Canada’s financial and business capital, Toronto, is a growing economic hub. With the growth in population and the use of new technology, the city is now ranked as one of the top 10 cities in the world. As the pandemic recedes, people are now keener on investing their money in highly profitable investments only. If you’re one of those, what better place to start than Toronto?
Every day you go to your job, earn money, and spend it on necessities and luxuries, but your wealth isn’t growing. Instead, try investing your money. There’s a vast difference between saving money and investing money. We all earn money, and most of us save that money in our banks, and what does that money do? Nothing. Whereas if you invested that same amount of money, you’ll get a return on investments and earn even more.
Are you wondering what investment would yield the best return for me right now? What should I invest in Toronto? What are the right opportunities for me?
Real estate investment in Toronto is the right choice for you! In fact, it could be the most brilliant move you’ve made with your finances recently.
Types Of Investments
With hard-earned money and time, one also needs a strategic approach and a deeper understanding of investments. Investing might seem like something that requires a lot of financial knowledge, but even if you start with the basics, you can save a lot of money. There are many types of investments with their risks and benefits. Let’s take a look at them.
High-Interest Savings Account
A high-interest savings account (HISA) is one of Canada’s top safe investments with high returns. Unlike a traditional savings account, a HISA rewards your savings with high-interest rates. Since you can take money out of a HISA without penalty, it’s more liquid and safe than other investments in Canada, with returns of 1.25%
GICs
A Guaranteed Investment Certificate is a type of investment that pays you a guaranteed interest rate. In exchange for your principal investment, a GIC pays a fixed annual interest rate for a fixed-term, often 1-5 years. GICs are best suited for short-term investments, keeping your principal investment safe while earning sufficient returns of 2% or less.
Bonds
A bond is issued by companies, governments, municipalities, provinces, and cities to raise cash in exchange for timely interest payments. Investors lend money to governments or corporations in exchange for a fixed interest rate.
Bonds are safer for those who do not want to take risks or have heavily invested in the stock market. They are lower risk and less volatile than stocks and are used to balance your asset allocation between equities and fixed income.
Average returns are 2.7% per year.
Bonus Tip: Try to purchase Federal Bonds, as they are the safest bonds on the market.
ETFs
An exchange-traded fund is an investment fund that lets you buy a large pool of individual stocks or bonds in one purchase. This type of investing is ideal for those who want to invest in stocks, commodities, and bonds all in one place.
Besides making capital gains on ETFs, investors benefit from profits distributed in the underlying ETF asset pool, such as dividends and interest. Canada’s ETF investments have grown eight times since 2011 – 2022, adding $304 billion to the Canadian economy.
Average returns are 6.2% and 7.8% per year.
Mutual funds
A mutual fund is an investment product that uses stocks to earn money for many investors. Investors earn money when stocks within the pool generate dividends, on interest payments from the bonds, and when assets are sold at a higher price.
Mutual funds in Canada tend to charge some of the highest fees in the world, with many equity mutual funds charging fees of 2-3% The mutual fund risk level is Low to medium, with average returns of 6.2% to 7.8% per year.
Stocks
Stocks are the shares or parts of a company listed on the stock market for people to purchase. Buying stocks in a company means owning a percentage of the company’s future earnings. Most stocks today are available as common stocks.
These stocks represent a portion of profits distributed by the company in the form of dividends. Payment of these dividends takes place annually or semi-annually, depending on the company’s policy. Stocks are medium to high risk, with an average return of 9-10% per year.
Real estate
The most common way to invest in real estate is by purchasing your own apartment or house. Real estate investors buy land or rental property with the expectation of selling them in the future or collecting rental income from tenants. If you want to invest in real estate without doing the actual work, you can invest in Real Estate Investment Trust (REIT)
REIT companies own and operate real estate holdings such as malls, hotels, hospitals, and seniors’ homes. They collect rents and pass most of their income to shareholders via generous dividends or distributions. The risk is high, but the Return is 8.3% to 10.6% a year.
Cryptocurrency
Cryptocurrency is a digital, alternative currency not regulated by a central bank. Instead, it’s managed by the people who use it and buy it. Cryptocurrencies use decentralized technology to let users make secure payments and store money without using their names or going through a bank.
Most investors buy coins such as Bitcoin, Litecoin, Ethereum, Ripple, and more and wait until their value rises. Once their market prices rise, they sell at a profit. The risk is very high because the returns are pure speculation.
These are the most common investments you’ll find in today’s market. Remember, each type of investment offers different levels of risk and reward. It would help if you also considered other factors like asset allocation, fees, past performance, and liquidity. Your investment planning should ensure that your portfolio aligns with your risk tolerance, investment goals, and time horizon.
