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Where to Invest Money in Canada [2024] | 5 Investment Options 

where to invest money in canada
Marko Marjanovic

If you’re new to n the market, the world of investing can seem intimidating, complex, and even dangerous. However, if you follow some basic guidelines and learn how to approach your investments from the right angle, investing can prove to be a solid way to make additional income and meet your financial goals. In this guide, we’ll lay down some basic info on investing and offer you our top five picks on where to invest money in Canada, no matter your experience level and the size of your capital. 

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  • Highly trusted multi-asset broker with clients in over 200 countries

  • Trade on 150 markets globally from a single platform (stocks, ETFs, futures, currencies, crypto & more)

  • Low commissions starting at $0 with no platform fees or account minimums

  • Easily fund your account and trade assets in 26 currencies

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Up to 4.58% interest on balance*

Where to Invest Money in Canada

Below, we have a list of the top five assets you can invest in in Canada. Each of them has its respective advantages and disadvantages, and each comes with varying levels of risk and potential returns. 

The five best ways to invest money in Canada are:

  1. Stock market;
  2. Index funds and exchange-traded funds (ETFs);
  3. Bonds;
  4. Commodities;
  5. Crypto.

1. Stock market

When you invest in stocks, you invest in ownership stakes in publicly traded companies listed on the Toronto Stock Exchange (TSE). By becoming a shareholder and owning stocks, you become entitled to voting rights proportionate to the number of shares you bought. Moreover, you have a chance to receive dividends, i.e., profits the company distributes to shareholders over time, which is a nice way to earn some extra passive income.

The objective of stock investments is to make a profit in the long run, that is, by selling your shares down the line for a higher value than your initial investment.

The best Canadian stocks to buy in 2024

Some of the most sought-after stocks in Canada to buy in 2024 include:

  1. TELUS (TSX: T): One of the largest internet providers in the country, worth $26.45 billion;
  2. Royal Bank of Canada (TSX: RY): The largest Canadian bank worth over $2 trillion as of 2023;
  3. Alimentation Couche-Tard (TSX: ATD): A convenience store chain with over 12,000 physical stores across the country;
  4. Canadian Natural Resources (TSX: CNQ): An oil and natural gas company;
  5. TMX Group (TSX: X): The financial services company responsible for the machinery used by the Toronto Stock Exchange itself.

Other popular options include:

  1. Tim Hortons (TSX: QSR);
  2. Lululemon (NASDAQ: LULU);
  3. Enbridge (NYSE: ENB);
  4. Dollarama (TSE: DOL);
  5. WestJet (TSX: ONEX).

Where to buy stocks

Our recommended broker is Interactive Brokers (IB), a regulated and convenient online exchange with over 2 million registered users trading every day. IB holds licenses issued by the US Securities and Exchange Commission (SEC), National Futures Association (NFA), and Commodity Futures Trading Commission (CFTC). In addition, IB offers features such as:

  • Commission-free stock trading;
  • Global stock-trading on 90+ market centers;
  • Fractional shares;
  • No minimum deposits;
  • Additional income on fully paid shares;
  • Lowest financing rates for margin accounts.

Best Platform for Worldwide Stock Trading & Investing

  • Highly trusted multi-asset broker with clients in over 200 countries

  • Trade on 150 markets globally from a single platform (stocks, ETFs, futures, currencies, crypto & more)

  • Low commissions starting at $0 with no platform fees or account minimums

  • Easily fund your account and trade assets in 26 currencies

  • IBKR pays up to 4.58% interest on cash balances of $10k or more

Up to 4.58% interest on balance*

Pros and cons of investing in the Canadian stock market

Pros

Pros

  • High returns: Stocks are among the most promising long-term investment options;
  • Liquidity: Stocks are liquid assets, so you can buy and sell them with relative ease;
  • Low barrier of entry: Online exchanges like Interactive Brokers have commission-free trading and no account minimums.
Cons

Cons

  • No guaranteed returns: Stocks might be more likely to generate income compared to some alternatives, but that does not mean they always do;
  • Short-term volatility: Stocks are a long-term investment for patient investors. If you are looking for quick gains, you might suffer losses, as the stock market can be volatile short-term;
  • Huge time investment: Stock trading can be quite complex and require a lot of active engagement on the investor’s part.

2. Index funds and ETFs

If buying individual stocks is not appealing, you have the option of investing in various types of funds and ETFs. In essence, funds are a collection of stocks and bonds, a diversified basket of assets, if you will. When you invest in a fund, you gain exposure to a portion of that basket as one of its owners.

Funds can suit both active and passive investors relying on a buy-and-hold strategy. Passive funds are typically projected to track an external index or benchmark and make a profit by mirroring its performance. On the other hand, active funds strive to outperform the market.

Pros and cons of investing in index funds and ETFs in Canada

Pros

Pros

  • Diversification: Passively investing is a good way to diversify your portfolio and still have some time to focus on other investments, which makes funds accessible to new traders;
  • Low fees: Transaction fees are low with passive investments;
  • Liquidity: A fund can comprise even thousands of stocks, so they are highly liquid;
  • Transparency: ETFs and funds are publicly traded assets, so you’ll have all the necessary insight into their performance;
  • Long-term solution: Funds are long-term investment solutions, so you won’t have to worry about market volatility every day.
Cons

Cons

  • Limited control: As you’ll only be one of the owners, there is a chance some assets in the basket are not going to be according to your liking, and you might disagree with other shareholders;
  • Funds cannot outperform the market: Funds depend on the market, so if it goes down, the value of your investment will follow;
  • Slow gains: Slow profits are one of the downsides of low-risk investments.

