Moving to a new country means learning new systems and rules—and that includes a new investing system. Some tax laws, financial accounts and even investment types might look a bit different in Canada than they did back home, and it’s important to understand how things work here so you can make confident choices and avoid unpleasant surprises. This guide outlines the basics of investing in Canada to help you get comfortable before you invest.
Who can invest in Canada
If you live in Canada, congratulations! You can invest here. But first you need two important things:
- Social Insurance Number (SIN). This nine-digit number is a must-have to work, pay taxes and invest in Canada. You don’t need to be a citizen to get one—temporary residents are also eligible. A SIN is free and easy to get from a Service Canada Centre or online with some basic documents like your passport and proof of residency.
- Canadian Bank Account. Having a local bank account makes investing here easier and keeps your money secure. Canada has one of the safest banking systems in the world. Plus, the money in Canadian bank accounts is protected by the Canada Deposit Insurance Corporation (CDIC). That means even if something happened to your bank, your savings (up to $100,000) would be safe.
What can I invest in?
Like other countries, Canada has a variety of investments to choose from that offer different levels of risk and potential returns.
Some lower-risk options include:
- Guaranteed Investment Certificates (GICs). A GIC is a loan you make to a bank or other financial institution for a set term (amount of time) in exchange for a fixed amount of interest for the duration of that term. A GIC term can be as short as 30 days or as long as 10 years. Usually, the longer the term, the higher the interest rate.
- Government Bonds. Canada’s federal, provincial and municipal governments use bonds as a way to borrow money. When you invest in a bonds, the government agrees to pay you a set interest rate until the end of the term.
Higher-risk options include:
- Corporate Bonds. These are like government bonds, but they are issued by companies. Since companies are more likely to fail than governments, corporate bonds are somewhat riskier than government ones.
- Stocks. This investment lets you own a small piece of a company listed on a stock exchange. Stocks have the potential to pay higher returns than GICs or bonds, but the value of a stock can go up or down, which means you could lose money on your investment. Some stocks also pay investors a share of their profits, called dividends.
- Mutual Funds.1 This is a collection of stocks, bonds or other assets chosen and managed by professionals. Mutual funds are an easy way to help you put your money into many different types of companies, sectors and regions—which spreads out your risk. Fund managers choose the investments they think will be the most profitable, and mutual funds include a fee for that expertise.
- Exchange Traded Funds (ETFs). Like mutual funds, ETFs pool together a varied selection of stocks or bonds. But, instead of a collection of assets chosen by a fund manager, an ETF often holds the same investments as a specific market index (like the S&P 500). That means ETFs are generally cheaper to own than mutual funds but generally aren’t actively managed.
What about taxes?
Canadian income taxes are based on where you live, not your citizenship. So, if you live in Canada for most of the year, you need to file taxes here. You must report and pay national and provincial taxes on all income you earn in both Canada and other countries, including investment income.
Individuals pay taxes at graduated rates, meaning that your rate of tax gets higher as your income increases.
The amount of tax you pay on investment income depends on the type of investment, as explained below.
- Interest income (on GICs, bonds or savings accounts): Interest you earn on investments is taxed like regular income.
- Dividend income: Dividends on Canadian stocks get special tax treatment in the form of a dividend gross-up and dividend tax credit, and is taxed at a lower rate than regular income.
- Capital gains: When you sell an investment for more than you paid for it, the profit is called a capital gain. In Canada, only half of the amount is taxable at your regular rate. You can also use capital losses (the amount you lose when you sell an investment for less than you paid for it) to offset capital gains and pay less tax.
- Foreign investment income: All foreign investment income is taxed like regular income. (And, unfortunately, you can’t claim the dividend tax credit on foreign stock dividends.) Foreign investments might also collect withholding taxes, but you might be able to get those amounts back by claiming a foreign tax credit on your Canadian tax return.
The good news is that Canada has special accounts, called registered accounts, that can help you pay less tax on your investment income. These accounts have limits on how much money you can put in them. But, because they save you money on tax, they’re usually the best place to start investing.
Types of registered accounts in Canada
Think of registered accounts like different kinds of piggy banks that can hold various savings and investment products. These accounts are registered with the federal government and each offers different features and potential tax advantages. Here are the most common registered accounts and how they work.
Tax-Free Savings Account (TFSA)
With a TFSA, your investments can grow tax free. If you’re 18 or older, you’re allowed to contribute up to a set amount each year. That amount is currently $7,000 – the TFSA annual contribution limit is indexed to inflation and rounded to the nearest $500. If you don’t add the maximum contribution amount one year, you can catch up in later years. The best part is that you can take your money out whenever you want without paying any tax. Plus, you can re-contribute withdrawn amounts starting in the following year. This flexibility makes the TFSA a great place to put your investments for any short- or long-term goal.
