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How to Start Investing Money in Canada

Investing should be a part of your long-term financial plan, especially if you are young. Many people think you need a lot of money to get started on investing but that isn’t always the case. With so many online investment options available, there is something for everyone. And remember: the earlier you start, the better.

December 3, 2020 in Learn

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Define your investment goals

Before you dive into the world of investing you should set specific investment goals. Defining what you want to accomplish when it comes to investing is very important so that you can decide what and where you want to invest your funds. Outlining if you are investing for your retirement, your child’s education, or for a down payment is crucial to help determine the amount of risk you should be taking on.

Establish your risk tolerance

With great risk comes great reward, but the more risk you take on, the more downside you could encounter. Understanding how long you are investing for will help you define the risk tolerance you can take on. When it comes to investing you can enter in something low, medium, or high-risk, depending on how long you will be investing for and your tolerance to market swings.

Choose an investment provider

Once you have established your investment profile and risk tolerance, it’s time to look at where you are going to invest your money. There are three main places that you can invest your money:


● Discount brokerage


● Automated investing / robo-adviser


● Financial advisor

Types of investments

Within your investment accounts there are many different types of investments that you can own. Depending on the risk profile you’ve outlined and the time period you are investing for, you’ll want to make sure that your investments line up with your goals.


Stocks are a type of equity in a company. Companies offer shares to individuals as a way of raising money. Investors are rewarded with the potential increased value in the company and are sometimes paid a dividend. To build a diversified portfolio you’ll likely need a large quantity of stocks across many industries which can be costly to obtain.


Bonds are a type of fixed income, meaning they will pay you a predetermined return for purchasing these investments. Bonds can be purchased individually or found in some mutual funds and ETFs. Bonds are lower risk than stocks, but they also typically provide lower returns.

Exchange-Traded Funds

Exchange-traded funds are passively managed which means they can be good low-cost investments to leverage in a portfolio. ETFs can hold a variety of assets and allow investors to lower their risk by ensuring their holdings are diversified.

Mutual Funds

Like ETFs, mutual funds hold many investments, making them a diversified option. The downside to mutual funds is that they are typically higher cost because someone actively manages the investments that are held within the fund.

Real Estate

Investing in real estate can happen in a couple of different ways. If you have the funds, you may be looking at purchasing a property to rent out. This can be high-risk and eat up a lot of capital within your portfolio. In addition, you assume the responsibilities of a landlord and need to find renters. Investing in real estate investment trusts (REITs) is a low-cost way that you can invest in real estate. Like an ETF or a mutual fund, a REIT holds a variety of different investments in real estate. You can benefit from the diversification in this fund as well as not having to worry about the day-to-day operations.

Tax-Sheltered Investments

Investing in a tax-sheltered account is a great way for Canadians to save money when it comes to investing in Canada. Tax-free savings accounts (TFSAs) and registered retirement savings plans (RRSPs) are two strong options when you are looking for how to invest your money. The TFSA provides tax-free growth and the RRSP provides tax-sheltered growth. Both accounts mean you may be paying less tax.

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