Investing in Canada for Beginners

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With smart investment ideas, many Canadians can achieve their financial dreams faster. At Canada Buzz, we are committed to providing you with investment guidelines and resources to maximize your investments. 

To have a successful investment, especially for beginners, it is essential to carefully choose your investment portfolios, minimize risks, and make the right decisions to guarantee profitable investment for long-term financial goals.

How and what you spend your money on today will positively or negatively impact your future financial status. It is therefore essential to harness your resources towards long-term financial gains. To be a good investor, you have to first understand what it means.

What is Investing? 

Investing is a process of spending your money on ventures or anything that will guarantee and provide you with more money in the future. People invest their money to have more money and actualize their financial dreams.

The secret to financial liberation and success goes beyond hard work. Most successful men and women work smart by taking bold steps to grab investment opportunities. 

There are diverse investment options and financial instruments available to Canadians – newbies and expert investors alike. Depending on your financial goals – retirement, housing, children’s education, you can commit your extra cash and let your money work for you. 

Disclaimer: This article is for informational purposes. You could lose all your money in an investment. Always consult a financial advisor before making investment decisions.

Investment Options in Canada

The advancement in financial technology paved the way for several investment options. As an investor, you can choose from several available securities to invest your money, depending on your financial goals and preferences. 

Here are some of the investment options that you can choose in your asset portfolio:

Stocks

Stock investing remains top of the list among investors and traders. Stocks, often referred to as shares, are pieces of a company that investors can buy. Stocks are listed on exchanges in the stock market.

When you purchase a company’s stock, you automatically have a portion of its ownership, voting rights, and entitlement to a part of the company’s profit-sharing (dividends).

Stock trading or investing is volatile. You could make a lot of profit now, and in the next few minutes, lose all your investments. As a regulated investment option, you can invest in stocks through an investment platform.

Bonds

Bonds are basically like a loan agreement to raise money. Bonds are issued by the government (federal and provincial) and companies to raise money with interests.

The interest rates are usually higher than bank rates and vary in their length – six months, two years, five years, or ten years. On the maturity date, the bondholders (investors) receive the full amount (principal amount) of the bond from the issuer, aside from the regular interest payments.

Compared to stocks, bonds are typically a safer investment and less risky. However, Bonds’ return on investment (ROI) is lower than investing in stocks. You can purchase bonds directly through the government or a brokerage platform.

Mutual Funds 

A mutual fund is an investment portfolio of Bonds and stocks managed by an investment or fund manager. When you invest in mutual funds, you’ll earn money in dividends and interest generated from stocks and bonds, respectively.

Fund managers, who manage mutual funds, are hired by investors to administer the assets. However, regardless of whether your funds generate profit or loss, the fund manager gets paid for their services.

The Simplest Way to Invest

Wealthsimple provides powerful financial tools to help you grow and manage your money.

Cryptocurrency 

Cryptocurrency is generally regarded as the currency of the future. It’s digital money that allows users to transact with other users (peer-to-peer) from any location using technological algorithms.

Cryptocurrencies like Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC), Tron (TRX), and other digital currencies have become popular investment alternatives to traditional financial instruments.

There are several crypto exchanges and crypto trading platforms where you can conveniently and securely buy and sell virtual currencies. However, the cryptocurrency market is extremely volatile and unregulated, as its price is based on demand and supply. 

Property and Real Estate 

Property or Real Estate investment involves buying real estate or venturing into the housing market, such as a real estate project, condos, etc. Real Estate portfolios often require more money than stocks or bonds. You can invest in Canadian real estate by buying a property directly from the owner or invest through Real Estate Trusts. 

Other investment options include:

  • Exchange-Traded Funds (ETF) 
  • Commodities 
  • Options
  • Life Insurance 
  • Retirement or tax-sheltered investment – RESP, TFSA, RRSP, etc. 

How to Invest in Canada 

You probably have heard much about financial investments, but not sure how you can put your money to profitable use. The expert investors you see today also started as newbies. 

