How are Canadians investing their money so far this year? With how unpredictable the economy has been, knowing the most popular investment choices for Canadians in 2023 is more valuable than ever, especially if you want to invest for yourself!
In this article, we’ll go through where most Canadian investors put their money. We’ll explain what makes these investments popular, and what you can expect out of them.
No matter what happens, the stock market stays the king of investments worldwide, and it’s also true for Canadians. It’s a tried and true method of long term investing, with an exciting mix of risk management for people who would otherwise get bored of investing.
Buying a stock is buying partial ownership, or shares, of a company. When a company does well, their stock price increases. So if you invested in a company before they became successful, you can sell your shares later for profit.
Many stocks also distribute dividends, which are small shares of a company’s earnings. As a partial owner of the company, a stockholder is entitled to their fair share of the company’s earnings. If a company you invested in does well on a regular basis, dividends can be a reliable source of passive income.
While stocks remain the most popular investment for Canadians, they can still be one of the more risky investments. If your stocks do well, that’s great news for you! But unfortunately, stocks don’t always do well. With crashes becoming a more and more regular occurrence in the stock market, investing in stocks looks to be as risky as ever.
If you’re interested in investing in the stock market, make sure you understand the risks well so that you can plan for them better.
In spite of the recent market correction we saw in Canada’s real estate market, it remains a strong and reliable investment for Canadians to this day. Let’s see what makes real estate a mainstay in Canadian investor’s portfolios.
The best part about real estate is that it requires very little knowledge to get into. Everyone can learn how to buy and sell a house with relative ease. And unlike things like stocks or cryptocurrencies, you can see what you’re putting your money into. That makes real estate a more trustworthy investment for Canadians, especially older generations.
Real estate investments are usually big, because housing is expensive. But that doesn’t mean that you need a huge amount of money to start investing in real estate. With only $20 or $30,000 of downpayment, you can easily buy a $400,000 home.
If you have a steady income and will be able to pay your mortgage regularly, you won’t need to enter the real estate market with a lot of cash in the first place.
One of the main advantages of investing in real estate is that it’s one of the more inflation-resistant investments out there. No matter how the economy is doing, a home is a home, and people need roofs over their heads.
If you’re a risk-averse investor and want something reliable, real estate is a great choice for you.
One of the main drawbacks of investing in real estate is being a long term landlord. If you’re flipping house quickly, this is less of a problem. But for most Canadians, real estate is a long term investment.
And what comes with owning a home for many years? Maintenance, property taxes, having to manage tenants if you decide to rent it out, renovations… When compared to a stock, there’s a lot of extra work that comes with real estate ownership.
While not as popular as the stock market or real estate, fixed income investments have been on the rise due to the high interest rates coming from the Bank of Canada.
A fixed income investment is when you put money somewhere and are promised a fixed interest rate or dividend payment until your investment matures. After maturity, you get the initial amount of money you invested back.
Let’s say you put $10,000 on a fixed income investment that promises 5% interest over a year. After one year, you’ll get your $10,000 back, with 5% on top, for a total of $10,500.
There are multiple kinds of fixed income investments. Some of the most popular are:
The greatest asset that fixed income investments have is how reliable they are. With a GIC, your investment is “guaranteed”, it’s in the name. You know exactly what you’re going to get when your investment reaches maturity, no matter what. When compared to the volatility of the stock market or ups and downs of real estate, you can’t get a more reliable investment than fixed income.
On top of reliability, fixed income investments are some of the easiest investments to make. After all, all you’re doing is putting your money somewhere for a determined period of time. You can open a GIC over the phone with most Canadian banks in less than an hour currently.
The only real downside to fixed income investments is that you can’t expect that much out of them. 5% is 5%, and that’s far from nothing, but you’re not going to get much more than 5% out of fixed income. Compare that to what’s possible with the stock market, and the difference is striking. Low reward is the price you pay for absolute reliability.
Investing in crypto isn’t nearly as popular with Canadians as the other investments we mentioned, but it’s worth a mention because of how quickly it’s rising. While only 13% of Canadians owned crypto assets going into 2023, the market is projected to grow by 14% by 2027.
The crypto market is still young, and investors haven’t quite figured it out yet. Recently we’ve seen extreme volatility with cryptocurrencies, with big booms and catastrophic crashes.
If you’re the kind of investor that’s interested in exploring uncharted territories, and taking big risks for possibly huge rewards, then you could join the growing number of Canadians that are turning toward cryptocurrencies.
With how the economy has been doing recently, it’s more important than ever to find the best ways to invest your money. Smart investments are the best way to stay safe from economic instability.
When people think of investing their money, they don’t always think of life insurance. But life insurance is one of the most reliable investments out there, and it’s quite popular among Canadians (more popular than crypto!).
If you’re interested in protecting your family’s financial future, then life insurance is the right investment for you. Life insurance is reliable, low cost, and with potentially high rewards, especially if you get into it early.
