Top 10 Best Investment Options in Canada

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Are you a Canadian saving for your future retirement? You are not alone. For anyone looking to maximize their financial resources in the future, a series of risk-averse investments where your money is safe is recommended.

There are several different investment options in Canada, some of which are pretty standard among Canadians. It’s important to know all your available options, how certain types of investments work in Canada, and common, tried-and-tested ways to protect your savings.

Here are the ten best investment options in Canada, as we discuss each option in greater detail:

1. Guaranteed Investment Certificate (GICs)

Also known as Guaranteed Investment Rates, GICs are designed to protect your investment capital. GICs provide a fixed or variable interest rate, giving you a steady return on what you put in. Void of risk, you will not lose money on this investment.

Even though the return isn’t as high as other investment options, the risk makes GICs an extremely safe way to invest your money in Canada. You can often get the best GIC rates in order to make a steady and sizable amount of money on your investment.

2. TFSA

A Tax-Free Savings Account is an investment option that allows you to contribute after-tax income to a savings account. This means your money is protected from being taxed again in the future. You can buy and trade stocks, and make investments within a TFSA and any interest you earn on the principal invested is tax-free.

Even though the advantages are clear, there are limits to how much you can put into a TFSA and though extremely safe as a savings account, the interest returns aren’t high compared to some other investment options.

3. RRSP

Registered Retirement Savings Plans are another great investment option in Canada. The primary difference between a TFSA and an RRSP is that an RRSP is tax-deferred. This means anything contributed to an RRSP can be taken from your pre-tax income. This can save you from paying taxes in the year where you earned the income, deferring it to another year.

However, the issue is that when it comes out of your RRSP account, you pay tax on any and all withdrawals. In your retirement, you may want to keep your tax bill as low as possible so it’s well worth debating whether a TFSA may be more appropriate as a long-term investment or selecting another option.

4. Canada Savings Bond (CSB)

A Canada Savings Bond is a specific bond type issued and guaranteed by Canada’s federal government. With it, you receive a minimum guaranteed interest rate. These bonds maintain a three-year term to maturity, with interest rates maintained in this period.

Every three years, the Minister of Finance announces new interest rates according to then-market conditions. CSBs, again, are a very safe way to invest. You can cash out at any time and up until that day, you continue earning interest.

Please note the only way to obtain CSBs are through Payroll Savings Programs, which means the only method of purchase is through payroll deductions.

5. Stocks

Stocks are a unit of ownership. They are purchased in a company that is registered on a stock exchange. Stocks are sometimes also referred to as ‘shares’ or ‘equities’. There are high-risk and low-risk stocks available as investment options in Canada.

There are a lot of variables at play when it comes to buying and selling stocks, maximizing your investment along the way. Depending on the strength of the stock exchange, the markets, and the company, the returns can be significant or disappointingly low.

6. Bonds

Bonds are less risky than stocks, with on average slightly less of a return. Bonds are essentially a certificate you receive for a loan that you give to a company, government, or issuer.

In return, bonds eventually repay your loan on a set date. Until that date, the issuer promises to make payments to you based off the interest agreed upon at a set rate.

7. Mutual funds

Mutual funds work by pooling together the resources of multiple investors and buying an investment portfolio of securities. This money can be distributed between stocks, bonds, and/or other stock options. Normally, a corporation or professional would oversee the fund.

8. Exchange traded funds (EFTs)

Otherwise known as ETFs, this is a fund you invest in that’s made up of different assets – usually stocks, commodities, and/or bonds. ETFs trade on stock exchanges and are valued only by the assets they contain. This means the value of an ETF, like purchasing stocks, see change throughout the day. There are high-risk ETFs and low-risk ETFs, just like stocks.

9. Annuities

Annuities are a type of investment that provides you income at routine intervals. It’s essentially giving yourself a paycheque based off what you’ve previously invested. This can be a form of guaranteed income supplement self-managed and self-made.

As with other investments, an annuity does carry a risk of loss but overall, it’s considered a good investment.

10. Real estate

In terms of making an investment outside of a stock exchange, bank, or savings account, real estate can provide some very, very strong returns if you know what to buy, where, when, and when’s the best time to get rid of it.

Contrary to what some people think, not all real estate doubles, triples, and quadruples in value! A lot of people over time have bought and lost with property so do be wary of this and any investments you make. A return is rarely guaranteed.

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