3. Bonds

Bonds are debt securities issued by corporations or the government itself. When you invest in a bond, you are essentially lending money to those who issued it. In return, they pay you periodic interest, usually semi-annually. Naturally, you receive the initial investment amount back as well.

Compared to stocks, bonds generally are less volatile. Moreover, some bonds show a negative correlation with stocks. In other words, when stock prices go down, bonds sometimes go up. Consequently, bonds are often used as a portfolio diversification. 

Investing in corporate-issued bonds is riskier than investing in government-issued bonds because companies are more likely to suffer losses.

Pros and cons of investing in bonds in Canada

Pros

Pros

  • Low volatility: As mentioned, bonds tend to be less volatile than stocks, even showing a negative correlation with them;
  • Liquidity: Bonds can be sold with relative ease if they are issued by a company with a good track record;
  • Great for diversification: Low volatility, naturally, implies good diversification.
Cons

Cons

  • Low interest rates: As with funds, increased stability means smaller short-term profits;
  • Inflation risk: As bonds are fixed investments, inflation can lower their value;
  • Credit risk: There is always a risk that the bond issuer may not be able to issue required payments or that they might default on one or more payments before the bond you purchased reaches maturity. In that case, you might even lose your principal investment.

4. Commodities

Commodities are a broad asset category that comprises a wide range of goods considered vital to the economy at large, including products such as coffee, cocoa, rice, oil and natural gas, as well as precious metals like gold and silver, etc.

While commodities are a good way to diversify your portfolio, they can be quite volatile, so they are usually not a great short-term solution. A positive side, however, is that they do not depend on stocks or bonds, so you can often rely on them as a hedge against inflation, too.

Pros and cons of investing in commodities in Canada

Pros

Pros

  • Diversification: As they do not depend on stocks and bonds, some commodities are never amiss in any investor’s portfolio;
  • Good against inflation: Some commodities, like gold, have been used as hedges against inflation for a long time now, as they tend to retain their value when currencies drop;
  • Exposure to various industries: Since commodities include a wide range of goods vital to the economy and virtually every industry, they give investors a chance to get some exposure to pretty much any sector.
Cons

Cons

  • Volatility: As mentioned, commodities are highly volatile and not useful as a short-term solution;
  • No passive income: Commodities provide no free cash flow and, thus, no passive income;
  • Additional costs: Commodities can incur potential expenses if they require storage, protection, etc.

5. Crypto

Cryptocurrencies are digital tokens built on decentralized networks called blockchains. Although a very popular investment option, cryptocurrencies are known for their high volatility, so they usually appeal to investors with a higher risk tolerance.

Even though it is relatively new, the cryptocurrency market numbers thousands of different digital currencies and tokens. Some of the most popular and widely recognized coins and tokens include Bitcoin (BTC) and Ethereum (ETH). 

Some less-known coins are often referred to as “altcoins”. There are also “stablecoins”, whose aim it is to maintain a stable value by being tied to another asset.

Canadians can use multi-asset investing platform Uphold to conveniently trade multiple cryptocurrencies.

Pros and cons of investing in crypto in Canada

Pros

Pros

  • Potential for high returns;
  • Crypto offers investors a chance to find exposure to blockchain technology and the ever-evolving crypto market;
  • No need to rely on traditional banks;
  • The market is always open.
Cons

Cons

  • Investing in crypto is highly speculative, and there is a high chance you might fall victim to some kind of scam if you don’t choose a good broker;
  • The crypto sphere is still largely unregulated;
  • Even the most popular coins can be highly volatile;
  • Steep learning curve.

Where to invest money in Canada safely 

Never invest without a clear plan in mind, and, more importantly, never invest if you are not in the position to do so. To make sure you are ready to venture into the world of investing, make sure you:

  • Create an emergency fund: No matter how large your capital, it is always wise to put a portion of your funds aside as an emergency fund;
  • Pay off all your debts: Investing is a terrific way to make a profit, but the general rule is that you should only invest what you can afford to lose. If you have any debts, pay them off before purchasing stocks, bonds, and other assets. Relying on highly volatile markets for quick gains and a way out of debt is not wise;
  • Figure out your risk levels: Investments are risky by definition. No matter how much money you are working with and what kind of asset you are investing in, always know how much risk you are willing to take to avoid any surprises down the line;
  • Do research: Some markets, for example, crypto, can be highly unregulated, so be sure you do your research. 

To learn more about some of the most common investment mistakes in-depth, read our dedicated guide.

Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.

FAQs about where to invest money in Canada

Where to invest money in Canada for maximum returns?

Where to invest money in Canada will depend on your financial goals. You can invest in stocks, bonds, funds, and other assets available on online exchanges such as Interactive Brokers.

Should I invest money in Canada?

Whether you should invest money will depend on several factors. Those include your risk tolerance, financial situations, financial goals, etc.

Is investing money in Canada safe?

Investing is relatively safe if you do it through a regulated broker such as Interactive Brokers. Note that profits are never guaranteed, so only invest what you can afford to lose, especially if you are investing in volatile markets, such as crypto.

How much money do I need to start investing in Canada?

You can start investing with smaller and larger sums. The precise amount can vary widely depending on the type of investment you are considering and your financial goals.

Best Platform for Worldwide Stock Trading & Investing

  • Highly trusted multi-asset broker with clients in over 200 countries

  • Trade on 150 markets globally from a single platform (stocks, ETFs, futures, currencies, crypto & more)

  • Low commissions starting at $0 with no platform fees or account minimums

  • Easily fund your account and trade assets in 26 currencies

  • IBKR pays up to 4.58% interest on cash balances of $10k or more

Up to 4.58% interest on balance*

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