So, you're looking to take over your finances and start investing on your own? Great idea! Leaving your finances up to others often leads to underwhelming returns, and often high fees. A recent 2020 study showed that 89% of actively managed funds don't even out perform the market! Why are people paying their high fees if they can't outperform the market? Often it's because people don't realize there's other options. The good news? It's now easier then ever to take over your own finances, and we're going to help show you how!


How to Choose a Brokerage?

The first decision you need to make when starting to invest is what brokerage you will use. There's many different options and they all have their pros and cons. Some people prefer to use their banks investment branch because they find it simpler to keep all their money in one place. Others prefer one of the various discount brokerages offered online as they generally have lower fees. I personally use Questrade, as that is who I signed up with 10 years ago and I haven't had any problems with them yet. They offer $0.01 per share trades (minimum $4.99, maximum $9.99), and I find their interface very easy to use. I've never had a problem with a trade not going through. I particularly find them to be the best brokerage for buying US stocks. The only problem I've had is that their customer support wait times are sometimes unreasonable, but I have been told they are working on improving that.

Here are some other Canadian brokerages you can compare:


TD Waterhouse

RBC Direct Investing


BMO Wealth Management


and some American:



TD Ameritrade



now that you have chosen your brokerage, what should you invest in?


Investment Options

As an individual investor, you have a few different options on investment strategies. Some of these strategies include long term investment, day trading, index tracking using exchange traded funds (ETFs), and options trading. This article (and for the most part, this website) focuses on long term growth. We do this by investing in companies that we believe will continue to grow well into the future and are undervalued currently. We do not try to predict what the market is going to do tomorrow, next week, or even next year. We are going to talk about long-term investing and index investing for this article, as these are the two best methods for most investors’ goals in my opinion.

The first method is doing fundamental research on individual companies and attempting to come up with an intrinsic value (what the company is actually worth) for the company. Once you have calculated what you think the intrinsic value is, you can decide if that company is a good investment at its current market price or not.

The second is index investing. Index investing is perfect for someone who isn't really interested in, or unable to, research individual companies. By index investing, you are basically buying a small portion of a whole pool of companies. This allows you to take advantage of the full market gains (around 8-10% per year on average over the last 90 years) without having to spend time researching individual companies. It also makes it a lot easier to diversify your portfolio, even if you don't have much to invest.


Fundamental Analysis

Fundamental analysis includes doing research on individual companies to try and find an intrinsic value for the company. This is not an exact calculation, and is a bit of an art.  Everyone will come up with a different intrinsic value. There is no exact, simple formula to calculate it. You need to decide what data points are important to you in determining a fair value. A lot of people come up with a range when calculating intrinsic value, which gives you a bit of a margin of safety. One of the most common methods to do this is called the Discounted Cash Flow model. This model requires you to make assumptions of the future growth of the company to see what it will be worth in 5-10 years, then discounts it back to today to get the current intrinsic value. This can be hard to do, as you never know what the future holds, and past results don't necessarily equal future results.

Here are some data points that can help you determine future earnings/cashflow, which will help in calculating intrinsic value:

  • Past 10 years growth
  • Future 5 year analysts’ projections
  • Discounted Cash Flow/Historic DCF
  • Competing Companies
  • Sector/Historical EPS compared to current
  • Current Ratio
  • Management
  • Do they have any sort of moat around their business?
  • 10 Year Treasury Bond rate (This is used as a risk-free rate)
  • Weighted Average Cost of Capital (WACC) (This is often used as the discount rate for companies in DCF calculations)

We will make another blog post showing exactly how to do a discounted cash flow calculation, if people are interested.


Index Investing


You can buy into most indexes using ETFs now, which is nice as some brokerages offer free ETF purchases (such as Questrade). 

The recommended way to invest in index funds is to try and purchase on a regular schedule, whether that’s’ monthly, weekly, or bi-weekly. Find an amount that you can afford to invest and stick to the schedule. The important thing is to invest whether the fund is up or down at that particular time. That allows you to dollar-cost-average over the long term, so dips in the short term don't affect you as much.

Index investing often provides better returns then actively managed funds. VOO, which is Vanguard's ETF for tracking the S&P 500 index, has an annual return rate of 13.45% over the last 10 years as of this writing. For extra safety, it is a good idea to diversify over multiple regions, as well as include fixed income investments for added portfolio safety. In Canada they now have some one-fund asset allocation ETF's that do all this for you. For example, VGRO is an ETF from Vanguard that contains 7 underlying low-cost index ETFs. By purchasing this single ETF, your portfolio is fully diversified. They also offer other ETFs with different % breakdown, depending on your risk tolerance, and how close you are to retirement.

CanadianCouchPotato is a great resource for Canadians looking to invest in index funds.


You should now have a good idea on where to start investing, and how to start investing. Remember, the most important part is to simply start. Time in the market beats timing the market. The longer you are invested, the more compounding will help your investments grow. Whether you have decided to take a more hands-off approach by investing in index funds, or a more hands on approach by picking individual companies; you are on the right path to financial freedom. Remember the more you learn, and the more you put into practice, the better you will be at investing. 

If you have any questions or comments please post in the comment section! We would love to hear from you!