How to Simply Invest and Get Richer for Dummies in 8 Easy Steps 38

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bicycleSorry, I have to break this to you but a lot of people will never be rich and financially independent. Why? Because they are afraid of learning something that is as easy as learning to ride a bicycle. Many people think investing is something they should do anything to avoid. They may fear the word ‘stocks’ ‘investing’ or think that investing on their own is a very difficult thing to do. Instead of learning how to invest and grow their net worth steadily and slowly, they may rely on their financial advisers to pick biased mutual funds (you are not making yourself rich but only the financial advisers as they get commissions) or put entire money on low interest rate saving accounts that lose its value everyday due to inflation.

Here is great news. Investing is really easy. I personally think it is easier than learning to ride a bicycle. You can be an advanced investor without advanced knowledge and time commitment.

Here is how to invest simply and get great long term results

  1. Sell all your mutual funds.
  2. Open brokerage account from any major banks nearby your home. (I have TD waterhouse)
  3. Buy great low fee ETFs. I recommend US ETFs and stocks in RRSP to avoid withholding taxes. (Disclaimer, I own VTI in RRSP and VCE in TFSA.
  4. Don’t worry about short term fluctuation, be patient, collect dividend income and watch your investment grow over the long term.
  5. Save and buy more ETFs with your dividend payments and available funds
  6. Read great personal finance blogs to learn more Research their methods and strategies. It is not a secret as most of them share their methods in their blogs. A lot of the bloggers would respond to your questions if you have any.
  7. Apply more advanced skills that you learned from great blogs and purchase stocks directly if you want however if you consider yourself a lazy person and still want to make a great return then keep buying ETFs. Check out Tawcan’s beginner strategy in this link.
  8. Don’t even think about purchasing mutual funds ever again.

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38 thoughts on “How to Simply Invest and Get Richer for Dummies in 8 Easy Steps”

  • Reply ↓
    Vivianne

    I agree with avoiding mutual funds for its high fees, that was why I decided awhile back to switch to index fund for my 401k. On my untax advantage account I developed my own freedom fund, and my own freedom ETFs. 🙂 The personal finance blogger community are full of success, and they also post their mistakes to help me along in the learning process, it’s great.

    • Reply ↓
      Be Smart Rich Post author

      Exactly. There are so many great personal finance bloggers that inspire me everyday. I am glad you are one of people who get benefited from the community and sure that you inspire so many others including me!

  • Reply ↓
    Felix Money

    I’ve done a little bit of investing in the past though Merrill Edge, I bank with Bank of America and they offered free trades. I want to learn more about ETFs, since I think the stock market and divided income is a great tool to use towards FI.

  • Reply ↓
    Vivianne

    To me the limiting factor at the beginning was the cost of investing. It was $10/trade for me, and I started out at $2000. At the time it didn’t make sense for me to buy 30 stocks each month. Until I discover free trades from my banks. It was a total turning point, it made buying dividend stocks in small increment possible.

    • Reply ↓
      Be Smart Rich Post author

      Thanks for stopping by Vivianne. Yeah economies of scale gets better with more money at the stake. I am jealous that your banks provide free trades. If mine did then I would set my account at cruise control to purchase Canadian bank stocks or solid index funds. As far as I know our major Canadian banks do not provide anything like that yet. If anyone knows, please let me know!

      Cheers,

      BeSmartRich

  • Reply ↓
    Jeff

    Growing net worth slow and steadily through dividends is a good place to start for people starting to invest. I am more interested in growing net worth fast and aggressively. 🙂

    An excellent guide to investing! Those high fee mutual funds are better than the GICs and high interest savings account though. Usually a good place to begin.

    • Reply ↓
      Be Smart Rich Post author

      Jeff you may be right however index and dividend investing made senses to me and I will keep going at it. I am more than happy to read your blogs and see how you are doing with your aggressive investing style as there is no right answer to this investing world. Thanks for the comments!

      Cheers!

    • Reply ↓
      Be Smart Rich Post author

      Thanks! I totally agree. People need to take more ownership on their own financial future. I think all they need is a little bit of exposure by us personal finance bloggers.

      Kind regards,

      BeSmartRich

  • Reply ↓
    DivHut

    Many, many years ago mutual funds were the go to investment vehicle of choice for many. Not realizing the insane fees and often lackluster performance for many of these funds most people simply acted as money funnels to financial advisers. Today with so many low cost ETFs and a wide variety of solid long term dividend paying stocks an individual can truly claim their independence from the financial services sector. Thanks for sharing. I hope it inspired other to learn some basics of investing and go for it on their own.

    • Reply ↓
      Be Smart Rich Post author

      Well said DivHut. I truly believes that people can do so much better with ETFs than mutual funds. All they need is being exposed to great investment accounts such as TFSA, RRSP (for Canadian) and 401K, IRA &ROTH IRA (for American) and right investment tools such as ETFs and dividend champions and arstocrats. Thanks for stopping by and leaving insightful comments.

