Investing

Investing in Canada: a guide for starting!

Do you want to start investing in Canada? If so, it can require a lot of research. So, keep reading our post to see a guide to help you out!

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by Victória Lourenço

Published on 11/26/2021

Just start investing in Canada with our tips

Find out how to start investing in Canada with our guide! Source: Unsplash.
Find out how to start investing in Canada with our guide! Source: Unsplash.

The first step to investing is making sure that you are prepared. There are many factors to consider when deciding to invest and how much money to put at risk. For example, if you want a more conservative portfolio, stocks may be the best option for you. However, if you have some cash on hand and don’t mind taking on some risk, consider ETFs or index funds! Also, you can find many opportunities if you want to start investing in Canada.

Moreover, in this post, we will provide you with some helpful information on the basics of investments in Canada. Also, there is a basic investment guide for those who live in Canada and are just starting in the investment world. So, keep reading if you want to know the steps to start your investment journey in Canada!

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How to start investing in Canada: a 101 guide!

Follow our guide and learn how to start investing! Source: Unsplash.
Follow our guide and learn how to start investing! Source: Unsplash.

It can be easy to start investing in Canada. However, you will need to do a lot of research about investments before you start your investment journey. Also, you need to analyze if this is the best choice considering your current financial situation. If you have some money to save, you can certainly use it to invest instead. When you invest, you can end up with more money than by just saving it in a regular bank account. So, here is our basic guide to help you start investing.

1. Learn more about investment terms

As we mentioned, you need to study investments before you start investing. But it does not need to be something boring. You can search online for courses and articles like this one to help you. Also, before you start investing, you might need to learn about a few basic investment terms, such as risk tolerance, risk and return, assets, and investment portfolio. Here is some information about these terms.

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Risk tolerance

Your risk tolerance is the level of comfort you feel when you are at risk. For example, if you want to invest in something to earn a lot of money and you do not care about the risks, you have a high-risk tolerance. However, if you do not feel comfortable investing in something where you can lose it all, you have lower risk tolerance.

Risk and return

Risk is the possibility of your loss when investing. Also, risk can be considered as the level of unpredictability of your profit or loss in some investment. Moreover, every investment has risks, but some are higher and others lower.

On the other hand, there is your return on your investment made, which is the ROI. The ROI is the profit you make on an investment. Also, the ROI can be very predictable with some investments. But, other investments have higher risks.

In addition, the return on your investment can be positive or negative, which is called a capital loss. Also, if you have a positive return on your investment, it can come as income or a capital gain.

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Assets

Assets are a resource with value owned by a person, company, country, or others. Also, an asset is something that generates cash flow. Moreover, it is important to know about the assets of a company or product you want to invest in. That is because assets represent the economic resources of a company.

Investment portfolio

An investment portfolio is a way of actively investing in different options. Therefore, you can build your investment portfolio by including investments, such as stocks, mutual funds, ETFs, bonds, and other types of investments. Moreover, to start building your investment portfolio, you need to determine which companies you know and like. It is because you need to do a lot of research to know where to invest your money.

2. Know how much you can afford to invest

When some people start studying about investments, they learn a lot but do not consider making a plan of how much they will be able to invest. So, to understand how much you can invest, you need to consider a few factors, such as age and income. Moreover, you can start by following some general rules to determine how much you need to invest.

One of these rules is to invest at least 10% of your yearly gross income in your retirement. However, if you are a bit younger, you can take a part of your money to invest in more mid-term goals. And after you achieve your mid-term goals, you can start thinking about investing in your retirement.

In addition, you need to consider how much money you need to live now and see how much is left for your investments. Also, you might need to consider finding ways to make extra cash before you start investing. If you consider getting some extra cash, you can have a higher risk tolerance and try to get more profit out of your investments.

3. Choose the right type of investment

It is important to know which investment option you want. Also, you can choose many different options in the investment market in Canada. For example, stocks, funds, and retirement accounts. Also, retirement accounts are a kind of investment for Canadians.

In addition, there are many great tax-free retirement accounts available in Canada, such as TFSA and RRSP. Moreover, the TFSA allows you to make tax-free investments. However, RRSP defers some taxes on your investment income.

4. Find the best investment account for you

A very important part of learning about investments is finding a good investment account. Also, you need to understand if you are more comfortable with online brokers or more traditional ways of investing. Moreover, you might hire a financial advisor to help you build the best investment portfolio for you. So, here is some information about online brokers and financial advisors.

Online brokers

Consider an online broker to start investing because you may find it a lot easier to learn while investing. Also, some online brokers offer access to a financial professional to help you with your investments. Moreover, with some online brokers, you will not have to pay commissions to buy and sell your investments. In addition, you can find much educational content about investment and finances on an online broker’s platform.

Financial advisors

This option is for those who like to have a more personal way to receive financial advice. Also, if you have the money to hire a professional financial advisor, you can get much more profit from your first investments. Moreover, financial advisors can also help you with your finances, such as debts you may have.

5. Monitor your investments

Be sure to always monitor your investments! Source: Unsplash.
Be sure to always monitor your investments! Source: Unsplash.

A very important step to consider is monitoring your investments. When some people start investing, they tend to forget about their investments. However, this can be a very risky thing to do. That is because when you pay close attention to your investments, you can have the potential to profit even more.

Moreover, if you want to learn about other types of investments, you can find many posts on our website. Also, to know more about how mutual funds work and how to start investing in them, check out our post below!

tela de computador com gráficos de investimentos

Mutual Funds as Investments

Mutual funds are profitable and a great opportunity for beginners. So, read our post to know more about Mutual Funds as investments!

About the author

Victória Lourenço

Victória Lourenço is part of the finance writer team for The Mister Finance website. She is a translator and copywriter, having worked on finance topics for over four years. She has a goal to keep studying finances to help people learn more about how to use their credit cards, make loans, and use other money-related products in a way that they can find a more meaningful and healthy financial life!

Reviewed by

Aline Barbosa

Senior Editor

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