Our definitive guide to investing in Canada
Preparing for your financial future doesn’t just mean saving money, it means investing. Done correctly, this allows your money to work for you. And that means more financial flexibility and a more comfortable retirement. Critically, investing is the best tool you have for offsetting the inflation that eats into your buying power.
Are you intimidated by all of the investment options available to you? Even if you already know that investing is important, you may not know where to start.
This page breaks down the myriad investing options. Learn what’s available, how investing works and what are the best investment options for someone in your situation with your investor profile. Compare the most popular options on the market.
Are you ready to learn more and to start investing? HelloSafe’s got you covered in our investment guides and comparison tools.
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What investments are available Canada?
There are many ways to invest in Canada. From well-known vehicles like stocks and savings accounts to newer vehicles like exchange-traded funds and cryptocurrency, great financial products exist for every profile. Let’s explore what's out there depending on your investment goals, risk tolerance and the amount you can spend.
Here’s a breakdown of the most popular options.
|Investment Type||What they are||Risk||Potential returns||Liquidity|
|The stock market||Buy share of companies||High||High||Very liquid. Buying and selling shares is easy through online brokerage platforms.|
|Bonds||Lend to a government entity or company||Low||Low||Bonds liquidity depends greatly on the financial health of the bond issuer and the interest rate. Some bonds are easily traded, but others are not.|
|Mutual Funds||Mutual funds pool money from thousands of investors in order to purchase a basket of diversified securities. A manager oversees the investments directly.||Varies||Varies||Buying and selling mutual funds is easy through online brokerages.|
|Exchange-Traded Funds (ETFs)||ETFs are a collection of securities combined into a single purchasable fund. Invest in multiple assets in a single trade.||Varies||Varies||Buying and selling ETFs is easy. They are diversified like mutual funds but they are traded on stock exchanges.|
|Guaranteed Investment Certificates (GICs)||Lend to a bank or financial institution in return for a guaranteed return.||Low||Low||GICs are not liquid. Money is accessible only after a pre-determined period has passed (or early with a penalty).|
|Cryptocurrency||Cryptocurrencies are decentralized digital currencies. They are very volatile.||High||High||Buying and selling cryptocurrencies online is easy through cryptocurrency exchanges.|
The stock market: investing in the stock market is a long-standing way to invest in the short, medium or long-term. Build a portfolio and sell shares to make money. Many companies share their profits by paying shareholders dividends.
Funds: mutual funds and exchange-traded funds are popular types of funds in Canada. They represent tradable baskets of securities. They are diverse and minimize your exposure to a specific company or industry.
Debt securities: these securities are issued by borrowers including financial institutions, federal, provincial, local and foreign governments. The borrower lends money to the issuer in exchange for a predetermined return. Debt securities include Guaranteed Investment Certificates, Treasury bills, savings bonds, bonds and debentures and principal-protected bills.
Cryptocurrency: cryptotrading is very popular with investors who appreciate its high volatility. This volatility can mean significant short-term returns (or losses).
Income trusts: Income trusts in Canada are companies that hold securities or assets of other businesses, which are designed to regularly distribute income to investors.
What types of investment accounts are available in Canada?
There are a number of great registered accounts in Canada. They offer significant tax benefits, but there are specific rules to be mindful of. There are investment accounts suitable for every type of investor. They can be used for long-term investment growth, speculation or preparing for retirement.
Remember that saving and investing is important to fund major life projects like buying a home, paying for education, having children, funding your retirement or just preparing for a rainy day. These accounts are ideal for doing just that.
There are many accounts for holding your investments in Canada. The table below helps to sort out the different types of accounts and which ones may be right for you and your family.
|Account Type||What They Are||About||Possible returns||Taxes|
|TFSA||Tax-free savings accounts are, as the name implies, not taxed when you contribute or withdraw. They are also very flexible, as earnings can be withdrawn at any time.||3 to 15%|
|RRSP||Registered Retirement Savings Plans let you get a tax deduction by setting aside money for your retirement.||Varies|
|Registered Education Savings Plan||Save for a child’s post-secondary education. Reduce taxable income and tap into Canada Education Savings Grants||4 to 30%|
|RDSP||Registered Disability Savings Plans provide long-term security for a person with a disability through grants and tax-free withdrawals.||3 to 10%|
|VRSP (RVER)||Voluntary Retirement Savings Plans are Quebec-only savings and investment accountants offered through employers.||Varies|
- TFSA: Tax-Free Savings Accounts let you grow your investments completely tax-free. It is one of the most popular investment accounts in Canada but does have a contribution limit.
