk Tolerance
Risk tolerance is one of the most important — and most misunderstood — concepts in personal investing. Getting this wrong leads to the single most damaging behavior in investing: selling during market downturns.
What Risk Really Means in Investing
In the context of investing, risk has several dimensions:
Volatility risk: The degree to which your portfolio's value fluctuates up and down over time. Stocks are more volatile than bonds; international stocks may be more volatile than domestic stocks. Volatility is not permanent loss — it is temporary fluctuation.
Permanent loss risk: The risk that an investment loses value and never recovers. This is the risk that actually matters for long-term wealth. Diversification is the primary defense against permanent loss risk.
Inflation risk: The risk that your portfolio grows slower than inflation, eroding real purchasing power. This is the hidden risk of being too conservative.
Sequence-of-returns risk: The risk that a major market downturn occurs at the worst possible time — near or at the start of retirement when you begin withdrawing funds.
How to Assess Your Risk Tolerance
Financial capacity questions:
- How many years until you need this money? (Longer = can tolerate more risk)
- Do you have a stable income? (Stable income = higher capacity)
- Do you have an emergency fund? (Yes = higher capacity)
- Could you absorb a 30% portfolio decline without selling? (Yes = higher capacity)
Psychological capacity questions:
- How did you feel during the 2020 COVID market crash? Did you stay invested?
- Would a 20% drop in your portfolio cause you to lose sleep?
- Are you naturally more comfort-seeking or growth-seeking with money?
- Can you commit to not checking your portfolio for 3+ months during a downturn?
Risk Tolerance to Asset Allocation Framework
| Risk Tolerance | Equity Allocation | Bond/Cash Allocation | Expected Volatility |
|---|---|---|---|
| Very aggressive | 95–100% | 0–5% | High |
| Aggressive | 80–90% | 10–20% | Moderately high |
| Moderate | 60–75% | 25–40% | Moderate |
| Conservative | 40–55% | 45–60% | Moderate-low |
| Very conservative | 20–35% | 65–80% | Low |
These are illustrative guidelines, not personalized investment advice.
A common rule of thumb: subtract your age from 110 to get your approximate equity percentage. A 30-year-old might hold 80% equities, 20% bonds. However, this is a simplification — your actual allocation should be based on your individual circumstances, not a formula.
Starting with Small Amounts
One of the most liberating realizations for new investors is that you do not need significant wealth to begin investing. The barriers to entry have never been lower.
Why Small Amounts Still Matter Enormously
The mathematics of compound growth means that early dollars invested are worth far more than later dollars, even if the amounts are identical. A investment at age 25 that grows at 7% annually becomes approximately ,497 by age 65 — a simple compound-interest calculation, not a market guarantee.
That same $100 invested at age 45 becomes only approximately $387 by age 65 — still a good return, but the compounding window is cut dramatically.
Micro-Investing: Starting Under $100
Several platforms now offer micro-investing features:
- Fractional shares allow you to buy a partial share of an ETF for any dollar amount
- Robo-advisors often accept as little as $1 to start
- Some platforms allow round-up investing — automatically investing the spare change from your purchases
While micro-investing with very small amounts will not build wealth quickly on its own, it serves two important purposes: it builds the habit, and it gets you learning while you have real money at stake.
The Consistent Investor vs. the Lump-Sum Investor
Many people wait until they have a "significant" amount to invest. This waiting mindset costs real money.
Example: $50/month starting at 25 vs. $500/month starting at 35, 7% return:
| Investor | Monthly Amount | Start Age | Total Contributions | Approximate Balance at 65 |
|---|---|---|---|---|
| Early small | $50 | 25 | $24,000 | ~$131,000 |
| Late larger | $500 | 35 | $180,000 | ~$607,000 |
The late larger investor catches up in this example — but notice the early small investor built $131,000 on only $24,000 in contributions. Their money worked harder because it had more time.
The lesson: both consistency and time matter. Start now with whatever amount is available.
Use the [BankDeMark Compound Interest Calculator(/calculators/compound-interest-calculator) to see how your specific amounts grow over time.
Increasing Contributions Over Time
A powerful habit: commit to increasing your monthly investment contribution by a fixed percentage every year — perhaps matching it to your salary increase. Someone who starts at $100/month and increases by 10% annually will be contributing approximately $672/month by year 20, dramatically accelerating wealth accumulation.