Depending on your preferences, there are several channels through which you can invest and manage your assets. However, to maximize your investment returns and reduce the cost, it’s often advisable to use online investment platforms like discount brokerages and Robo-advisors.

Robo Advisors 

Robo advisors are financial expert advisers and investment managers that use a computer or mathematical algorithms to build your investment portfolio based on your risk tolerance and investment goals.

As an automated digital investment platform (online and app-based), Robo advisors like Questrade can provide you with financial and investment guidelines, especially if you’re new to investing. Robo advisors can be a suitable option if you prefer to hands-off your investment decisions in the hand of a financial expert. 

Online Brokerages 

Online brokerages or trading platforms offer brokerage services to investors and facilitate stock trading. Often called discount brokers, online brokerages provide an enabling trading environment for Do-It-Yourself (DIY) investors. As a self-service platform, discount brokers don’t offer investment advice or guide to investors. 

To invest through an online trading platform, you’ll need to open a brokerage or investment account online, deposit money and purchase your preferred assets. Before opening a brokerage account, you need to research and compare the best online brokers in Canada, their services, fees, accessibility, and ease of use.

The majority of Canadian discount brokers offer low-fee and commission-free trading access to their clients to buy and sell stocks and other securities in Canada and US exchanges. There are many licensed online brokerages in Canada, including Questrade, Qtrade, Wealthsimple Trade, Virtual Brokers, Interactive Brokers, TD Direct Investing, Scotia iTRADE, etc. 

Investment Tips for Beginners 

To make your money work for you, here are some tips to guide your smart investment decisions. 

1.      Savings

Except you have a wealthy associate or relative who is willing to fund your lifestyle, you need to save money and build up some cash to invest. As a result, you should cut down on unnecessary luxurious lifestyle to have enough funds towards investing for your future. It’s important to note that investing is for the long-term. Therefore, you should have some extra cash for emergencies. You can start by opening a Tax Free Savings Account.

2.      Start Small, Grow Big

Grow your investment from a lower level and progress to a higher level. You can start investing with the little amount at your disposal. You should start investing as soon as you can, regardless of how small, and grow it with time by setting up auto-transfer from your bank to your investment account. 

3.      Understand Your Investment

You might be faced with indecision on what investment assets to commit your money to. It’s advisable to invest in what you understand because someone else’s asset portfolio might not be the best investment for you. Bottom line? Invest in an industry you know! 

4.      Diversify 

Rather than investing your money in a single asset type, you should diversify and invest in different assets and risk levels. The idea behind the diversification is that if one investment isn’t doing well, you can earn returns on other classes of assets and industries. 

5.      Consider Long Term 

You should set long-term investment goals. Don’t panic sell! Most successful investors save and invest towards future projects or goals. This will also save you from unnecessary financial stress over time. 

6.      Be Logical

When it comes to investing your money, you should be logical and not be driven by emotions. For instance, if your favourite brand or relative’s company isn’t doing well financially and has no future improvement, the logical thing is to avoid such investment and invest in industries or assets that can guarantee profitable returns.

7.      Do Your Research 

You need to conduct extensive research of your preferred assets and investment platform. One of the things to consider is the fees associated with investment and its impact on your returns. 

Conclusion 

Investing is a long process and along the line, you’ll have some losses and gain some profits. The best thing is to keep learning and grow your investment one step at a time.

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Odeyemi O.

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Avid researcher, freelance writer, and personal finance enthusiast passionate about financial education and literacy.

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Kareena Maya

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Kareena Maya is a freelance writer focused on the personal finance and travel spaces. He frequently writes about credit cards, banking, student loans, insurance, travel rewards and more. His work has been featured in publications such as Forbes Advisor, Bankrate, Credit Karma, Finance Buzz, The Ascent and Student Loan Planner.

Kareena Maya is a freelance writer focused on the personal finance and travel spaces. He frequently writes about credit cards, banking, student loans, insurance, travel rewards and more. His work has been featured in publications such as Forbes Advisor, Bankrate, Credit Karma, Finance Buzz, The Ascent and Student Loan Planner.