- RRSP: The Registered Retirement Savings Plans let you invest while enjoying a deduction on your taxable income when you make the contribution. Growth is taxed when you withdraw it. Once you reach the age of 71 you must close the account, convert it into a registered retirement income fund or roll it over into an annuity.
- RESP: Registered Education Savings Plans are an important tool for saving for your dependant child’s post-secondary education. Start saving early and often, while taking advantage of Canada Education Savings Grants.
- RDSP: Registered Disability Savings Plans are savings vehicles for people with disabilities and help to guarantee their long-term security. These accounts encourage saving by offering tax-free withdraws and Canada Disability Savings Grants and Bonds
- VRSP: Voluntary Retirement Savings Plans are Quebec-only savings and investment accountants offered through employers. These fund supplemental retirement savings. Contributions are deducted from your taxable income with a contribution limit of 18% of one’s earnings.
Access a wide range of assets through these savings and investments accountants including
- Shares in the stock market
- Bonds and debt securities
- Commodities like gold or oil
- Real estate with specific securities such as REITs
- Funds such as mutual funds and ETFs
The advantages and disadvantages of these registered accounts include:
- Safely prepare for the future
- Significant tax advantages
- Suitable for all investor profiles
- One-time or regular contributions
- Variable and sometimes high fees
- Investments are limited to certain asset classes.
How do you invest in Canada?
There are a few ways for Canadians to invest depending on whether they prefer to manage their own investments, rely on online tools or work with a dedicated financial advisor.
|Invest through||Invest in||For||About|
|Brokerage platform||Experience, independent investors||Brokerage platforms are for experienced investors interested in managing their own stock market investments. They offer low fees, but little guidance.|
|Robo-advisor||All types of investors||Robo-advisors automate your investment portfolio management while offering minimal fees. They are perfect for investors who need help managing their investments and want the lowest possible fees.|
|Portfolio manager||All types of investors||Financial advisors are particularly helpful in deciding which accounts and savings vehicles to choose to maximize your return. This hands-on help comes with fees.|
Invest using an online brokerage
Our opinion on online brokers
Online brokerages are the easiest investment solution for people who want to manage their investments themselves.
Online brokerages have made it easier to trade than ever before. These platforms are powerful tools for investors who have knowledge and interest to manage their own investments. The platforms empower investors who can now trade online at any time with minimal fees. They allow investment in stocks, bonds, ETFs or cryptocurrencies.
Unlike traditional brokerages, everything happens online and fees are lower. The main drawback is that investors do not have access to an expert or their advice.
To get started investors just need to create an account with a broker and fund their investment account. From there they start placing orders and managing their portfolios in no time.
Prospective investors can start comparing online brokerage platforms on this site.
The advantages and disadvantages of online brokerage platforms:
- Freedom to invest directly in the markets
- Low brokerage fees
- Minimum deposits start at just $1
- Variable return depending on assets
- Best for experienced investors
- High level of risk for certain instruments.
Invest using a robo-advisor
Our opinion on robo-advisors
Robo-advisors are a nice fit for investors who want to delegate managing their portfolio and are willing to forgo personalized advice in exchange for reduced fees.
Robo-advisors are automated financial advisors that perform trades and invest for you. They are relatively new to the market but are increasingly popular. They are a good match for busy people who do not have a lot of time to spend in the markets, but who want the lowest fees.
Here’s how robo-advisors work:
- You fill out a questionnaire to assess their investor profile and risk aversion.
- This profile tells the robo-advisor how to compose and manage your portfolio.
- It then carries out transactions buying and selling ETFs. Robo-advisors aim for similar returns to the market while minimizing fees.
The main advantage of these automated advisors is that they are offered at much lower fees than traditional advisors, but still have the legal obligation to be registered as portfolio managers and to act as fiduciaries on behalf of their clients.
The advantages and disadvantages of robo-advisor platforms are:
- Fees are often under 1%
- No minimum deposit
- Automatic balance your portfolio
- Suitable for all investor profiles
- No personalized advice
- Risk can be high depending on the profile
- Investment options are often limited to just ETFs
Do you think that a robo-advisor could be right for you? Our comparison tool can help you pick one.
