Investing 101: Canadian Investing

Learning how to invest can hold various meanings for different individuals. It can spark your limitless potential within, awakening dreams hidden deep within your heart. Taking charge of your investment decisions reveals your ability to learn new skills and achieve goals, becoming a wellspring of empowerment.

Even if you’re new to investing or lack comprehensive understanding of finances, investment forms a vital part of your life journey.

Why investing matters

Whether you're saving for retirement, housing, education, or the future, investing can aid you in achieving financial growth. Storing your money in a savings account might not earn enough interest to outpace inflation. In most cases, realizing financial goals requires the essential contribution of appreciation and income through investment.

Essential Concept -- Compound Interest

Compound interest refers to reinvesting investment earnings to generate additional income and growth. By reinvesting your investment returns, you not only earn returns on your initial investment but also gradually increase your assets. This growth is exponential, and over time, the compounding effect accumulates rapidly, accelerating your financial growth.

You can use a compound interest calculator to see how your investments will appreciate over time:

One of the most effective ways to harness the power of compound interest is to start investing early and establish a regular investment plan through dollar-cost averaging.

Essential Concept -- PAD

A pre-authorized debit allows the biller to withdraw money from your bank account when a payment is due. Pre-authorized debits may be useful when you want to make payments from your account on a regular basis. On the specified deduction dates, the distributor automatically deducts the predetermined amount from the investor's designated bank account and executes the purchase of the chosen fund.

By setting up a dollar-cost averaging plan with Ai Financial, you can schedule regular deductions from your bank account into your designated investment account (TFSA/RRSP/RESP/Non-Registered, etc.) on a weekly, bi-weekly, or monthly basis. Once you initiate this regular investment strategy, the long-term appreciation of your funds is likely to pleasantly surprise you.

Essential Concept -- Inflation

Inflation refers to a situation in which, over a period of time, the purchasing power declines significantly, leading to an increase in the prices of goods and services. A higher inflation rate indicates a faster pace of price increases, and the purchasing power of your money may not be comparable in the future to what it is today. Additionally, in general, the speed at which wages increase often lags behind the pace of inflation.

To ensure that your funds appreciate over the long term, you need to achieve an after-tax return that surpasses the inflation rate. For instance, if the inflation rate is 3% per year (using Canadian data) and the marginal tax rate is 43%, to maintain the purchasing power of your invested funds at the present level, you would need a return rate of 5.32% annually. Investing serves as a way to outpace inflation; however, the actual outcome hinges on the investment products you choose. While they might carry higher risks compared to savings/deposit accounts, the returns can be considerably more substantial.

Essential Concept -- Leverage

Leverage (also known as gearing) investment is essentially using borrowed money to invest, employing a small amount of capital to engage in investments that are several times the initial amount. The objective is to achieve multiple times the return rate of the underlying investment. Given the right choice of investment targets, leverage investment can significantly reduce trading costs, enhance capital utilization, and amplify profit outcomes, aiding investors in swiftly reaching their financial goals.

Canadian financial institutions like B2B Bank, iA, and others offer a specialized leveraging product for financial investment - the Investment Loan. Besides enhancing investment profitability, this form of investment loan can also be a component of a tax-advantaged financial strategy, as loan interests can be tax deductible. For investors with higher risk tolerance aiming to increase portfolio value, this could potentially be a perfect solution.

What to consider before investing?

Planning investment goals, initial funds, time horizon, and risk tolerance can help make your personal investment journey smoother. Before delving into different investment options, start by asking yourself the following questions:

Investment Goal: "What is my objective?"

Reflect: "Why am I investing? Is it for retirement, early retirement, real estate, or leisure expenses?" Clarifying your goals, how much money you want to make through investments, also determines when you should start and the amount of initial funds required.

Initial Funds: "How much money do I want to invest initially?"

Opening a Bank Account: "How much idle funds do I currently have available for investment? Do I have any short-term plans for using money?"

You can calculate your initial investment amount based on the average return rate of the US stock market: "If I aim to earn $150,000 in 5 years with a market return rate of 14%, how much money do I need to invest now?"

Time Horizon: "How long do I plan to invest for?"

