When you want to build wealth, saving will only get you so far. Putting your money away is always a good idea, of course, but the rich get richer by investing. You might not be rich, but you can still get richer by choosing to invest your money rather than keeping it in a savings account or under the mattress.
Frequently Asked Questions
Start by learning about the different types of investments you can make and deciding what kind of investor you want.
Once you’re confident in the basics, a robo-advisor is the perfect way to get started as a new investor. A robo-advisor can help you determine your risk profile, recommend investments to meet your goals, and take care of the day-to-day maintenance for you.
Whether you should save or invest depends on your goals. If you want to buy a car next year, saving is the way to go because you don’t stand to lose any money, and it doesn’t cost anything to open or withdraw money from a savings account.
If you want to grow your wealth for the long-term, investing is more likely the way to go. And, to make things a bit more confusing, a well-diversified investment portfolio should include some cash savings that are accessible at a moment’s notice. You’ll also want to build an emergency fund.
Yes, investment dividends are taxable in Canada. Your investment income will be subject to a combination of income tax (for money earned through interest and dividends) and capital gains tax (for money earned through selling investments at a profit).
You can avoid some, or all, of these taxes by holding your investments in a registered account like an RRSP or TFSA.