Invest using a financial advisor
Our opinion on financial advisors
A good financial advisor is immeasurably valuable. They can provide punctual, relevant investment advice.
A financial advisor may be right for you if you want to invest but are not personally interested in or knowledgeable of financial markets. Financial advisors will take the time to get to know your financial goals and will handle the management of your portfolio.
The advantages and disadvantages of financial advisors are:
- Investments are chosen for you according to your profile and financial goals
- Regular re-evaluation and balancing of your portfolio
- Performance is often higher than with self-directed investments
- Financial advisors have higher fees than other ways of investing
- Levels of expertise and accreditation vary greatly. Anyone can call themselves a "financial advisor", so pick your advisor carefully and insure they are a fiduciary.
Invest in cryptocurrency
Our opinion on cryptocurrencies
Cryptocurrencies have performed impressively over the past few years, but are only aimed at investor profiles with a high-risk appetite.
The cryptocurrency market is currently booming and is attracting more and more investors. The best crypto exchange platforms let you trade a variety of cryptocurrencies inexpensively.
To start investing in cryptocurrencies you will first need to pick a crypto exchange platform and the coins you wish to invest in.
Bitcoin and Ethereum are the best-known cryptocurrencies, but they are not the only ones with growth potential. Want to learn more? Get started by reviewing the top cryptocurrencies.
The advantages and disadvantages of cryptocurrency platforms are as follows:
- A potentially high return
- A wide variety of crypto-assets
- Can take advantage of leverage.
- Very volatile and risky market
- Best for seasoned investors
Invest in NFTs
Our opinion on NFTs
NFTs have performed impressively over the past few years, but are only appropriate for investors with a high-risk appetite.
NFTs are booming with more and more investors getting into them all the time. The best NFT marketplaces let you trade a variety of NFTs and buy and sell them with your cryptocurrency.
NFTs are stored on a blockchain, the most common being Ethereum. Others frequently use Cosmos, Tezos, Polkadot and Binance Smart Chain.
The advantages and disadvantages of NFT marketplaces are the following:
- A potentially high return
- A wide variety of crypto-assets
- A fun new investment class
- Extremely volatile and risky market
- Best for knowledgeable, investors
Invest in the stock market
Our opinion on the stock market
Despite newer investment options, the stock market remains an attractive investment for both regular income and long-term capital gains.
Buying and selling shares or diversifying through mutual funds and ETFs in the stock market is a time-tested investment strategy. It is particularly good for
- Long-term investment: Stock market shares generally offer a higher return than fixed-income securities, despite market fluctuations. They have historically been a great long-term investment. It is possible to realize capital gains when you sell your shares. Want to learn more We’ve put together a guide to the best stocks.
- Protection against inflation and tax deduction: investing in the stock market can protect you against both inflation and taxes that can gradually erode your wealth. Investing in stocks through specific registered accounts lets you deduce your taxable income and/or withdraw your returns tax-free.
The advantages and disadvantages of investing in the stock market are:
- A simple investment that's ideal for beginners
- Make money through dividends and capital gains
- Many investment vehicles depending on your profile
- Suitable for investors with average risk aversion
- Variable brokerage fees.
- Average returns
- Better options for short-term investment.
Read about the best stocks on the market and stock market investment products in our section dedicated to this investment. When you are ready to get started investing, you can compare the best online brokers available.
Invest in debt securities
Our opinion on debt securities:
Debt securities are a good investment vehicle for the risk-averse. They are inherently stable, but that stability corresponds with lower potential returns than many other types of investments.
There are several types of debt securities available for secure investing including
- Treasury bills: T-Bills let you lend money to the Canadian Federal Government. They are incredibly low-risk and their return varies according to when they were bought and the time to maturity.
- Savings Bonds: When you purchase a bond, you are giving a loan to the federal or provincial government that issued it. The interest is regular or compound and the interest rate is calculated in different ways. It can be fixed, tiered or have a minimum rate that increases. Note that Canada Savings Bond program is no longer available.
- Bonds and debentures: These are investments guaranteed by a government or a company that allow you to receive regular interest calculated on the basis of a fixed rate with a maturity of 1 to 30 years.
