"At the very beginning, I was investing in a single company's stock. After the pandemic and the sharp market fluctuations, I realized how risky that was. That's when I discovered ETFs."
Like many beginners, I mainly thought about the potential for gains when buying individual stocks. But when the market dropped, I understood that putting all your money in a single company is a huge risk.
ETFs changed the way I invest. Here's everything I wish I had known at the beginning.
What is it, in plain words?
Imagine a large basket that holds several stocks at once. Instead of buying one stock at a time, you buy a share of that basket.
The goal, in most cases, isn't to "beat the market" but rather to track a market or an index — for example the S&P 500, the NASDAQ, the TSX 60, or a specific sector.
Example — QQC.F (NASDAQ-100)
How it works
An ETF pools money from multiple investors to purchase a set of securities. Its price moves on the stock exchange throughout the day, just like a regular stock.
If the tracked index goes up, the ETF goes up too. If the index falls, the ETF falls. There may be small differences due to fees and the way the fund replicates the index.
"An ETF isn't without risk. If the market drops, the ETF drops too. But over 20 years, history has shown that markets rise more than they fall."
How to choose an ETF well
My personal strategy
After much reflection and calculation, I realized I preferred to invest mainly in growth-oriented ETFs.
Mentally, I think of this money as money I won't touch for a very long time. I know there will be highs and lows — but my goal is to let time work for me.
My current allocation
This approach gives me a balance between long-term growth and regular income.
I also always keep a separate emergency fund in a high-interest savings account — like Wealthsimple Cash — so I'm never forced to withdraw from my investments during unexpected events.
5 questions to ask before buying
Checklist before buying an ETF
I am not a financial advisor. This article shares my personal experience — not official financial advice. Consult a professional for your situation.