Are you a beginner investor?

This post is sponsored by Tangerine.

You don’t need to dive head-first into the stock market to start investing. There are many options for both beginners and experienced investors alike, designed to help Canadians grow their savings gradually, with diversification* built in. You can choose an investing option that suits the level of risk you are willing to take on.

When you place your investments in accounts such as a TFSA or RRSP, you have the added benefit of potentially saving on taxes as well.

Keep reading to learn some of the easiest ways to start investing, how different investment vehicles work, and why combining them with tax-advantaged accounts can make a real difference for long-term growth.

ETFs and mutual funds explained for beginners

An ETF, or exchange traded fund, is a pooled investment that contains many individual securities such as stocks and bonds. It’s traded on a stock market, but instead of having to buy and sell all those securities yourself, you can invest in them all with a single fund.

This built-in diversification* may help to reduce risk, since a dip in one stock has less impact on your overall investment, while you may still benefit from the stock market as a whole generally appreciating in value over the long-term.

Some ETFs follow an index, such as the S&P/TSX Composite Index, which tracks the performance of hundreds of companies on the Toronto Stock Exchange. These ETFs aim to match the performance of the index they follow. Because of that passive approach, they may come with lower fees, making ETFs a popular option for new investors.

So, how does investing in an ETF differ from stocks? When you buy stocks, you’re choosing individual companies and deciding when to buy or sell. With an ETF, you can invest in the broader market in one step, without having to make decisions about all the different companies that make up the index.

Mutual funds are professionally managed investment funds, which also pool many investments together in a single package, but they work a bit differently from ETFs. Instead of trading on an exchange where the price may rise and fall throughout the day, mutual funds are bought directly through a financial institution, with prices set once per day. For this reason, they may be considered even more accessible for new investors than ETFs.

There’s even a growing category of mutual funds that contain ETFs. That means you may still get diversification, passive index exposure, and potentially lower fees, without having to place trades, watch market prices or reinvest any dividends – common hurdles facing new investors. Because it’s a mutual fund, automatic contributions are easier to set up — you can purchase units on a regular schedule. For example, Tangerine offers this option helping reduce friction for new investors who want a simpler way to get started.

ETF vs. mutual fund: Pros, cons and beginner considerations

When comparing ETFs with mutual funds, the trade-off usually comes down to cost versus convenience.

 Here’s a look at the similarities and differences:

ETF vs. mutual funds: A comparison

Using TFSAs and RRSPs to help lower taxes

The account you use can matter almost as much as the investment itself. Tax-advantaged accounts can reduce or defer the taxes you would otherwise owe.

A tax-free savings account, or TFSA, allows your investments to grow tax-free. You don’t pay tax on interest, dividends or capital gains earned inside the account.

For example, if you start investing at age 30 and contribute regularly to a TFSA, that money can grow through a mix of contributions and investment returns. When you withdraw it five,10 or 30 years later, you won’t pay any tax on the amount you take out — even though a large part of that balance may be investment growth. The full amount is yours to use, and withdrawals won’t affect your income or government benefits.

A registered retirement savings plan, or RRSP, works differently. Contributions you make may reduce the amount you owe in income taxes today, and the taxes on any growth in your investments are deferred until you withdraw the money later, usually in retirement. (Just be sure to stay within your contribution limit set by the Canada Revenue Agency. You can check by logging into your CRA account.)

For example, if you earned $80,000 last year, contributing $5,000 to an RRSP before the deadline would reduce your taxable income to $75,000. That reduction may mean a lower tax bill now, while your investment continues to grow inside the account. When you eventually withdraw the money in retirement (presumably at a lower tax bracket because your income has decreased), you’ll pay less tax than you would have if you’d kept your investments outside a registered plan.

Both TFSAs and RRSPs allow Canadians to hold investments like ETFs or mutual funds, helping money compound more efficiently over time.

TFSA contribution room, withdrawal rules, and compounding growth

Each year, the government sets a limit for new contributions to your TFSA. For 2026, that limit is $7,000. Unused room carries forward indefinitely, and a TFSA contribution room calculator can help you track how much space you have left over.

You can take money out of your TFSA at any time without paying tax, and the amount you withdraw is added back to your contribution room the following year.

Compounding plays a big role here. Regular contributions, even modest ones, can grow meaningfully over time when returns are reinvested and sheltered from tax. Many investors set up automatic contributions through providers like Tangerine, so compounding can happen in the background, without extra effort.

The bottom line

For beginner investors, long-term consistency can matter more than short-term market moves. Pooled investment funds offer a straightforward way to invest with built-in diversification, and holding them inside a tax-sheltered TFSA or RRSP may lead to meaningful tax savings, either through tax-free or tax-deferred growth.

With tools that support automatic investing and diversified portfolios — like those available through Tangerine Investments — it’s possible to start small, stay invested, and let both compounding and tax advantages work in your favour over time.

*For more information, including legal details, please visit Tangerine.ca.