- Principal protected bills: These are long-term investment instruments guaranteed by a financial institution. They guarantee a full return on your principal but may pay out more based on the performance of the equity markets. The interest rate can be fixed or variable. Their time to maturity ranges from 5 to 10 years.
The advantages and disadvantages of investing in debt securities are:
- Secure investment
- A good choice for very cautious investors
- Fixed-term investment
- Low returns
- Some vehicles require a large upfront investment
Investing in mutual funds and ETFs
Our opinion on funds
ETFs and mutual funds are good options for people looking for simple but diversified ways to invest. Fees are often very low.
You can learn more about ETFs and mutual funds in our dedicated guides.
- ETFs: exchange-traded funds, are made up of a group of passively-managed securities and they are traded on the stock market as if they were a stock. ETFs are often invested in a single industry or even the commodities market.
- Mutual funds: mutual funds also pool together securities but are managed by a professional manager. They can be purchased through a brokerage, bank or robo-advisor.
Here are the advantages and disadvantages of investment funds:
- Reduced risk through diversified investment
- Suitable for the risk-averse investors
- Professional management of mutual funds
- Moderate return
- Potentially high expense ratios with (mutual funds)
Investing in an income trust
Our opinion on income trusts
An income trust is an interesting investment method for estate planning or protecting professional assets.
Trusts hold incoming-producing assets on behalf of an individual or commercial group. They pay out to beneficiaries based on the income they generate. Trusts are commonly used as an estate planning tool, but trusts can also be used to invest in real estate with a REIT or Real Estate Investment Trust, which consists of buying shares of large landowners in order to receive a portion of the rents.
The advantages and disadvantages of trusts are:
- Protect corporate assets
- Diversified investments
- Suitable for entry-level investor profiles
- Can offer tax advantages
- Can generate regular income.
- Highly variable management fees
- Locking in your capital.
Invest in real estate
Our opinion on real estate investment
Investing in real estate is an excellent way to diversify your investments. However, it is not for everyone and most often requires a substantial amount of capital.
Direct real estate investment requires significant capital, but there are ways of investing indirectly with less money. Real estate is risky but can be a high-profit investment. Real estate investment trusts and ETFs focused on real estate are nice ways to invest in this market if you cannot or do not wish to buy an entire property yourself.
The advantages and disadvantages of real estate are:
- Possible to make a quick return on your investment
- Possible to reduce taxes
- Earn through rent or resale
- Property maintenance can be time-consuming and expensive
- Managing tenants is difficult
- Local markets vary greatly
What kind of investor are you?
Before deciding on the types of investments for you, it’s important to know your investor profile and clearly define your investment goals.
Start by asking yourself these simple questions:
- How much money do you have available to invest?
- What is your investment horizon, meaning do you want to invest in the short, medium or long terms?
- Why are you investing?
- What are your financial goals?
- What is your risk tolerance?
- How much are you willing to risk?
Thoughtful answers to these questions will help you determine your investor profile. Alternatively, a financial advisor can help walk you through it.
Once you think about your investor profile, consider your goals and weigh your risk tolerance, see the table below for the types of investments recommended for each profile.
|Investor Profile||About||Recommend Investment Types|
Keep read about investing
- What are Canada's best NFT marketplaces?
- RRSPs vs TFSA: Which to invest in first?
- Investment strategy essentials: know your investor profile
- What is an RESP?
- How to invest in commodities in Canada
- An essential guide to annuities
- What are Canada Treasury bills?
- What is an RRIF and how does it work?
- Average salary by profession in Canada
- What is an RDSP?
- All about the Guaranteed Income Supplement
- All about Old Age Security in Canada
- The best mutual funds to invest in Canada
- The Top 10 RRSPs: Invest in your future
- How to buy the best ETFs in Canada
- Canada's best financial advisors
- What are Canada savings bonds?
- How to get started investing in real estate
- How to trade Forex in Canada
- Compound interest calculator
- The best investments in Canada for 2022
- What is CPP in Canada?
- The top 10 TFSAs
- Our essential guide to stocks
- Our guide to the best GIC rates in 2022
- Get expert financial advice and start investing better
- What are the best online brokers in Canada?
- Which robo-advisors are Canada's best?
- What are the best crypto exchanges in Canada?