Starting your investment journey in Canada can be both exciting and rewarding. With various investment options such as stocks, bonds, mutual funds, and mortgage investments, the key is to develop a thoughtful and strategic approach from the outset.

If you’re ready to begin, this guide offers simple and valuable insights to help you make informed decisions and set you up for success in the world of investing.

Key Points to Remember:

• Anyone in Canada can start investing, but understanding your goals, time frame, and risk tolerance is essential.
• Canada offers diverse investment opportunities, from stocks to mortgage funds, so beginners must plan strategically.
• Companies like Amur Capital offer an easy way to grow your wealth with stable returns through mortgage investment funds.

What Is Investing?

Investing is essentially putting your money into assets with the aim of increasing its value over time. Think of it as planting a seed that, with time and the right care, will grow into something more substantial. Unlike trading, which is more about quick profits, investing requires a long-term commitment to managing risk and rewards wisely.

In Canada, you can invest in various assets such as stocks, bonds, mutual funds, and real estate. Every investment type carries its own set of risks and rewards, so it’s important to make decisions based on your financial goals. Keep in mind, there’s no guarantee that your investments will always appreciate.

The goal is to make informed choices that align with your specific financial objectives, risk tolerance, and time horizon.

Saving vs. Investing

While both saving and investing involve setting aside money, they differ significantly in their purpose and potential for growth. Saving typically involves putting money in a bank account where it earns a small amount of interest. The goal is to preserve your money with minimal risk. However, inflation can diminish the value of your savings over time if the interest rate on your account is lower than the inflation rate.

Investing, on the other hand, allows you to grow your wealth by earning returns that can outpace inflation. For example, consider comparing a high-interest savings account with a 2.5% return versus investing in a Mortgage Investment Corporation (MIC) fund with a 7% return over 15 years. The latter can lead to more significant gains over time, helping you achieve your financial goals faster.

Key Factors to Consider Before Investing

Before making any investment decisions, it’s crucial to plan your approach. Consulting with a financial advisor can provide valuable insight. Key factors to consider include:

1. Investment Goals: These are typically tied to life milestones such as purchasing a home or planning for retirement. Use the SMART criteria (Specific, Measurable, Achievable, Relevant, Time-bound) to set clear and realistic goals.
2. Time Horizon: The longer you invest, the more you can benefit from compound growth. A longer investment timeline also allows more time to recover from market downturns.
3. Risk Tolerance: Your comfort with uncertainty plays a major role in your investment choices. As you age or your financial situation evolves, your tolerance for risk may change as well.
4. Investment Approach: Do you want to manage your investments directly, or prefer a more hands-off approach? A DIY approach via online brokerage accounts requires research and effort, while robo-advisors or financial advisors can help manage your portfolio for a fee.
5. Investment Accounts: Choose the right investment account to minimize tax exposure. Tax-advantaged accounts like TFSAs and RRSPs allow your investments to grow tax-free or tax-deferred, while non-registered accounts offer more flexibility without tax benefits.

Popular Investment Types in Canada

Understanding your options is critical to building a strong investment portfolio. Here’s a breakdown of some common investments in Canada:

1. Bonds: Bonds are essentially loans to governments or companies that pay you interest over a fixed period. When the bond matures, you receive your initial investment back, plus interest. You can also sell bonds for a profit if their value increases.
2. Stocks: Buying stocks means owning a share of a company. Stocks tend to have higher growth potential but come with more risk, as company performance can fluctuate.
3. Mutual Funds: A mutual fund pools money from various investors to buy a mix of stocks, bonds, and other assets. A fund manager oversees the investments, and investors share in the fund’s profits.
4. Exchange-Traded Funds (ETFs): ETFs are like mutual funds but trade like stocks, providing flexibility. They aim to mirror the performance of a specific stock market index.
5. Guaranteed Investment Certificates (GICs): GICs are low-risk investments offered by banks, guaranteeing your original deposit plus interest. They are insured by the Canada Deposit Insurance Corporation (CDIC) up to a certain amount.
6. Real Estate: Real estate investments are often more hands-on but can offer significant returns. REITs (Real Estate Investment Trusts) or mortgage funds offer a passive way to invest in income-generating properties.
7. Mortgage Investment Corporations (MICs): MICs pool investor funds to lend to borrowers. Investors receive interest and fees, paid out as dividends. This provides a stable, passive income stream without the need for direct property management.

How Mortgage Investing Works

Mortgage investing is an attractive option for those looking for a more hands-off approach to real estate. With MICs, your money is pooled with other investors and lent out to borrowers. Investors receive returns through monthly dividends, which can either be withdrawn or reinvested for compound growth.

At Amur Capital, the process is simplified. Investors can choose from a range of funds, each tailored to different financial goals. Once the mortgages are originated, you receive dividends based on the payments made by borrowers. Amur’s MICs offer stable, historical returns, even during market downturns.

Tips for New Investors

Here are three tips to help you get started:

1. Create a Plan: Outline your financial goals, time frame, and risk tolerance. A solid plan will guide your investment decisions.
2. Diversify Your Portfolio: Don’t put all your money into one type of investment. Spread your investments across different asset classes to reduce risk and balance potential losses.
3. Start Early and Consistently: Begin investing as soon as possible, even with small amounts. The longer you invest, the more time your money has to grow.

Investment Glossary for Beginners

Here are some terms you may encounter as you dive into investing:

• Asset: A resource with monetary value, like stocks or real estate.
• Asset Allocation: Distributing investments across different asset classes.
• Dividend: A payment made by a company to its shareholders.
• Risk: The chance of an investment not meeting expectations.
• Return: The profit or loss on an investment.

Getting Started with Investing in Canada

Now that you’re familiar with the basics, it’s time to take action. Follow these steps to begin your investment journey:

1. Create an Investment Plan: Define your goals, risk tolerance, and time horizon.
2. Understand Your Options: Research different investment types and their risks and rewards.
3. Open an Investment Account: Choose a reputable platform that suits your investment style.
4. Diversify Your Portfolio: Spread your money across various asset classes to minimize risk.
5. Start Small but Consistently: Regular contributions, even in small amounts, can yield significant growth over time.
6. Monitor and Adjust: Review your portfolio regularly to ensure it aligns with your evolving goals.
7. Leverage Tax-Advantaged Accounts: Maximize your investments by using TFSAs and RRSPs.

Starting your investment journey in Canada doesn’t have to be overwhelming. With the right strategy, you can confidently navigate the world of investing and work towards achieving your financial goals.