Our definitive guide to investing in Canada

James Rodriguez James Rodriguez  updated on 2022-05-18

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. 

Our tools for investing your money

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 TypeWhat they areRiskPotential returnsLiquidity
The stock market Buy share of companiesHighHighVery liquid. Buying and selling shares is easy through online brokerage platforms. 
BondsLend to a government entity or companyLowLowBonds 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 FundsMutual funds pool money from thousands of investors in order to purchase a basket of diversified securities. A manager oversees the investments directly.VariesVariesBuying 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. VariesVariesBuying 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.LowLowGICs are not liquid. Money is accessible only after a pre-determined period has passed (or early with a penalty).
CryptocurrencyCryptocurrencies are decentralized digital currencies. They are ​​very volatile. HighHighBuying and selling cryptocurrencies online is easy through cryptocurrency exchanges. 
Types of investments available in Canada

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 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 their 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 TypeWhat They AreAboutPossible returnsTaxes
TFSATax-free savings accounts are, as the name implies, are not taxed when you contribute or withdraw. They are also very flexible, as earnings can be withdrawn at any time.
  • Hold many types of assets including stocks, mutual funds, ETFs and GICs
  • Significant tax benefits
  • Have a contribution limit
3 to 15%
  • Neither contributions nor withdraws taxed
RRSPRegistered Retirement Savings Plans let you get a tax deduction by setting aside money for your retirement.
  • Hold many types of assets including stocks, mutual funds, ETFs and GICs
  • Popular vehicle for retirement savings
  • Significant upfront tax benefits
Varies
  • Taxable income is reduced the year you contribute
  • Withdraws are taxed
Registered Education Savings PlanSave for a child’s post-secondary education. Reduce taxable income and tap into Canada Education Savings Grants
  • Create an educational fund
  • Receive government grants
  • Tax-free contributions
4 to 30%
  • Contributions and withdraws are tax-free
RDSPRegistered Disability Savings Plans provide long-term security for a person with a disability through grants and tax-free withdrawals.
  • Protect a loved one with a disability
  • Receive government grants
  • Contributions are not taxed
3 to 10%
  • Contributions and withdraws are tax-free
VRSP (RVER)Voluntary Retirement Savings Plans are Quebec-only savings and investment accountants offered through employers. 
  • Contribute to a supplementary retirement account
  • Contributions limited to 18% of earnings
Varies
  • Contributions reduce your taxable salary contributions
  • Withdrawals are taxed
Investment accounts in Canada
  • TFSA: Tax-Free Savings Accounts let you to 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:

Pros   

  • Safely prepare the future
  • Significant tax advantages
  • Suitable for all investor profiles
  • One-time or regular contributions

Cons

  • Variable and sometimes high fees
  • Investments 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 throughInvest inForAbout
Brokerage platform
  • Stock market
  • Debt securities
  • Mutual funds
  • ETFs
  • cryptocurrencies
Experience, independent investorsBrokerage platforms are for experienced investors interested in managing their own stock market investments. They offer low fees, but little guidance.
Robo-advisor
  • Money Market Assets
  • Stocks
  • Bonds
  • Funds
  • Cryptocurrencies
All types of investorsRobo-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 investment
All types of investorsFinancial advisors are particularly helpful in deciding which accounts and savings vehicles to choose to maximize your return. This hands-on help comes with fees.
The best ways to investments

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:

Pros 

  • Freedom to invest directly in the markets
  • Low brokerage fees
  • Minimum deposits start at just $1
  • Variable return depending on assets

Cons

  • 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 on 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:

Pros:

  • Fees often under 1%
  • No minimum deposit
  • Automatic balance your portfolio
  • Suitable for all investor profiles

Cons:

  • 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:

Pros

  • 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

Cons

  • Financial advisors have higher fees than other ways of investing
  • Levels of expertise and accreditation very 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

You will also compare the best cryptocurrency trading platforms.

The advantages and disadvantages of cryptocurrency platforms are as follows:

Pros:

  • A potentially high return
  • A wide variety of crypto-assets
  • Can take advantage of leverage.

Cons

  • Very volatile and risky market
  • Best for seasoned 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:

Pros:

  • 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.

Cons:

  • 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:

Pros:

  • Secure investment
  • A good choice for very cautious investors
  • Fixed-term investment

Cons:

  • Low returns
  • Some vehicles require large upfront investment.

Investing in mutual funds and ETFs

Our opinion on funds

ETFs and mutual funds are good options for people looking for a simple, but diversified ways to invest. Fees are often very low.

You can learn more about about ETFs and mutual funds on 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. 
  • 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:

Pros

  • Reduced risk through diversified investment
  • Suitable for the risk-averse investors
  • Convenience
  • Professional management of mutual funds

Cons

  • 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:

Pros

  • Protect corporate assets
  • Diversified investments
  • Suitable for entry-level investor profiles
  • Can offer tax advantages
  • Can generate regular income.

Cons

  • 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 is 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 ProfileAboutRecommend Investment Types
Minimal risk
  • Very low risk tolerance
  • Short investment horizon
  • Favors safety over growth
  • Accepts lower returns
  • Secured savings vehicles
Prudent
  • Low risk tolerance
  • Accept a minimal loss of capital
  • Short-term investment horizon
  • Accept modest returns
  • Strive for income stability
  • Prefers funds that invest in fixed income securities
  • Does not favour capital appreciation
  • Stocks
  • Fixed income securities
  • GICs
  • ETFs
  • Mutual funds
  • Robo-advisors
Conservative moderate
  • Low tolerance for portfolio volatility and loss of capital
  • Tolerates short-term fluctuations in investment returns
  • Accepts small losses of capital in exchange for the possibility of small capital appreciation

  • Stocks
  • Fixed income securities
  • GICs
  • Mutual funds
  • Robo-advisors
  • ETFS
Moderate
  • Moderate tolerance for risk and loss of capital
  • Tolerates slight fluctuations in investment returns
  • Tolerates moderate capital losses
  • Medium-term investment horizon
  • Objective to create stable income and long-term capital growth
  • Fixed income securities
  • Stocks
  • ETFs
  • Robo-advisors
Aggressive
  • High tolerance for risk and loss of capital
  • Tolerates wide fluctuations in investment returns
  • Risks moderate to large capital losses in exchange for long-term returns
  • Does not require income from investments
  • Medium-term investment horizon
  • Stocks
  • Cryptocurrencies
  • Online brokerages
  • ETFs
Very aggressive
  • Very high tolerance for risk, volatility and loss on investments
  • Tolerate large and sustained fluctuations
  • Willing to accept large capital losses
  • Has extensive investment knowledge
  • Does not require income from investments
  • Long-term investment horizon
  • Stocks
  • Online brokerages
  • Cryptocurrencies
Best investments for each investor profile

Keep read about investing

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