Building a Long-Term Mindset
Technical investment knowledge is only part of investing success. The behavioral and psychological dimension — the ability to stay disciplined through market cycles — is where most individual investors fail or succeed.
The Behavioral Gap
Morningstar research on investor returns documents a gap between fund returns and the returns many investors actually realize. This gap exists primarily because investors buy when prices are high (following the herd into rising markets) and sell when prices are low (panic-selling during downturns). The result: they systematically buy high and sell low — the opposite of a successful strategy.
The solution is not more market knowledge — it is better behavior.
Market Cycles Are Inevitable
Every investor will experience market downturns. They are not anomalies — they are the normal operating condition of financial markets over any multi-year span. Understanding this intellectually before it happens makes it easier to stay disciplined when it does.
Historical perspective:
- The US stock market has had negative calendar years regularly throughout history (source: S&P Dow Jones Indices and NYU Stern historical return datasets)
- Corrections of 10%+ are a normal part of equity investing (source: S&P Dow Jones Indices and historical market drawdown research)
- Bear markets (20%+ declines) occur periodically and should be expected in long-term equity investing (source: S&P Dow Jones Indices and historical market drawdown research)
- Broad US equity markets have historically recovered from major bear markets over time, although recovery timing varies widely (source: S&P Dow Jones Indices historical data)
The investors who stay invested through downturns consistently benefit from the subsequent recovery. Those who sell lock in their losses permanently.
Principles of the Long-Term Investor Mindset
1. Define success over decades, not quarters. A portfolio that is down 15% this year is not a failing portfolio if it is part of a 30-year plan. Reframe your measurement of success to align with your actual investment horizon.
2. Separate noise from signal. Daily market news is mostly noise. Economic commentary, geopolitical headlines, and earnings reports generate significant short-term volatility but have little bearing on 20-year investment outcomes for diversified investors. Filter accordingly.
3. Automate to remove emotion. Automation is the single most effective behavioral tool for individual investors. When contributions and purchases happen automatically, there is no decision to agonize over, no temptation to wait for a "better time," and no risk of forgetting.
4. Visualize the endpoint, not the journey. Keep a simple projection of where your portfolio could be in 10, 20, and 30 years if you stay the course. Revisiting this projection during downturns provides behavioral anchoring. The [BankDeMark Investment Calculator(/calculators/investment-calculator) and [Retirement Calculator(/calculators/retirement-calculator) are useful tools for this.
5. Avoid comparing your portfolio to others. Envy-driven investing decisions — switching to whatever a friend is doing, chasing last year's returns — are a reliable way to underperform. Your portfolio is a personal financial plan, not a competition.
6. Education beats entertainment. Financial media is designed to capture attention, not to make you wealthy. Replace consumption of daily financial news with periodic, deep reading of investment fundamentals. One good book on passive investing can permanently improve your financial outcomes.
30/60/90-Day Investment Roadmap
Days 1–30: Foundation and Readiness
Week 1:
- [ Calculate your net monthly cash flow (income minus all expenses)
- [ Confirm emergency fund status — 3–6 months of expenses in a liquid account
- [ List all high-interest debts and create a payoff plan if applicable
- [ Determine how much you can realistically invest each month without jeopardizing daily finances
Week 2:
- [ Research TFSA vs RRSP (Canada) or Roth IRA vs 401(k) (USA) suitability for your income and tax situation
- [ Identify 3–5 brokerage platforms to compare
- [ Review fee structures, account minimums, and ETF availability for each
- [ Use the [BankDeMark Investment Calculator(/calculators/investment-calculator) to project your wealth at various monthly contribution levels
Week 3:
- [ Write down your top 1–3 investment goals with amounts and time horizons
- [ Assess your risk tolerance honestly using the framework above
- [ Determine your target asset allocation (e.g., 80% equity / 20% bonds)
- [ Select your brokerage platform
Week 4:
- [ Open your brokerage account and tax-advantaged account
- [ Link your bank account for deposits
- [ Do not invest yet — wait until you have selected your investments in Days 31–60
Days 31–60: First Investments
Week 5–6:
- [ Research 2–3 candidate index ETFs appropriate for your allocation
- [ Compare MERs, tracked indices, AUM, and fund issuer reputation
- [ Decide on one-fund, two-fund, or three-fund portfolio approach
- [ Confirm ETF availability on your chosen platform
Week 7–8:
- [ Make your first contribution and first ETF purchase
- [ Set up automatic monthly contribution from your bank account
- [ Set up automatic recurring ETF purchase if your platform supports it
- [ Write a simple investment policy statement: what you own, why, and when you will review
Days 61–90: Discipline and Optimization
Week 9–10:
- [ Check your portfolio once — then put it away for 30 days
- [ Use the [Compound Interest Calculator(/calculators/compound-interest-calculator) to see how your contributions project forward
- [ Begin reading one book about long-term passive investing
Week 11–12:
- [ Review your contribution amount — can you increase it, even by $25/month?
