I'm 25 and Just Opened a TFSA. Should I Just Buy XEQT?
Yes. Here is the full picture of why, what to do first, and what the next forty years could look like if you start now.
The direct answer
Yes. If you are 25, have just opened a TFSA, and are wondering whether to just buy XEQT, the answer is yes. Open Wealthsimple, deposit whatever you can afford, buy XEQT, set up automatic bi-weekly contributions, and get on with your life. Almost nothing you learn in the next ten years of financial research will improve materially on that starting position.
This article exists to explain why, address the objections you will encounter, and give you a clear picture of what to do before investing, how much to contribute, and what the next forty years look like if you follow through. But the answer to the headline question is not complicated. It is yes.
Why 25 is the most powerful starting age
Time is the most valuable input in compound growth, and it is the one input that becomes permanently unavailable the longer you wait. Starting at 25 gives you something a 35-year-old starting from zero simply cannot buy back.
The 25-year-old who starts today and the 35-year-old who waits ten years will contribute the same monthly amount. But the ten extra years of compounding the 25-year-old gets are worth more than all the contributions the 35-year-old makes in their first decade. This is not a motivational poster. It is arithmetic.
Two things to do before buying XEQT
How much to contribute
Contribute whatever you can genuinely sustain every paycheque without creating financial stress that causes you to skip contributions or stop investing during a bad month. For most 25-year-olds early in their careers, that number is somewhere between $100 and $500 per month. The exact amount matters less than the consistency.
A useful target: aim to eventually contribute $7,000 per year to max out your annual TFSA room as your income grows. At 25, you also have accumulated TFSA room from 2020 onward (the year you turned 18 if born in 2002, or earlier). Find your exact TFSA contribution room for 2026 here.
Set up automatic bi-weekly contributions from your bank account. The amount that goes to XEQT should leave your bank account on payday, before you have a chance to spend it. Treat it as a fixed expense, not a discretionary one.
What the numbers actually look like
What about the risk?
At 25, you have more tolerance for investment risk than at almost any other point in your life, for one reason: time. When XEQT falls 30% (and it will, at some point), you will have decades to recover. The March 2020 crash saw XEQT fall 30% and fully recover within six months. Investors who held through that period ended 2025 up significantly from their pre-crash levels. For exactly what to do when that moment comes, see what to do when XEQT drops 20%.
The only scenario where risk genuinely threatens a 25-year-old's XEQT position is if they panic-sell during a downturn. The solution to that risk is the emergency fund described above (so you are never forced to sell) and the mindset shift that a falling market is a sale, not a disaster.
The risk of not investing at 25 is larger, less visible, and more certain than the risk of investing in XEQT. Inflation quietly erodes the purchasing power of cash left in a savings account. Forty years of missed compounding is a very large, very silent wealth loss that arrives at retirement regardless of whether markets cooperated.
Common mistakes to avoid at 25
| Mistake | Why it hurts | What to do instead |
|---|---|---|
| Waiting until you "know more" | Every month of delay costs expected compound growth that can never be recovered | Start now with $100. Learn while invested. |
| Trying to time the market | Investors who wait for the "right time" typically buy at higher prices than if they had started immediately | Any day is a fine day. Start today. |
| Picking individual stocks instead | Stock picking underperforms index funds for most investors after fees and taxes | XEQT gives you 8,400 companies at 0.20% |
| Keeping a 20% credit card balance while investing | Paying 20% interest to earn an expected 8% is a guaranteed wealth transfer to the bank | Clear high-interest debt first, then invest |
| Over-checking the portfolio daily | Frequent checking during downturns makes panic-selling more likely | Check quarterly at most. Automation helps. |
| Contributing too much and running dry mid-month | Inconsistency is the enemy of compounding | Set a sustainable amount. Lower is fine. |
What to think about in your 30s
In your 30s, life gets more complex: a potential home purchase, a growing income that creates more RRSP optimization opportunity, perhaps a partner's finances to coordinate. Some things that become relevant as you move through the decade:
An FHSA if you plan to buy a first home. The $8,000 annual contribution with tax deduction and tax-free home purchase withdrawal is worth opening now even if you are not buying for several years. The 15-year clock starts when you open the account, not when you contribute.
RRSP contributions become increasingly attractive as your income rises into higher tax brackets. Once you are consistently above $80,000 in annual income, RRSP contributions generate meaningful tax refunds that can be reinvested. Continue maxing your TFSA alongside contributing to an RRSP as income grows.
Your XEQT stays as XEQT throughout your 30s and most of your 40s. The 100% equity allocation remains appropriate for your time horizon. There is nothing to adjust.
Stop overthinking it. Start today.
The most common outcome for 25-year-olds who research investing thoroughly is paralysis. There are too many options, too many opinions, too many risk warnings, and too much uncertainty about the future to feel confident making a decision. This is normal and also the primary enemy of the wealth you are trying to build.
XEQT is not the only right answer for a 25-year-old Canadian investor. But it is a correct answer that requires no ongoing decisions, carries one of the lowest cost structures available, provides genuine global diversification, and has worked well for the investors who have held it through every market condition since its 2019 launch. The perfect investment portfolio you have not started will always underperform the good investment portfolio you started in your twenties.
The best time to open a TFSA and buy XEQT was the day you turned 18. The second best time is today.
Forty years of compounding. Start now.
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