      Cheers!

  • Reply ↓
    Anonymous

    Found your article and thought it was very informative. However, I would like to know more as to why you decided to go with TD Waterhouse. The reason I ask this is because I am considering going ETF with either TD Waterhouse (as I am currently with TD) or Questrade. Questrade looks better to me for buying ETFs because they don’t charge you commissions for buying ETFs, only when you sell. On the other hand, it would be nice to have all the accounts with TD and not have them scattered. Just wanted to get your opinion on going with TD Waterhouse versus going with Questrade or any other brokerage that may offer lower commissions.

    • Reply ↓
      Be Smart Rich Post author

      Hey there, Great question!

      The advantages of going for TD Waterhouse are
      1. to have all the accounts such as chequing, saving and investing all within one service provider
      2. Transferring funds is extremely easy and fast (immediate) so you can act quickly if needed to
      3. Sometimes have really great promotion (you may be able to get some free trades). I think the last promotion (giving free trades up to 250 or something) is over if you open TD Waterhouse account and invest certain amounts. Call and ask. They may be able to give you some sweetener
      4. They provide US RRSP and TFSA accounts.
      5. The best “Research” function among Canadian discount brokers
      6. Customer service is quick and hours is pretty amazing. I even called them around 6am and 10pm and I was connected to their customer service. Also I have been asking them with free trades occasionally when they were giving away free trades to new customers only and I have got 10-15 free trades so far.

      Disadvantages
      1. Trading cost is $9.99 per trade including ETF (however for a value investor like me, I don’t sell stocks often and buy only when I have around $3000 to invest to spread the cost)

      To be honest, I love Questrade as well for their low commissions but based on advantages from TD Waterhouse simply compensated for one big disadvantage that I could think of. I think it is really up to you, if you are looking for low costs and think of buying ETFs whenever you have even small amounts of cash like $50-100 then go for Questrade but if you are looking for big retailer convenience then TD Waterhouse is pretty awesome.

      Hope I answered your question. Please come by often!

      BeSmartRich

      • Reply ↓
        Anonymous

        The free trades would have totally made it worth it. Looks like their promotion ended but I’ll try calling in and see if they can do anything for me. Otherwise I guess I’ll wait until their next promotion (hopefully it will come soon). Not sure I want to be in a situation where I open an account and then the next month they are giving away free trades.

        Thanks for the help!

  • Reply ↓
    Be Smart Rich Post author

    @Anonymous- For some reason wordpress does not let me ‘reply’ to your comments. To answer your comments, you are totally right, you can only buy ETFs or shares in whole share amounts with DRIP (unless you go for Full DRIP) There will be excess cash after DRIP. I typically purchase stocks/ETFs in an amount that make the automatic DRIP to be applicable every dividend payout. However when there is excess cash, I will have to wait until I make additional contribution in the plan to purchase more stocks. I have always about total $300-400 of unused cash in various plans such as Canadian/US RRSP/TFSA. It sucks but better than not utilizing these amazing tax free/tax deferred plans.

    BeSmartRich

    • Reply ↓
      Anonymous

      Thanks for your response! Very helpful advice as usual.

      I ended up opening up a TD Waterhouse Direct Investing Account (they offered no free trades though). The bottom line came down to this: I didn’t want to go through the hassle of waiting two weeks for the money to transfer correctly and felt it was too risky considering I never used Questrade before. Having easy access to my money was also a huge advantage. Also, buying stocks with TD at $9.99 may be cheaper than or close to the same price of buying stocks with Questrade because of the ECN fees and other fees that might be charged that wouldn’t be charged by a bank brokerage however when you join Questrade you can take advantage of the free trades given to you when you join (free trades are set to expire though). There are also other major brokerages like CIBC Investor’s Edge that charge only $6.95 (less than TD) flat rate but I feel the cost difference is negligible considering I am already with TD.

      However with Questrade, it costs nothing to buy ETFs, only to sell (at standard commission)…I am going to open a Questrade account later when I start my job and from then on, store my ETFs there. I believe this would allow me to save a lot of money and at the same time, fully utilize my cash excess without having to wait for an appropriate amount to accumulate. At the same time, I’d also take advantage of the free trades in a limited time span and later on, test to see what they charge overall for each trade, then compare to TD.

      Overall, the main advantage of having the Questrade account is reinvesting cash excess into ETFs without being charged any commission fees. In the long run, TD would be my place for investing in stocks, having money readily available, and having the research tools there to make informed decisions.

      • Reply ↓
        Be Smart Rich Post author

        I think you totally nailed it in terms of understanding the advantages and disadvantages of the both TD and Questrade. I am thinking the exactly the same about both brokerages and probably will do the same in the future. Both of them are really solid brokerages. Thanks so much for sharing your thoughts on this and I am looking forward to your further investing ideas.

        Cheers!

        BeSmartRich