Wealthsimple (https://www.wealthsimple.com) is a Canadian online platform where you put your money in and invest it, either by letting the platform choose and manage your investments for you, or by choosing them yourself. It's a member of CIRO (Canadian Investment Regulatory Organization), and your accounts are protected by CIPF (Canadian Investor Protection Fund) up to $1 million if the firm itself fails. You need to be a Canadian resident to hold a Wealthsimple account.
When you invest money, you're using it to buy one of three things: a stock, a bond, or an ETF.
Stocks
Stocks are tiny pieces of ownership in a company. When companies do well, each stock is worth more. Dividends are a share of the company's profits paid directly to shareholders just for holding the stock.
A stock's price moves mainly because of changing expectations about the company's future. If a company reports higher profits than people expected, or looks set to grow faster, more people want to buy in, and the price rises. If profits disappoint, or the outlook worsens, people sell, and the price drops. A stock's price isn't really a measure of how the company is doing right now, it's the market's constantly shifting guess about how the company will do going forward.
Bonds
Bonds are loans to companies or governments, paid back as interest. Bonds earn less than stocks but fluctuate less.
A bond's value can drop for two reasons. If interest rates rise after you've locked in a bond at a lower rate, like 3%, new bonds start offering more, like 5%, so nobody wants your old one unless you drop its price, though if you just hold it until it's paid back in full you still get your original money back regardless. The other reason is default, the borrower simply not paying you back, rare for governments and big companies but not impossible.
Most people buy bonds for the steady interest, not to trade them. You'd sell one early mainly if you needed the cash sooner than the loan was due back, or wanted to move the money elsewhere.
ETFs
ETFs (Exchange-Traded Funds) are collections of stocks and bonds bundled into one product. Instead of buying one company's stock and being exposed to whatever happens to that one company, an ETF spreads your money across hundreds or thousands of companies at once. This is what makes ETFs the easiest way for most people to invest: built-in diversification, without having to pick individual stocks yourself.
ETFs come in two types, passive and active. A passive ETF just follows an index. An index is basically a list, a fixed group of companies that someone has decided represents a market. For example, the S&P 500 is a list of the 500 biggest companies in the US. An ETF that "follows" that index buys a little bit of every single company on the list, automatically, in roughly the same proportion as the list itself. Nobody is sitting there deciding which of those 500 companies to buy or skip, the fund just owns all of them. That's why it's called passive, there's no active decision-making involved, it just mirrors the list.
An active ETF has a manager deciding what to buy and sell based on their own judgment, trying to do better than just owning the whole market. Active funds usually cost more, since you're paying for someone's research and decisions, and they can outperform or underperform depending on whether those decisions turn out right.
Risk, Volatility, and Return
Return is how much money an investment makes or loses, usually shown as a percentage. An 8% return on $10,000 means it grew to $10,800 over that period. Return can be measured over a day, a month, a year, or any stretch of time you choose, so the same investment can show very different numbers depending on the timeframe. A stock might be down 2% today but up 15% for the year. Always check what timeframe a return figure is referring to, otherwise you might compare a one-day number against a one-year, five-year, or ten-year number and draw the wrong conclusion about which investment is actually better.
Risk is the chance that an investment loses money, or that what happens differs from what you expected. Stocks are riskier than bonds because their value depends on how a company performs, which is less predictable than a fixed interest payment. This is also where ETFs and individual stocks differ. If you buy one individual stock and that company has a bad year, gets caught in a scandal, or gets outcompeted, your investment takes the full hit. If you buy an ETF holding thousands of companies instead, one company doing badly barely moves the needle, since it's a small slice of the whole. Individual stocks can also outperform the market by a lot if you pick the right one, but consistently picking winners is genuinely difficult, even for professionals, and picking the wrong one can wipe out a big chunk of your money. An ETF gives up that higher upside in exchange for steadier, more predictable growth, which is why it's the right tradeoff for most beginners.
Cash sitting uninvested in a bank account carries a risk too, inflation. Prices for goods and services tend to rise over time, so money that just sits there loses some purchasing power each year, even though the number on the statement never goes down.
Volatility is how much an investment's value swings up and down along the way, even if it's generally heading in a good direction over time. A volatile investment might be up 15% one year and down 10% the next. A low-volatility investment moves in smaller, steadier steps. Volatility is only harmless if you can afford to wait it out. If you need the money during a downturn, an unexpected expense forces a withdrawal, or you panic and sell while the value is down, that swing turns into a real, locked-in loss instead of a temporary dip. That's the actual risk volatility carries, not the swings themselves, but being forced or scared into selling at the wrong moment.