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Investing for Your Future in Canada

There are investment options available to help you set money aside for your future needs, like buying a home, saving for your children’s education or retiring comfortably.

These investment options fit into three main asset classes:

Cash

Cash investments include savings accounts, fixed-term deposits such as guaranteed investment certificates (GICs), currency, Canada Savings Bonds, money market funds and government and corporate bonds maturing in less than one year.

Fixed income

Fixed income investments include government and corporate bonds maturing in more than one year, preferred shares and other debt instruments.

Equities

Equity investments include common stocks, some derivatives (rights, warrants, options), convertible bonds and convertible preferred shares.

In addition to the products listed here, mutual funds and exchange-traded funds can hold a variety of investments, such as stocks and bonds. Investments such as these can help diversify your portfolio. Depending on what they hold, they can fit into or across different asset classes.

You can hold your investments in a registered or non-registered account. Each type of account comes with its own features, eligibility requirements and restrictions. It’s important to research which account (or accounts) is best for you and your family.

Registered accounts can offer tax advantages.
Here are two registered account options:

TFSA

A Tax-Free Savings Account (TFSA) is a savings account registered with the federal government that lets your savings grow tax-free for any goal you want. TFSA withdrawals are tax free because you make contributions with after-tax dollars.

RRSP

A Registered Retirement Savings Plan (RRSP) is an account that is registered with the federal government, and is intended to help you save money for retirement. RRSP contributions are tax-deferred. This means you don’t pay tax on your income used for contributions but you do pay tax on your withdrawals.

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Buying a home is a big investment. Like many other investments, the real estate market is subject to fluctuating prices. And just like other investments, do your research and carefully consider your options before you buy.

For more information about the types of investment accounts available in Canada and investment options, visit GetSmarterAboutMoney.ca

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Saving for Your Child’s Education

There are many costs if you want your children to attend university, college or an apprenticeship program in Canada after high school. The largest expense is likely to be tuition, but there are also things like textbooks that need to be purchased and these can get expensive. If your child moves out of your home to attend school, there will also be costs for housing and food. One way to save for these costs is by opening a Registered Education Savings Plan (RESP).

An RESP is a dedicated savings plan to help you save for your child’s education after high school. Your savings grow tax-free and there is no tax on the investment earnings as long as they remain in the account. As a student, your child probably won’t have much in the way of taxable income, so they will likely have little or no tax to pay when the time comes for them to withdraw from their RESP.

While all RESPs can help you save for your child’s education, there are different types of plans; each plan will have different features including fees and monthly contribution requirements. It is important to know the rules before you open any type of RESP.

The three types of RESPs are:

Single person

Individual plans

Individual plans are intended to pay for the education of one beneficiary. Anyone can open an individual plan and anyone can contribute to it. You can even open a plan for yourself. Individual plans usually don’t require you to make a minimum deposit.

Family

Family plans

Family plans can have more than one beneficiary. Beneficiaries must be related to the person who opens the plan and you can decide how to divide the funds amongst beneficiaries. Family plans usually don’t require you to make a minimum deposit.

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Group plans

Group plans work differently from individual and family plans. They often have additional rules about the required monthly deposits, how much and how often your child can make withdrawals, and which education programs are eligible. Group plans are sold by scholarship plan dealers who are registered with the securities regulator in the provinces and territories where they sell investments to the public. You have 60 days to cancel plans provided by scholarship plan dealers with no penalty.

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Did you know?

If you have an RESP, the Government of Canada will provide additional saving incentives up to a certain limit. The amount you receive depends on your annual contributions and annual household income.

You may also use other types of accounts to save for your child’s education, such as a TFSA, a trust or a non-registered account. Each type of account, including RESPs, comes with its own features and restrictions. Make sure you review all of your options and the different types of accounts and investments in order to make the best decisions for you and your family.

For more information about RESPs and questions to ask when choosing an RESP provider go to:

GetSmarterAboutMoney.ca

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Plans registered with the federal government (for example: Tax Free Savings Accounts, Registered Retirement Savings Plans and Registered Education Savings Plans) are regulated by the Canada Revenue Agency, an agency of the Government of Canada. The Canada Revenue Agency website has the latest information and rules about these plans.

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Learn to Recognize Investment Fraud

There’s a saying that if something sounds too good to be true, it probably is. Fraudulent investment opportunities and the people trying to sell them can sometimes be very convincing, so it’s important to learn what some common scams look like and where they can happen.

