Skip to content
September 24, 2022


Investment information for the new generation

How ETFs Work: On keeping your personal life messy and financial life simple

One of my favorite things in life has returned to society – couples arguing in public. 

The worldwide pandemic and stringent mask mandate nearly devastated this essential, mortal experience. But luckily, as goes with truly powerful things, they find a way to return to their former glory. 


Every month I take myself out to a restaurant or nearby coffee shop (crowded for optimal listening conditions) and people-watch. Just last week, I was privy to a first date that launched headfirst into an extended volley of clunky sexual innuendo (courtesy of post-pandemic-social-anxiety and the “mans [sic]” desperation for intimacy) fueled by a bottle of screw-top Chardonnay. Then, by way of a horrible miscommunication in which one party used the word “daddy” (in reference to her biological father), the duo spiraled into an argument over respect. It was all very, “blood-is-thicker-than-water, how dare you insult my family?” type of dramatics – quite Shakespearian, if you ask me. 


I believe I am at my best when sitting next to a couple arguing in public (with my headphones in and on silent, of course). I know what you’re thinking, “Madelyn, mind your own business”. But the truth of the matter is, I don’t want to. 


And before you holier-than-thou-people start to shame me, let me remind you that we live in a golden era of self-aware voyeurism: everyone is putting on a show, and everyone is watching, all the time. We are all simultaneously swimming and peeing in a stream of curated intimacy. We’re listening in and tuning out and everything’s happening a lot and all the time and nothing’s happening in order. Add this to the fact we’re all caught in the infinite clamor of the lowest-stakes wars in human history (the content wars, the streaming wars, Facebook’s perpetual cross-platform battle for relevance), and you wind up with a culture designed for compulsive lurking, listening and watching.


I am pretty much obsessed with the idea of mess (another’s – not my own) in every capacity of life aside from finance. For instance, I carry daily anxiety for my cousin’s old roommate who has over 100K of student loans that just sit dormant and accrue more and more interest. Selfishly, for my anxiety levels, I’d like you to all just figure your shit out. And investing in ETF’s seems like a good way to start.


What is an ETF?
An exchange-traded fund (ETF) is an investment fund that holds a collection of investments, such as stocks or bonds owned by a group of investors and managed by a professional money manager. If you’ve been with me on this “let’s learn how to be responsible with money” journey for a while now, you probably recognize this term. However, I found myself confused when trying to explain an ETF to my sister last week so figured, it was time for a refresher. 


ETFs trade on a stock exchange and can be sold short or margined (these are confusing terms that basically mean ETFs operate like any old stock). You can also trade in futures and options on ETFs. 


ETFs and mutual funds both offer similar options to spread out risk using diversification – but they’re built, bought and sold differently.


How do I make money on an ETF?

Some ETFs pay out the money the ETF makes to investors. These payments are called distributions. For example, you may receive:

-Interest distributions if the ETF invests in bonds,

-Dividend distributions if the ETF invests in stocks that pay dividends, or

-Capital gains distributions if the ETF sells an investment for more than it paid.


Unlike many mutual funds, ETFs do not reinvest your cash distributions in more units or shares. Here’s what happens with your distributions instead:


  1. The cash stays in your account until you tell your investment firm how you want to invest it. (You may have to pay a sales commission on what you buy – ugh, these people never make it simple). 
  2. Your investment firm may offer a program to automatically buy more ETF units or shares for you. (You likely won’t pay a sales commission on these automatic purchases).

How ETFs are taxed:
The part you’ve all been waiting for! Who doesn’t love to chat about their taxes? (I’ll keep this brief). You’ll pay tax on:

-Any capital gains you make from an ETF when you sell it, and

-Any distributions you receive from the ETF.


If you hold an ETF inside a tax-sheltered account such as an RRSP or a RRIF (registered retirement income fund), you won’t pay tax on what you make investing until you take the money out. With a TFSA, you won’t pay any tax on the money you make while it’s in plan or when you take it out. 


The takeaway.

Like a mutual fund, an ETF holds a variety of investments. But it trades on a stock exchange like any old regular stock. ETFs are like the new, hot environmentally-friendly car (sustainability is sexy). They offer trading flexibility, portfolio diversification (the hill our man Warren Buffet will die on), lower costs and tax efficiency! 


The other takeaway. 

If you are a couple that has argued or will argue in public, I implore you to implement some of these suggestions to make it a good experience for everyone involved:


  1. Both parties should avoid any use of pronouns. I want proper nouns – names, places, events, time stamps. I need to pick a side and therefore need all the information available. Context helps. Is the affair with the friend they ‘told you not to worry about’?
  2. If there is a man involved in the couple, feel free to look confused or tired or maybe even a bit sad, but never angry. Angry men are not my idea of prime entertainment. I don’t want to have to look up domestic helplines to slip to the partner getting yelled at.
  3. If one or both parties could be eating, that generally ups the ante. It adds a certain texture to the public argument. Nothing can compare to someone scarfing down yam fries as they yell about who’s childhood trauma matters more.

*list ideas for couples arguing courtesy of a Tik Tok I’ll never be able to find again…

Cheers to keeping your personal life messy and financial life simple – happy arguing.


5 1 vote
Article Rating
Notify of
Inline Feedbacks
View all comments
Would love your thoughts, please comment.x