Investment means setting money aside or procuring an asset today with the aim that it will generate income for you perpetually or at a future date.
Investments are of different types and forms. Some assets can be long-term, medium, or short-term in terms of the time frame of expected benefits.
They can also be classified as Aggressive, Conservative, or Passive in terms of the degree of yield expected compared to the resources committed.
Choosing How to Invest in Canada
Choosing a suitable investment destination does not simply guarantee success in your investment goals. You still have to choose the right form of investment. It would help if you made your choice of investment based on certain key parameters.
- Income profile:
- Risk Appetite
- Available Capital
- Access to Credit
- Level of Education/Information
- Opportunity/ Research
- Pioneer Idea/Problem Identified
- Government: Policy
- Available Infrastructure.
- Competitor Analysis, Industry Analysis,
10 Best Ways to Invest in Canada
1) Real Estate
This involves investing in landed property for future income. Many ways that people make income from real estate include Leasing, Mortgages, Rents, Sub-let, etc.
Advantages of Real Estate Investment
- Wealth Preservation: this is an effective way to preserve wealth and hedge against the risks of inflation and currency fluctuations
- Steady Growth: The value of real estate generally appreciates overtime steadily
Real Estate in Canada
There are a lot of valuable properties available in Canada at competitive rates. It would be best if you took your time to consider your options
Premium Provinces: Vancouver – $900,000 CAD, Ontario – $750,000 CAD, Calgary – $400,000 CAD, Montreal – $340,000
Affordable Provinces: New Brunswick – $170,000, Prince Edward Island – $230,000, Nova Scotia – $246,000
Stock trading is a form of investment that involves buying and selling shares of companies based on their current performances or potential of future performance. ETFs are also good investments.
- Viable means of growth; Investing in the right stocks can positively change your financial fortunes within a relatively short period.
- Economic Activity: Investing in Stock helps the general economy to remain active and prevent companies from going bankrupt
- Low Risk: Stock of well-performing steady companies carries a relatively low risk.
Investing in Canadian Stock
There are broadly two types of Stock
- BlueChip: these are Stock of well-known, well-performing companies. They are usually more expensive, but they yield steady gains over time. Examples of such blue-chip companies trading on the Toronto Stock Exchange in Canada include; Metro Stock, Granite REIT stock, Nuvei, Goeasy Ltd, Agnico Eagle Mines, Brookfield Renewable Partners.
- Penny Stock: these are stocks that cost relatively low prices i.e. less than $10 CAD. The companies are lesser-known. But this doesn’t mean they perform any worse.
Some of the best performing Penny stocks in Canada are Nevada Copper Corporation, Taseko Mines Limited, Trican Well Service. Etc.
3) Precious Metals
This involves investing your money in precious metals that have an ornament, sentimental and industrial value. Such as Gold, Silver, Copper, Bronze, Platinum.
Advantages of Investing in Precious Metals
– It is a very stable store of value. It does not fluctuate drastically
– This method of investment carries minimal risk
– Precious metals have intrinsic value. Asides from being a valuable investment portfolio, they can also be used for their ornamental & industrial purposes.
-Liquidity: they can be easily converted into cash.
How to Invest in Precious Metals in Canada
The most prominent precious metal globally is Gold. It is a symbol of royal, wealth and excellence. It is a prevalent means of Investment in Canada. You can invest in Gold through many channels
- Banks: If you are interested in buying Gold, you can visit your local bank branch.
Canada Big 5 Banks – CIBC, TD Canada Trust, BMO, RBC, Scotiabank all sell Gold over the counter and other precious metals.
- Gold Stock: Another way to invest in Gold, albeit indirectly, is to purchase Stock of companies that engage in mining and exploration activities. This is a more aggressive way to invest in Gold compared to simply purchasing and keeping gold bars.
4) Government Bonds
This type of investment arrangement is where you loan money to the government in return for an agreed interest rate. Examples of these are Treasury Bills
Advantages of Investing Government Bond
-Low risk. Government is most likely the most reliable entity that you can loan money to. The government fully guarantees the bonds. The only chance of default is if the country ceases to exist.
– Tax-free: In most cases, income that you derive from Government bonds is not taxed. This makes it a desirable investment.
-Fixed Income: the expected returns and maturity date are fixed, this makes it very suitable for you to plan your spending or subsequent investment strategy.
-Public Good: When you loan money to the government, the government uses it to fund infrastructure, utilities, and general development of the country.
– Liquidity: Because government bonds are risk-free, tax-free investments you can sell them before maturity for less than the face value or use them as collateral for loans to raise some cash in the interim.
How to Invest in Government Bonds in Canada
Government of Canada Bonds usually offer competitive rates of return and are fully guaranteed by Canada’s Federal Government. They are available for One to Thirty-year Terms.
Direct Purchase from Bank of Canada: Banks and Large Investors can purchase bonds directly from the Bank of Canada,
Indirect Purchase from Banks & Investment Firms: Small investors like you and I can indirectly purchase Government of Canada Bonds from Financial Institutions, i.e. Banks, Investment Firms or from other holders of the bond looking to liquidate before maturity.
5) Fixed Income Investments
This refers to savings and investment opportunities offered by various banks. It involves saving a certain amount of money today with the promise to receive a fixed amount in return at an agreed date.
