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What You Need to Know About Investing as a Canadian


July 19, 2021 ( Newswire) Are you ready to start investing as a Canadian? Before you do, there are a few things you should know about your options for what you can invest in, what kind of accounts are available, and how you can get started with it all.

Credit: roman- via Freepik

What to Invest In

First, you want to know what you're going to invest in. Your options are more or less the same as they are anywhere. Your investments are likely going to revolve around stocks, bonds, and alternative assets like gold and silver or digital assets like cryptocurrency.

Alternative assets play an important role in a balanced portfolio. Gold, for example, is known to have a non-correlative relationship with stocks, which means that the prices are largely unrelated to what's going on with the stock market. When indexes crash, gold can be a good investment to have.

You can buy gold in Toronto from a physical bullion dealer to minimize the risks. Storing gold in a home safe or in storage also reduces risks of third-party mismanagement as well.

Choose the Right Account

When you're investing in Canada, there are two main types of savings accounts that you should use:

  • TFSA (Tax Free Savings Account)
  • RRSP (Registered Retirement Savings Plan)

There are other accounts, but we'll focus on these.

RRSP: When you contribute to an RRSP, the contribution is deducted from your taxable income, so when you go to file your taxes that year, you can get a better refund. You're effectively deferring paying taxes on your RRSP contributions until you make a withdrawal in your retirement. At that point, you're likely in a lower income bracket, saving in the long run.

TFSA: With a TFSA, you pay your income tax on gross income first, and then you contribute to your savings account. The advantage is that when you withdraw it at any point in life, you don't have to pay any taxes on either it or your gains. It often makes sense to contribute to your TFSA first, up to your contribution limit, if you earn around $50,000 or less. Below that and the tax advantage of an RRSP largely disappears.

You can use both of these accounts to invest in stocks, GICs, and even gold.

Pick the Right Investment Provider

Your investment provider determines what kind of advice you get, the fees you pay, and how much control you have over your investments. You can go with an online brokerage, bank, financial advisor, or an automated investing service. Each has its own advantages and disadvantages. For example, a financial advisor might be able to guide you if you're uncertain about what you're doing, but many prefer to invest alone and simply consult with an accountant who can help with a bit of planning rather than the details of what you invest in.

Increasingly, more investors are choosing self-directed investment strategies. From robo-advisors to no-commission brokerage apps, you can do a lot of the work of setting up your investment funds on your own. This gives you the power to invest in companies and assets that you believe in.

You can do this all online. You can even buy gold online from a local dealer and pick it up or have it mailed to you. You can take all the time you need to price compare and find the right deal.

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