Here’s What I Wish Someone Told Me About Investing at 22

0:00 Here's the stuff I wish someone told me when I was younger. At 22, I started off making $33,000 as a PwC doing auditing. No one explained what a TFSA was, not what an index fund was, not why any of this mattered at all. I had debt, I was living paycheck to paycheck, and honestly, I didn't care really about investing at the time. I was pretty stressed in doing my CPA designation or CA at the time. and you know, I was just struggling even to afford meals at that time. But whatever you're saving, whether it's 50 bucks, 100 bucks a month, inflation is just eating that away. I was saving about I was really proud of myself if I saved $100 a month at that time. we just lived through this crazy inflation period as well. Cost of living, rent, food, education, all of it because of inflation, the damage is done. If your money is sitting at a bank earning a couple percent while inflation runs over 2%, you're losing purchasing power every single year. You should be proud of yourself for saving anything, especially when you're just starting out, but that amount is quietly shrinking. So, the question becomes, how do you protect your hard-earned money, even if it's a small amount? So, the government has set up these fancy accounts for us that do exactly that, and they're genuinely good. This is one thing Canada really has going for us. These the TFSA RRSP are better than what Americans have. The three you need to know about are TFSA, FHSA, and RRSP. If you're planning to buy a home, FHSA is the best account by far Canada has right now. Tax deduction going in, tax shelter while it's in there, and tax-free coming out.

1:35 Definitely worth looking into and opening if you're looking at buying a home within the next 15 years. For everyone else, including me at the time, I was not interested in buying a home, maybe eventually down the line, but it wasn't even on my radar at the time. I wanted to make money, move around, etc. TFSA is where I'd start for building long-term wealth, and it's where I wish I started at the time. Now, here's the thing, the name is misleading. It sounds like a savings account, it is not. It's a investment account, it's a container for investments, really. In it, you can hold stocks, ETFs, bonds, whatever.

2:07 Everything grows tax-free forever, you can pull it out anytime, no penalties. This is the item in the video game I say that's too good to be true or too good to even use it. Room starts growing the year you turn 18. If you're 22 right now, you might have $33,000 in contribution room. Now, why TFSA first over RRSP? It's simple. You're in a lower tax bracket now than you'll be at a later point in your life when you retire and need to take that money out.

2:31 Most people when they start their career are going to earn more over time. The RRSP gives you a deduction now, but you pay tax when you withdraw at that rate. So, if your tax rate's low now and higher later, the math clearly favors TFSA. And it really is that simple. That's why a lot of people hold off on RRSP until their peak earning years when the deduction is worth far more. So, once you open up a TFSA, there's a million low-cost brokers out there, plus the banks. Very easy to do. So, once you open it up, what do you put inside it?

3:02 This is the part that's frustrating to me and where most people get overwhelmed because there's so much of the internet misleading you. People telling you to buy this stock or that stock or index investing is dead, or they've found the magic formula. But the guy on Reddit, you know, going long on Palantir options from his parents' basement, he seemingly has cracked the code, right? And if someone actually had a guaranteed way to beat the market, they would not be selling you a $500 course on it online.

3:29 But the thing is, investing sounds complicated, and the deeper you go, the more complicated it tends to look. Rebalancing, tax loss harvesting, sector rotation, tracking errors, fee drag, what to hold in what account. Thing that most people won't tell you is you don't need to know any of those levels to build real wealth. The smartest CFAs and portfolio managers in Canada consistently point to the same thing, simplicity. And the more you actually learn about investing, the more boring it actually becomes. It's kind of annoying like that. You always end up back at simplicity because complexity just adds cost and drag over time. So, why does keeping it simple work so well?

4:07 Let's get into a little bit more to the nuance and how this works under the hood. So, markets, you might have heard, are incredibly efficient. This is called an efficient market hypothesis, and the basic idea is that thousands of analysts, institutions, and algorithms are processing information every single second of every single day. Earning reports, news, economic indicators, geopolitical events, and by the time you or I hear about it, some edge or opportunity, it's already priced into the market. The best professionals with billions of resources, teams of PhDs, can't consistently get access to information because it's already been bought or sold. That's how fast this is.

