Best Investment Options for Newcomers to Canada 2024

Are you a new immigrant searching for ways to invest your money? Here we have discussed some of the preferred and Best Investment Options for Newcomers to Canada.

Who is a Newcomer to Canada?

A person who has migrated to Canada and has lived in Canada for a short period of time, say five years or lesser is called as a “newcomer to Canada”. They have access to almost all services in Canada, just like a Canadian has. In addition, they get help to get settled in the country with aid in exploring jobs, finding a house, pick up language and Canadian accent, tax filing and education. It has been recognized that these newcomers have a great hand in making Ontario province prosperous. 

Canada expects to welcome around 1.5 million new immigrants into the country by 2025 and that’s a massive boost from earlier figures. If you are looking for stepping up in your life, you can migrate to Canada, for these reasons:

  • Employment opportunities
  • Education
  • Healthcare
  • Welcoming culture
  • Pro-immigration stance
  • Safe and secure
  • Stable political scenario
  • Steady economics

If you are a newcomer to Canada or if you are entering into the beautiful country in the near future, continue reading to explore the investment ideas in Canada.

Before that, you can also go through the Financial Checklist for New Immigrants to Canada

Investment Options for Newcomers to Canada

Here are some of the common Investment options available:

1. High Interest Savings Account

Being a newcomer to the country, you would have just commenced earning and settling down. Hence, you might be doubtful of investing your funds in a risky investment option. In such case, you can safely park your money in a savings account. However, while doing so, it would be best if you can research on various savings accounts and pick the one that offers high interest rate while offering noteworthy features and services. You can feel safe with this option as it earns a high interest rate, whilst offering you liquidity.

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Most of the financial institutions in Canada are members of CDIC and your deposits will be protected up to $100,000 per deposit per member.

High- Interest Savings Account or HISA Options in Canada

We have listed some high earning savings account options that has announce promotional interest rates as a welcome pack:

  • Simplii financial high interest savings account: 5.00%
  • HSBC high-rate savings account: 4.90%
  • Tangerine Savings Account: 4.50%
  • CIBC eAdvantage savings account: 4.50%
  • Scotia Momentum Plus savings account: 4.50%
  • RBC high interest eSavings account: 4.20%

2. Bonds

Bonds are financial instrument that offer fixed interest rate on a periodic basis and repays the principal to the investor once the term of the bond is over. If you are not keen on liquidity, but you want capital guarantee, you can go for bonds.

Types of Bonds in Canada

There are various types of bonds in Canada:

1. Government Bonds

  • Government of Canada bonds offered by the federal government of Canada
  • Provincial bonds
  • Municipal bonds

2. Corporate Bonds

Investment grade corporate bonds are issued by corporates and they are rated BBB or Baa3.

High yield bonds are comparatively risky but offer higher interest rates

You can also invest in ETFs that track the performance of the Canadians bond markets. We have listed some top bond ETFs in Canada:

  • iShares Core Canadian Universe Bond Index ETF
  • Vanguard Canadian Government Bond Index ETF 
  • Vanguard Canadian Corporate Bond Index ETF
  • BMO Global Strategic Bond Fund
  • BMO Short Corporate Bond Index ETF

3. Mutual Funds

As newcomers you will not have time and energy to contribute in tracking the Canadian financial markets. Given you are ready to take risk in investing, you can choose to start investing in mutual funds that has a basket of various investment options.

A mutual fund can have shares, bonds, or other investment options within and they are managed by professional fund managers to keep the fund in track with its objective. For this service, you are required to pay an investment management fees which is generally a small percentage of your investment.

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Mutual funds are best suited for newcomers as it offers diversification, flexibility, professional management, and saves your time. Mutual funds can be based on the following:

  • Risk profile
  • Small market cap companies
  • Mid-market cap companies
  • Large market cap companies
  • Investment asset class

We have listed some well-known mutual fund managers in Canada:

  • Vanguard
  • Fidelity
  • RBC
  • BMO
  • HSBC
  • Invesco
  • Scotiabank
  • TD

Once you are settled in the country, you can surely think of exploring the Best Real Estate Investing Options in Canada.

Popular Savings Plans for New Immigrants to Canada

Now that we have discussed what are the best investment options, let us find out where to invest these funds in order to reap benefits.

In Canada, there are two types of accounts –

  • Registered accounts and
  • Non-registered accounts.

Registered accounts are those offered by the federal government of Canada and it offers various tax benefits in order to encourage saving and investing. Hence, it is wise to invest within the registered accounts first and later use non-registered accounts once the caps are drained.

1. Tax-Free Savings Account (TFSA)

You can save for short-term expenses or as a long-term savings. You can contribute up to $6,500 per annum. This limit is for the year 2023. In 2022, it was $6,000 per annum. The limit keeps changing year after year. You can also carry forward any unused caps. The earnings within a TFSA are not taxed when the investments are within the account and while withdrawal.

2. Registered Retirement Savings Plan (RRSP)

You can use RRSP as a tool to save up for your retirement. You can contribute 18% of earned income you reported on your tax return in the previous year, up to a maximum of $29,210 (2022) or maximum of $30,780 (2023). You can contribute and utilise until you turn age 71, after which you must start using these funds to meet retirement income needs.
You can carry froward contribution, if they are unused in the previous years. The contributions made in RRSP is tax-deductible and the earnings within RRSP is tax-deferred until the funds are within the account.        

3. Registered Education Savings Plan (RESP)

The funds within RESP are tax-deferred, so you can use the funds to save up for the sole purpose of meeting educational costs. There is no maximum contribution limit. You can save up to $50,000 within this type of an account.  

Important: Please note that given the information is on an as is basis. The benefits and other details are subject to variation. The content is for informational purposes only and not a substitute for any professional advice. The readers and subscribers should take required professional advice before taking any financial decisions.

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Are you looking to invest in real estate? You may also like to discover Mortgage Options for New Immigrants to Canada

Investments for Newcomers in Canada

It is overwhelming for anyone to move from one country to another. But you cannot forget to manage finances and saving after a time period. Especially with the news of recession looming, inflation factor, raising house rents, you must draft a plan to manage your finances.

You must always look to maximize returns, accumulate wealth, minimize risk and reduce tax liabilities. This offers security, financial freedom, peace of mind, and a stress-free life.  Also, make yourself familiar about the Types of Insurance in Canada that can help protect you and your family in uncertainties.

Which is your preferred investment option in Canada? Being a new immigrant to Canada, it might take sometime to adjust and settle down. But, once you get a good job or setup your own business and are comfortable, do plan your savings and investments in the best possible way.

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