How Should a Beginner Invest in Stocks? Start With This Index Fund

Here’s an easy way you can get a complete investment portfolio going as a beginner.

Tony Dong, MSc, CETF®

Tony turned a series of 2017 marijuana stock losses into a freelance career advocating for ETF investing. He currently holds a Master’s in Risk Management from Columbia University and is a Certified ETF Advisor (CETF®). Tony is the founder of ETF Portfolio Blueprint (etfportfolioblueprint.com) and the Lead ETF Analyst for ETF Central, a partnership between Trackinsight and the NYSE. His analysis has also been featured in publications like Kiplinger, 24/7 Wall St., U.S. News & World Report, TheStreet, and Benzinga. Tony also provides independent content and marketing consulting services to various Canadian and U.S. ETF issuers. His editorial opinions for The Motley Fool remain independent and objective.

Published October 24, 2024 9:30 am EDT

| More on: ZEQT

Investing in stocks as a beginner doesn’t have to be complex or time-consuming. For those looking to tap into the market’s potential without constantly monitoring their investments, there’s a simple strategy: buy and hold an index fund.

This hands-off approach is perfectly embodied by the BMO All-Equity ETF (TSX:ZEQT), an exchange-traded fund (ETF) that allows you to participate in the market’s growth with minimal effort.

I think ZEQT is ideal for investors who want to invest in the markets without needing to become experts themselves. Here’s what you need to know.

ETF stands for Exchange Traded Fund — Source: Getty Images

What is ZEQT?

ZEQT is an ETF, essentially a fund that trades on a stock exchange like a regular stock, but holds a diversified portfolio of investments.

ZEQT is structured as a “fund of funds,” meaning it invests in a selection of other ETFs that collectively cover the global market, including U.S., Canadian, international, and emerging market stocks. This approach ensures that investors can gain comprehensive global market exposure through a single investment.

Think of ZEQT as your virtual fund manager, handling the selection and rebalancing of investments to maintain an optimized mix. It even distributes dividends quarterly, offering regular income from your investment.

The fee for this ETF is competitive at just 0.20% annually. For example, a $10,000 investment in ZEQT would incur just $20 in fees per year.

How to invest in ZEQT

Investing in ZEQT is straightforward – perfect for beginners who want a set-and-forget approach. Here’s a step-by-step guide on how you can start:

Open a brokerage account. I recommend Wealthsimple for its $0 commissions on Canadian stocks and ETFs, ideal for cost-effective investing.
Search for ZEQT. Look up its ticker symbol in your brokerage app.
Decide how many shares to buy. Base this on your budget and investment goals.
Set a limit order. This specifies the maximum price you’re willing to pay per share, avoiding overpaying in a volatile market.
Submit your order and wait for it to fill. Your order will execute at your specified price or lower.
Enable dividend reinvestment. This feature automatically uses dividends to buy more shares, enhancing the compounding effect on your investment.
Set up auto-contributions. This helps you consistently invest without manual intervention.
Log out and focus on life. Once your investments are set up in ZEQT, you can enjoy a hands-off approach, knowing your portfolio is geared for long-term growth.