4:44 It's why 90 plus percent of actively managed funds underperform index funds over 20 years. People are trying to outsmart a system that's already processing everything in real time, and they charge you higher fees attempting. And the constant trading of these funds creates tax drag and fee drag that most people don't even realize about. They're literally losing to a fund that just buys everything and sits there. You'll hear people also say that valuations right now are too high. Cape ratios in the US are elevated, and that's definitely true. But I'm not one to bet against the US. These are some of the most efficient and innovative companies in history operating at a scale we've never seen before. The overhead structures, the margins, global research, it's never been quite like this. That doesn't mean it can't correct or that it won't. It just means the conversation is more nuanced than most people make it sound online or on the headlines. So, what does buying everything actually look like? An index fund, you know, Apple, Amazon, Google, Shopify, Royal Bank. Imagine buying a tiny piece of every single one of those companies and thousands more in one single purchase. Index is just a list of all those companies, boring, unsexy, and it's wildly effective, though. What most people don't realize is when you own a global index fund, you already own exposure to so many different asset classes through companies themselves.

6:06 You have real estate already in there, you have gold already in there, energy, tech, healthcare, banks and financials. Companies operate in every single part of the economy. You're not just buying like stocks in tech, you're buying innovation and output and thousands of businesses across the global economy, and these companies innovate and adapt over time, and these index funds adjust for the best companies, too. These all-in-one fund tickers are amazing. XEQT, VEQT, ZEQT. You might have seen or heard about these, but what they are really is all-in-one fund index ETFs.

6:39 XEQT is from iShares, VEQT is from Vanguard, ZEQT is from They all do essentially the same thing, over 13,000 companies across 50 different countries under 0.2 percent in fees. Sounds too good to be true, but one purchase, you own the global economy, and the fund handles the rebalancing for you automatically. We actually did a deep dive on rebalancing recently, and the research is so clear. Doing it yourself adds complexity, cost, and potentially mistakes. These funds handle it internally, almost no fee at all. That's the part that would have changed everything for me at 22. The global equity market, which is basically what these funds track, has returned roughly 8 to 10% annualized backdated over the last 20 years. That includes the '08 financial crisis where the market dropped over 50%. Includes COVID and every single scary thing that's happened in between there. it's always recovered. The other thing to know about crashes is they're always going to happen. You'll go through a ton of these over your lifetime. But when you're young and contributing regularly or dollar cost averaging, crashes are a benefit. Think of it this way, when the market drops, those funds go on sale.

7:47 You get to buy 13,000 of some of the best companies in the world on sale. You want more units by the time you retire, not fewer. So, when you're buying when you're when the market's down, it means you're getting more for your money. Timing the market does not work. The smartest people, again, try to do so, and they underperform. Another thing is staying aggressive in equities is a big piece of this. Over long time horizons, equities, or businesses, beat every other asset class. These other asset classes it beats are bonds, cash, gold, real estate. The Dimson data set has 125 years of data across 35 countries showing that equities win in the long run. No, not every year. They're volatile, sometimes there's crashes, sometimes not even for a decade, but over your investing lifetime, which for the most part for most people is 30, 40 years. Two, I let almost most of my portfolio, if not all of it, be guided by the research. Just buying an all-in-one ETF like ZEQT or XEQT. I did a short-form video comparing them or backdating them over 10 years. They're all incredibly close performance. Three is I'd set up automatic contributions, whatever I could. Pay yourself first. 25 bucks, 50 bucks, 100 bucks right into your brokerage. Just building that habit early and letting time do the compounding for you. Our brains did not evolve to dollar cost average into any of these like ZEQT in a TFSA. Sounds crazy. Headlines are brutal. I feel especially bad for young people right now. Housing, cost of living, the job market, AI, war, all of it. You can still save, you can still be efficient with the money you do have, which matters more than ever before. You can't control the macro events of all this, you can control what you do with your money. All of the concepts I mentioned on efficient markets, rebalancing, global diversification, countries rotating over time, asset class exposure, CAPE ratios, fee drag, you don't have to understand all these concepts. The all-in-one fund ETFs take care of this for you.

9:48 Keeping it simple is not lazy. It's doing more than most people realize. This can genuinely be one of the easiest parts of your life. For most people, they're better off just focusing on their actual career, building skills, their health, relationships, the things that actually matter in day-to-day. Way too many people are worried about money. It's over 43 or 50% of Canadians, it's their number one stressor. I love this stuff, but not everyone does, that's for sure. I wish someone had told me this stuff at 22. I figured it out later, and I got lucky in the timing with investing in tech companies when I was young. You don't need to get lucky, you just need time. Time in the market beats timing the market every single time, and it's the biggest thing when you're young. You have that time. Please like and follow for more content like this.