Navigating Accounts & Investments

Once you have a clear picture of your goals and understand what type of investor you are, you can explore the account (or accounts) and investment products that are available to you.

Types of Accounts

You can save for your short- and long-term goals using one account or a combination of registered and non-registered accounts. Registered investment accounts are typically used to defer taxes on your income and capital gains. Non-registered accounts don't come with the same tax-deferral benefits, so income generated is subject to tax each year. They do offer more flexibility than registered accounts and there are no contribution limits.

Registered Account Choices

RRSP - A Registered Retirement Savings Plan (RRSP) is a personal savings plan that lets you save for your retirement on a tax-deferred basis.

Spousal RRSPs - A spousal RRSP is a retirement savings plan that allows one spouse to own the account and the other to contribute to the account. The main objective of a spousal RRSP is to shift retirement income from the higher-income spouse to the lower-income spouse.

TFSA - A Tax-Free Savings Account (TFSA) is an investment account that can help you save while sheltering your investment earnings and withdrawals from tax.

RRIF - A Registered Retirement Income Fund (RRIF) is an extension of your RRSP. Your RRSP is designed to save for retirement, while your RRIF is used to withdraw your money throughout retirement.

RESP - A Registered Education Savings Plan (RESP) is a savings plan specifically designed to help you save for a child's education after high school.

FHSA – A First Home Savings Account (FHSA) is a registered plan that is designed to help Canadians contribute up to $40,000 on a tax-free basis to use towards the purchase of their first home. 

Non-Registered Account Choices

Cash Account - Non-registered investment cash accounts can be used to save for shorter-term goals, or to supplement a longer-term goal like retirement. These accounts can be individually or jointly held.

Margin Accounts - Margin accounts allow you to borrow money against the investments in your account.

Non-Personal Accounts - These types of accounts can include ones that allow you to invest on behalf of a business or organization, as well as trust and estate accounts.

Investment products

Depending on your goals, time horizon and risk tolerance, there are a number of investment products available to you.

Here's a quick overview:

• Stocks give you part ownership in a company, provide the greatest potential for long-term growth and protection against inflation.
• Fixed-income products, such as bonds, GICs and treasury bills, can generate cash flow and provide stability to help protect your portfolio from volatility.
• Mutual Funds are baskets of investments that can include stocks, bonds, cash and other securities. They provide a simplified way to achieve diversification.
• Exchange-traded funds (ETFs), like mutual funds, can hold a variety of investment products, but like stocks, are easy to buy and sell since they trade on major stock exchanges throughout the day.

Alternative Investments

Canadian investors are increasingly looking to alternative investment strategies to help reduce risk by hedging their investments, to increase portfolio diversification or simply to speculate.

Here are a few alternative investment products available to you:

Options

Options are securities whose value is tied to an underlying asset or a group of assets. Because they derive their value from something else, options are called derivatives. Most often, the underlying assets are stocks, but other assets can include bonds, currencies, interest rates, market indices, ETFs or futures contracts.

Structured products

A structured product, also known as a market-linked investment, is a pre-packaged investment based on an underlying reference asset or benchmark, such as a single security, a basket of securities, options, indices, commodities, bonds or foreign currencies. Basically, a structured product is an investment with a fixed term whose payout depends on the performance of something else. There are two main types, structured deposits (based on bank savings accounts) and structured investments or notes. 

Each investment type carries risks — consider your risk tolerance, goals, and time horizon when evaluating which might be right for you.