Popular investment ways in Canada

Canada English Life

Investing is an important part of financial planning and wealth-building. In Canada, there are many different ways to invest, from stocks and bonds to real estate and alternative investments. Let's take a closer look at some of the most popular investment options available to Canadians.

Stocks:

Investing in the stock market is one of the most popular investment options in Canada. Many Canadians invest in individual stocks through a brokerage account or through mutual funds and exchange-traded funds (ETFs) that invest in a basket of stocks. The Toronto Stock Exchange (TSX) is Canada's largest stock exchange, and there are many publicly traded companies that Canadians can invest in. Some popular Canadian stocks include Shopify, Royal Bank of Canada, and Enbridge.

Bonds:

Bonds are a type of debt security that allows investors to lend money to governments or corporations in exchange for regular interest payments. Bonds are generally considered to be a lower-risk investment compared to stocks, as they typically offer a more predictable stream of income. Canadian government bonds are often considered to be among the safest bonds in the world. Many Canadians invest in bonds through mutual funds or ETFs.

Real estate:

Real estate is a popular investment option in Canada, with many Canadians investing in rental properties or buying and selling homes for profit. Real estate investment trusts (REITs) are another way to invest in real estate without owning property directly. REITs invest in a portfolio of properties and pay out regular dividends to investors.

Mutual funds and ETFs:

Mutual funds and ETFs are investment vehicles that allow investors to pool their money together and invest in a diversified portfolio of stocks, bonds, and other assets. Mutual funds are actively managed by a professional fund manager, while ETFs are passively managed and typically have lower fees. Both mutual funds and ETFs are popular investment options in Canada.

Retirement savings:

Investing in retirement savings is important for Canadians, and there are several options available. Registered Retirement Savings Plans (RRSPs) allow Canadians to contribute pre-tax income to a retirement savings account, while Tax-Free Savings Accounts (TFSAs) allow Canadians to invest after-tax income and withdraw their earnings tax-free. Employer-sponsored pension plans are another way that many Canadians save for retirement.

Alternative investments:

Alternative investments are a less traditional way to invest, and include assets such as commodities, private equity, and hedge funds. These types of investments are generally more complex and require more expertise than traditional investments like stocks and bonds.

In conclusion, there are many different ways to invest in Canada, each with their own advantages and risks. Canadians should carefully consider their investment goals and risk tolerance before investing in any particular asset. Working with a financial advisor can also be helpful in developing an investment strategy that meets your individual needs and goals.

Here are the 5-year average returns for some of the investment examples above.

Stocks:

  • Shopify (SHOP): 53.7%
  • Royal Bank of Canada (RY): 10.3%
  • Enbridge Inc. (ENB): 9.3%
  • Canadian National Railway Company (CNR): 10.4%
  • Brookfield Asset Management Inc. (BAM.A): 15.5%

Source: Yahoo Finance

Bonds:

  • iShares Canadian Government Bond Index ETF (XGB): 2.8%
  • BMO Aggregate Bond Index ETF (ZAG): 2.8%
  • Vanguard Canadian Aggregate Bond Index ETF (VAB): 2.8%

Source: Morningstar

Real estate:

  • RioCan Real Estate Investment Trust (REI.UN): 5.5%
  • Canadian Apartment Properties Real Estate Investment Trust (CAR.UN): 11.1%
  • SmartCentres Real Estate Investment Trust (SRU.UN): 3.8%
  • H&R Real Estate Investment Trust (HR.UN): 2.8%

Source: Yahoo Finance

Mutual funds and ETFs:

Source: Morningstar

Retirement savings:

  • Registered Retirement Savings Plans (RRSPs) and Tax-Free Savings Accounts (TFSAs) returns will depend on the investments held within them, and can vary widely.
  • Alternative investments:
  • Commodities ETFs, such as iShares S&P/TSX Global Base Metals Index ETF (XBM): 26.7%
  • Private Equity funds, such as Brookfield Asset Management Inc.'s private equity funds: returns can vary widely depending on the specific fund
  • Hedge funds, such as the Vertex Arbitrage Fund (Class F): returns can vary widely depending on the specific fund

Source: Morningstar