- [ Confirm automatic contributions are running correctly
- [ Set a calendar reminder for your first annual portfolio review
- [ Explore the BankDeMark [TFSA Calculator(/calculators/tfsa-calculator), [RRSP Calculator(/calculators/rrsp-calculator), or [FIRE Calculator(/calculators/fire-calculator) to expand your planning horizon
FAQ: How to Start Investing
Q: What is the first step to start investing? Build your financial foundation first — emergency fund of 3–6 months in a liquid account, high-interest debt eliminated. Then open a tax-advantaged account, choose a low-cost brokerage, select a broad market index ETF, and make your first contribution.
Q: How do I choose a brokerage to start investing? Look for commission-free ETF trading, no account minimums, access to the ETFs you want, regulatory insurance (CIPF in Canada, SIPC in the USA), and a clear interface. Compare several platforms before opening. Avoid platforms with excessive or opaque fees.
Q: How much should I invest each month as a beginner? Invest as much as you can comfortably afford after covering expenses and maintaining your emergency fund. Even $50–$100 per month invested consistently builds meaningful wealth over decades through compound growth. Increase the amount whenever your income grows.
Q: What is risk tolerance in investing? Risk tolerance is your combined ability and willingness to endure investment losses or portfolio volatility without making panic-driven decisions. It depends on your financial situation (time horizon, income stability, emergency fund) and your psychological capacity to stay calm during downturns.
Q: Should I invest in stocks or ETFs as a beginner? Broad market index ETFs are the recommended starting point for most beginners. They offer instant diversification, very low fees, and require minimal research compared to individual stock selection. Research consistently shows most individual investors achieve better long-term outcomes with index funds than with stock picking.
Q: What is dollar-cost averaging? Dollar-cost averaging means investing a fixed amount at regular intervals regardless of market conditions. When prices are lower, you automatically buy more shares; when higher, you buy fewer. Over time, this averages your cost per share and removes the psychological burden of trying to time the market.
Q: Can I start investing with $100? Yes. Most modern platforms allow fractional share purchases or have no minimum investment requirement for ETFs. $100 is enough to begin — and more importantly, beginning at all is what matters most.
Q: How often should I check my investment portfolio? Monthly at most for new investors; quarterly or annually is sufficient for disciplined long-term investors. Checking daily is associated with worse investment decisions due to emotional reactions to short-term fluctuations. Automation removes most of the need for frequent checking.
Internal Links
- [BankDeMark Investing Pillar(/pillars/investing)
- [Investment Calculator(/calculators/investment-calculator)
- [Compound Interest Calculator(/calculators/compound-interest-calculator)
- [Retirement Calculator(/calculators/retirement-calculator)
- [TFSA Calculator(/calculators/tfsa-calculator)
- [RRSP Calculator(/calculators/rrsp-calculator)
- [FIRE Calculator(/calculators/fire-calculator)
- [Net Worth Calculator(/calculators/net-worth-calculator)
Disclaimer
This content is educational only and is not personalized financial, investment, tax, legal, or credit advice. Investment involves risk including the possible loss of principal. Past performance does not guarantee future results. Consult a qualified financial advisor before making investment decisions. Tax rules and contribution limits referenced in this article reflect information available at time of publication and may change. Always verify current rules with the CRA (Canada) or IRS (USA).
Published by BankDeMark | Finance Intelligence Platform Pillar: [Investing(/pillars/investing)