Determining the time horizon depends on your investment goals and when you'll need to access these funds after investing for a certain period. For long-term goals like retirement, you might consider reinvesting returns to achieve annual compound growth – this can potentially accelerate the appreciation of your funds.

Risk Tolerance: "How much risk am I willing to take?"

Your risk tolerance can be categorized as conservative, moderate, or aggressive. Your risk tolerance determines which type of investments you can consider. For instance, if you have short-term goals, you might opt for lower-risk investments (conservative). For long-term goals, you might have a higher tolerance for market fluctuations (aggressive).

Consider working with an Advisor

The financial market is unpredictable, offering investors a multitude of plans and products to choose from. The influx of news online and the noise in the market can affect your assessment of investment trends and make managing your investments feel challenging.

Ai Financial's Investment Advisor team is ready to offer free assistance and expert advice. They analyze your goals, customize plans, and recommend suitable investments to help you achieve your objectives. Collaborating with a personal advisor streamlines the process and ensures you make informed decisions. Reach out for support.Click to choose your preferred investment advisor..

Practical Investment Accounts in Canada

In Canada, there is a wide range of accounts available for various types of investments, including Segregated Funds, stocks, bonds, ETFs, GICs, and more. The three most popular registered investment accounts are RRSP, TFSA, and RESP, along with the non-registered account: Non-Registered account.

The Canadian government initiates these registered account plans to encourage Canadians to manage their finances, save, and expedite the growth of their funds. Each registered account plan has distinct purposes, regulations, and limitations:

Invest in TFSA

TFSA, Tax-Free Saving Account, is a tax-free savings account that enables wealth accumulation without taxation. As long as the applicant is 18 years old and holds a valid work permit, an account can be opened. This makes it accessible to both international students holding study permits and individuals with work permits. It's particularly friendly for novice investors and young people.Explore more details about TFSA >>>

Invest in RRSP

RRSP, Registered Retirement Savings Plan, is a registered retirement savings plan that offers short-term tax deductions and serves as long-term financial support for retirement.Explore more details about RRSP >>>

Invest in RESP

RESP, Registered Education Savings Plan, is a Canadian government initiative designed to provide funds for higher education through a subsidy program. As a parent, opening an RESP account not only allows you to benefit from investment returns but also qualifies you for government grants based on your family's circumstances, helping you save a substantial amount on your child's educational expenses.Explore more details about RESP >>>

NON-Registered account

A NON-Registered account is an unregistered account, where the investments held inside are subject to taxation upon earning profits. However, non-registered accounts don't have contribution limits, allowing you to store funds without penalties and with no withdrawal restrictions.

Common Investing Products

Choosing investment products is closely tied to your account type and risk tolerance. Many investors diversify their investments across different asset classes to help maintain a balanced portfolio.

Please note that registered plans (such as RRSP and TFSA) are limited to holding investment products that qualify under the plan's investment criteria.

The value of Segregated Funds, a type of investment product, often fluctuates and there's no guaranteed investment return. However, when the Segregated Fund contract matures or in the event of your passing, if your account is in a loss position, the contract guarantees you'll receive 75% or 100% of your principal. You can purchase Segregated Funds using various accounts, including but not limited to TFSA, RRSP, RESP, Non-Reg, etc.Learn more about Seg-Fund

Mutual Funds

The value of Mutual Funds often fluctuates and there's no guarantee of investment returns, nor is the principal protected from loss.


Stocks represent ownership in a company and serve as ownership certificates issued by the company to shareholders as evidence of holding shares. They're issued by companies to raise funds from shareholders, entitling them to dividends and potential capital gains.


Bonds are debt securities issued by governments, financial institutions, businesses, and other entities to raise funds from the public. They are issued to investors and promise to pay interest at a specified rate and repay the principal under agreed-upon conditions.


ETF, Exchange-Traded Funds, are open-ended funds that can be freely bought and sold on a stock exchange by investors. They track various indexes and provide exposure to a wide range of assets.

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Leveraging for Maximum Returns and Tax Minimization

With segregated funds, AiF's professional investment capabilities deliver double-digit annual returns.

Tailored strategies based on individual investment goals for stable profitability.

Recent Activities >

Regularly organizing offline and online events aimed at enhancing financial literacy among Canadians.

Market Tracking, News Analysis, Professional Insights

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