Registered Education Savings Plan (RESP)
This account is like a special piggy bank for your children’s college or university education fund. Investment earnings on your contributions grow tax free. Even better? The Canadian government adds 20 cents for every dollar you contribute—up to $500 in free grant money each year (and up to $7,200 over the lifetime of the plan). There is a lifetime contribution limit of $50,000 per beneficiary
Once your child is registered in college or university, you can withdraw your contributions tax free to help pay for their studies. Withdrawals of the investment income or grant portions are taxable to the student, who will likely be in a low tax bracket while studying.
Registered Retirement Savings Plan (RRSP)
An RRSP gives you a tax break now to help you save for retirement. When you put money into an RRSP, you get to deduct the contribution amount from your taxable income. That means you could potentially pay less tax (or get a refund) when you file your yearly income tax return. You must be age 71 or younger to contribute to your own RRSP (if you have a younger spouse you can contribute to a spousal RRSP until the end of the year in which they turn 71).
The amount you can put into to an RRSP each year is based on the income you reported on your previous year’s Canadian tax return. (That means you might not be able to invest in this type of account until your second year in Canada.) In 2025, you can contribute up to 18% of your 2024 reported earnings, to a maximum of $32,490. If you don’t contribute the full amount, you can catch up in future years.
Investments inside an RRSP grow tax-free, but you pay tax on withdrawals. (There are a couple of exceptions where you can borrow money from an RRSP tax free: to pay for your first home, or for your—or your spouse’s—education costs. Then you must repay the amounts to your RRSP within a specified period.)
An RRSP can be a good option for long-term savings, especially if you are in a lower tax bracket when you take out the money (as is often the case in retirement) than you were when you claimed the tax deduction.
First Home Savings Account (FHSA)
The FHSA helps you save for your first home in Canada. You get a tax break when you put money into an FHSA, and you won’t pay tax when you take the money out—so long as you use it to buy your first home. You must be at least 18 to open an FHSA, and you can contribute up to $8,000 each year (with a lifetime maximum of $40,000).
How to start investing
There are three main ways to invest in registered and non-registered accounts in Canada:
- Financial advisor. These professionals can offer personal advice on investments, budgeting and general tax planning. Some financial advisors may include costs such as flat fees, hourly rates or commissions.
- Self-directed investing. Open a brokerage account with a bank or investment company to choose, buy and manage your own investments. Self-directed investing can save you money because there tend to be fewer fees than there are for other investing methods, but you need time and knowledge to do it effectively.
- Robo-advisor. When you open an account with a robo-advisor, a computer program will ask you about your goals and comfort with risk. Then it will help you choose and manage your investments—usually a variety of ETFs. This is easier and less time-consuming than self-directed investing, but the fees are slightly higher.
No matter which option you choose, make sure you’re working with reputable firms and advisors. For example, you can check if a firm or advisor is registered at the Canadian Investment Regulatory Organization (CIRO) website.
Beware of scammers
Sadly, there are criminals who try to take advantage of newcomers, thinking they are easy targets. Protect yourself with these tips:
- Never give out personal information (like your SIN, account numbers or passwords) if someone calls or emails you without you contacting them first—even if they say they’re from your bank.
- Don’t trust get-rich-quick promises or “guaranteed” high returns.
- Be extra careful if someone pressures you to act quickly.
- Only use official phone numbers and websites for your bank or investment company.
- If you think you’ve been scammed, contact the local police and Canadian Anti-Fraud Centre.
Invest in Canada with confidence
Just like with other countries, investing in Canada takes time, care and patience. Start with registered accounts that can help you save on taxes. Choose investments that match your goals. And always protect yourself from scams. Whether you decide to invest on your own or get help from professionals, these basics will help you grow your money safely in your new home.2
Mutual Funds are sold by Royal Mutual Funds Inc. (RMFI). There may be commissions, trailing commissions, management fees and expenses associated with mutual fund investments. Please read the Fund Facts/prospectus before investing. Mutual fund securities are not insured by the Canada Deposit Insurance Corporation. For funds other than money market funds, unit values change frequently. For money market funds, there can be no assurances that a fund will be able to maintain its net asset value per security at a constant amount or that the full amount of your investment in a fund will be returned to you. Past performance may not be repeated. RMFI is licensed as a financial services firm in the province of Quebec.
Financial planning services and investment advice are provided by Royal Mutual Funds Inc. (RMFI). RMFI, RBC Global Asset Management Inc., Royal Bank of Canada, Royal Trust Corporation of Canada and The Royal Trust Company are separate corporate entities which are affiliated. RMFI is licensed as a financial services firm in the province of Quebec.