One way that fraudsters might approach you is through a group or community organizations that you belong to.  Fraudsters will use their targets’ religious community or cultural identity to gain their trust. The fraudster will often volunteer with them, attend social events for that particular group, and are often from the same community. They might have been in Canada longer and so present themselves as someone potential victims can trust and rely on in an unfamiliar Canadian financial industry. Once they have established a strong relationship, they convince people to invest in their scheme. This is known as affinity fraud.

Victims can lose some or all of their life savings to fraud. Many people often don’t report the fraud out of fear of embarrassment or backlash from their friends and family. They may try to resolve problems within the group, which can leave others vulnerable to the same fraud.

Fraudsters will go to great lengths to get between you and your hard-earned money. Knowing what to look for can help you avoid losing money to investment fraud.

Common signs of investment fraud

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High returns with little or no risk

Generally, the higher the potential return of an investment, the higher the risk of that investment. This is known as the risk-return relationship. If someone promises you an investment that has high returns with little or no risk, the investment that they are offering might be a scam.

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Pressure to buy

Fraudsters frequently use high-pressure sales tactics to quickly get your money and then move on to other victims. Investing your money is a serious decision, and should always be done with time and consideration. Be very cautious if you are asked to make a decision right away, or are presented with a limited-time offer. Fraudsters don’t want to give you enough time to figure out their scheme.

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Unregistered salespeople or advisors

Before you invest, check the registration of the person offering you the investment. In general, anyone selling securities or offering investment advice must be registered with their provincial securities regulator. If the person selling the investment is not registered to do business in Canada, you should question whether they’re authorized to sell investments at all.

Learn more about checking registration (In English/French only)

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You may hesitate to report fraud but it’s important to remember that investment fraud can happen to anyone. If you suspect that you have been approached by a fraudster or that you may have been a victim of a scam, please contact us immediately.

Avoiding investment scams

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Get a second opinion

Be skeptical of unsolicited investment opportunities that you might receive over the phone, online or from acquaintances. Before you invest, call us or get a second opinion from someone you’ve confirmed is a registered advisor. You may also want to consult a lawyer or an accountant.

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Take the time you need

Be suspicious of limited-time offers and high-pressure salespeople. If the investment is legitimate, you should not have to invest on the spot. Take the time you need to make an informed decision.

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Research the investment

Before you make any investment, understand how it works, and the risks and fees associated with it. Don’t be afraid to ask questions. Make sure it fits with your financial goals and needs.

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Check Before You Invest

One of the best ways to avoid investment fraud is to verify that any person offering you an investment or investing advice is registered to do so. In general, anyone selling securities or offering investment advice must be registered with the securities regulator in the provinces and territories where they sell investments.

Why is registration important?

Registration helps protect investors because investment regulators, like the Ontario Securities Commission, will only register people or companies that are qualified to sell investments or offer advice to the public.

Checking registration is quick and easy to do. Use the National Registration Search tool to check the registration status and review the discipline history of any person or business in the investment industry.

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Ontario Securities Commission

The Ontario Securities Commission (OSC) is a regulator that is responsible for regulating the capital markets in Ontario. The OSC provides protection to investors from unfair, improper or fraudulent practices and fosters fair and efficient capital markets and confidence in capital markets.

People and businesses that are trading securities and providing investors with advice in Ontario must follow Ontario securities rules. The OSC can take action against those who don’t follow the rules.

The Investor Office (www.InvestorOffice.ca) is a part of the OSC. The Investor Office sets the strategic direction and leads the OSC’s efforts in investor engagement, education, outreach and research. The Office also brings the investor perspective to policy-making and operations.

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GetSmarterAboutMoney.ca

GetSmarterAboutMoney.ca is an Ontario Securities Commission website that provides independent and unbiased information and financial tools to help you make better decisions about your money.

Here you will find information on investing basics, such as the different roles that organizations and professionals have in Canadian markets, the different types of investment accounts available in Canada, and questions to ask before you choose an investment.

GetSmarterAboutMoney.ca also has calculators, worksheets and quizzes to help you make better informed investment decisions for you and your family.

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Inquiries and Contact Centre

You can contact the Inquiries and Contact Centre of the Ontario Securities Commission if you have a question or complaint about a company, an investment product, or the actions of your advisor.

The team can answer your questions in over 200 languages.

The Inquiries and Contact Centre will answer your questions and may refer your complaint or inquiry to another branch at the Ontario Securities Commission.

Ask a question

Phone

Local (Toronto)

416-593-8314

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Toll-free (North America)

1-877-785-1555

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TTY

1-866-827-1295

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Fax

416-593-8122

(Questions and complaints)