Funding provided by The Government of Canada
Home  
Site Map  

  Money
  Work


Welcome Theme: Money

What different kinds of investments are there?

Suggested Answer:  Prev Next Top
There are many different kinds of investment you can make. Some are simple. Most people have a bank account, for example. Others, like mutual funds, require more know-how. Here are some common investments you may want to consider:
 
Savings accounts

Opening a savings account is a simple way to start investing. These accounts pay interest on your savings. This interest makes your savings grow. But, since the interest rate is low, your money won’t grow very fast. So you don’t want to keep a lot of cash in a savings account. Instead, invest it where you can make it grow faster.

You can learn more about savings accounts from the Ontario Securities Commission web site for Investor Education.
 
 
Tip: Before you open a savings account, look for one that will charge you lower fees and pay a higher interest rate.
 
 
Guaranteed Investment Certificates (GICs)

 

GICs are another simple way to invest. Here, you deposit money with your financial institution, and agree to leave it invested for a certain period of time – three months, or a year, for example. There are ways to get your money out early, but you will likely not make as much interest. Or you may pay a penalty. You can learn more about GICs from the Ontario Securities Commission web site for Investor Education.
 
Canada Savings Bonds (CSBs)

 

Canada Savings Bonds are issued by the Government of Canada. You can buy Canada Savings Bonds at most financial institution, including banks. Like GICs, savings bonds pay interest on the money you have invested over a set period of time. There are different kinds of Canada Savings Bonds, so you will need to talk to your financial institution and find out which one is right for you. You can learn more about Canada Savings Bonds from the Ontario Securities Commission web site for Investor Education.
 
 
About risk: Savings accounts, GICs and CSBs are very safe, low-risk investments. That means you are not likely to lose money when you invest in them. Other kinds of investments, like stocks and mutual funds, may pay more, but they have a higher risk. That means you could lose money.
 
 
Stocks

 

When you buy a stock, you are buying a share in the ownership of a company. If the company does well, the price of your stock will likely rise. If the company does poorly, the price of your stock may fall.
 
Stocks are bought and sold in a stock market, called a stock exchange. To buy or sell stocks, you need to open an account with a stockbroker. A stockbroker buys or sells the stocks you choose and charges you a fee – called a commission – for these services. You can learn more about buying and selling stock from the Ontario Securities Commission web site for Investor Education.
 
Mutual Funds

 

A mutual fund pools money from many different investors to buy a mix of stocks or other investments. When you buy a unit of a mutual fund, you are buying a share of this pool. Mutual funds are run by professional money managers who choose which investments to buy and sell. They charge management fees for this service. You can learn more about the many types of mutual funds on this web site. You can buy a mutual fund through a stockbroker or directly from a mutual fund company.
 
Exchange-Traded Funds (ETFs)

 

When you buy an ETF, you are buying a share in a pool of many investments. The companies that manage ETFs buy a mix of stocks that represent an entire stock market or other investment market. For example, an ETF for the Toronto Stock Exchange (TSX) holds investments that match the TSX index.
 
Why do people like ETFs? One reason is that the fees are often lower than you pay for mutual funds. That’s because the ETF managers don’t really have research or decide which investments to buy or sell. They just follow an existing index of stocks. You can learn more about ETFs and how they work from the Ontario Securities Commission web site for Investor Education.
 
 
Tip: Some investors like to buy individual stocks because they feel they do not need the services of a mutual fund manager. They are comfortable making their own picks. And they may save money on investment fees. For beginning investors, however, mutual funds can be a wise choice because the fund manager does the work for you. When you buy stocks on your own, without any professional help, you really need to know what you are doing.
 
 


Related Links: Prev Next Top
Here are some related link(s):
Please click on "Contact Us" and send us your suggestions.
 

Other Suggested Answers: Prev Next Top
Please click on "Contact Us" and send us your suggestions.

Other Questions: Prev Next Top
Have you been asked for help with one of the following questions:
[3] What different kinds of investments are there?

Rate this answer: Prev Next Top
Provide feedback on this answer:
Did this answer help you solve your problem?





  Strongly
Disagree
1
2 3 4 Strongly
Agree
5
The answer is easy to understand
The answer is accurate

Additional Comments

To protect your privacy, do not include contact information in your feedback.