Advantages of Fixed Income Investments
- High returns: Returns on Fixed income investments are usually much higher than government bonds.
- Low-Risk: Fixed Income Investments with the right financial institution carry relatively low risk than other forms of investment.
- Networking: Making such investments with financial institutions can help you build the right social network and improve your credit profile with them. Which can become in handy in the future.
Where to make Fixed Income Investments in Canada
- Banks: Banks offer several Fixed Income Investment products such as HISA (High-Interest Savings Accounts).
- Money Lenders: Private money lenders can also offer you an excellent Fixed Income return on your cash investments.
- Hedge Funds
Agriculture involves the rearing of animals and planting crops for human domestic, industrial, or even animal use.
Advantages of Investing in Agriculture
- High returns
- Public good
- Provides raw materials to other industries
How to Invest in Agriculture in Canada
- Investing in owning a Farm
- Own a Farmer’s Stock: i.e Stock of a notable company that engaging in farming. Especially cultivation of cash crops.
- Value Chain: you can also invest in a company’ that operate in other areas of the agricultural value chain, such as transportation of farm-produce
7) Tech Start-ups
The world has witnessed a technological revolution over the last decade. Many areas of business are now being digitized. The internet has made many things possible today that we would have considered wishful thoughts decades ago.
The efficiency and globalization that have characterized the Tech industry have made it one of the most valuable sectors for investment today. Making the right investment of your time, money, and effort in Starting-Up a Tech company can dramatically transform your financial fortunes.
Advantages of Investing In Tech Startups
- Efficiency: The Tech industry is very efficient. For comparison, today’s market cap of the top 5 tech companies is much higher than the top 50 Oil Companies.
- Growth Potential: the industry has a lot of potential for growth and development in recent times.
- Access to Global Patronage: the internet makes it possible for a tech company to reach markets across all continents instantly.
- Public Good: The tech revolution has done a lot to make life much easier and more fulfilling for humanity.
How to Invest In Tech in Canada 2021
- Tech Solution Spaces: Canada is home to one of the world’s largest tech hubs in places like Toronto, Ottawa, Vancouver, and Waterloo Region which are aimed at growing new tech startups attracting innovative talent from all over the world.
- Tech Stock: The Stock of the world’s biggest tech companies and prominent startups such as Google, Apple, Tesla all have their Stock traded on the Toronto Stock Exchange. Some of the best Canadian Tech Stocks to look out for include: Descartes Systems, Open Text, Constellation Software, Kinaxis, and Shopify
Cryptocurrencies are digitally-encrypted computer codes acting like money. It involves the use of computer codes, networks, and virtual ledgers to generate currency, facilitate payments, and record transactions.
They have gained prominence in the world finance circle over the last few years. Asides from being used to facilitate instant payments across the world, they have also emerged as viable investment options.
The most prominent Cryptocurrencies at the moment are Bitcoin, Ether, and Dogecoin.
Advantages of Investing in Crypto-coins
- Growth Potential
- Less Complex compared to the stock market trading
How to Invest In Cryptocurrency in Canada
There are mainly two ways to earn cryptocurrency, trading, and mining.
- Cryptocurrency Exchanges: Crypto-Exchanges and wallets enable you to trade crypto-coins for other coins or fiat currencies. You can make a healthy income from this. There are many cryptocurrency exchanges operating in Canada. Such as Coinbase and Coinomi
- Mining farms: Mining Crypto coins involves setting up massive blocks of computers to perform complex mathematical computations to verify transactions being done on a Distribution Ledger i.e Blockchain in return for a reward of an agreed quantity of the virtual coin (cryptocurrency coin) that is being exchanged.
E-commerce means digitizing the practice of buying and selling merchandise.
Instead of owning physical shops, you can invest in setting up online stores to display and sell your products to people worldwide.
- Saves rent costs
- The internet offers cheap marketing
- Access to global markets
How to Invest in E-commerce in Canada
Popular Stores in the Canadian internet space are Shopify, Amazon Canada, eBay Canada.
10) Asset Leasing
This involves purchasing assets and leasing them out for other people who require them for their private or industrial uses.
- Asset Accumulation: It will help you to accumulate assets and increase your net-worth.
- Networking: Investing in asset leasing enables you to expand your social networks and meet other business owners, which can be crucial in the long-run.
How to Invest in Asset Leasing in Canada?
Some of Canada’s most leased assets include Luxury Cars, Houses, Industrial Equipment, and Heavy-duty Trucks.
Investing in any of these can be very profitable.
Reasons to Invest in Canada
Canada has recently become a choice investment destination in recent times due to the Ease of Doing Business, substantial property rights, political stability, the influx of immigrant talents, and quality infrastructure. All of these constitute an excellent environment for any Investment to flourish.
Ease of Doing Business has to do with a country with simpler regulations, an easy business registration process, and better protection for lives and property rights. Canada currently ranks 23rd out of 190 countries in the 2020 DB (Doing business) rankings published annually by the World Bank.
This is evident in Canada’s Foreign Direct Investment figures over the last 10 years, which have been consistently on the rise over the last few decades. Canada averaged $8bn in FDI annually from 1981 to 2020.
Why should you miss out? Get your investment calculators out, start looking at affordable provinces and stock trading apps in Canada.