Investing and the investment world can be complex. Re: Investing offers clear, unbiased answers to your questions on investing, from a trusted source.
Investir peut être complexe. Et le monde de l’investissement aussi. Le site Re : Investir est une source d’information fiable qui offre des réponses claires et objectives à vos questions sur l’investissement.
Roxanne M.
When you’re starting to invest, the options can seem overwhelming! However, before you make any decisions, there are some questions you should ask yourself:
You can invest money through an advisor at your bank or financial institution, through a registered financial advisor or an online investment advisor.
Mary
Segregated funds are an investment product sold through life insurance companies, regulated federally by the Office of the Superintendent of Financial Institutions (OSFI) and sold by insurance advisors. Depending on the seller, segregated funds may also be regulated provincially – in Ontario this is under the Financial Services Commission of Ontario (FSCO). They are individual insurance contracts that invest in one or more underlying assets, such as a mutual fund. Learn more about segregated funds.
Segregated fund performance is reported by the insurance companies who offer the product. They typically provide information on the fund’s performance on their website including annual returns and fees. However, keep in mind that past performance cannot be used as an indication of future return.
Mandeep K.
A company’s share price is determined by supply and demand based on buyers and sellers who want different prices. Supply is the total number of shares that people want to sell. Demand is the total amount of shares that people want to buy.
If there are more buyers (demand) than sellers of the stock, the buyers bid up the prices of the stock to motivate sellers to get rid of them. The reverse happens if there are more sellers (supply) for the stock than there are buyers. As more owners sell, the holder of the stock lowers the price to entice a buyer to purchase the stocks since there is now more supply than demand.
Why there might be more buyers for a stock than available supply could be based on a number of factors such as a positive outlook for the company, confidence in the market place or economy or that the company’s share price will go up over time.
Learn more about factors that can affect stock prices.
Patrick B.
There is no database available to help you track down a missing Registered Retirement Savings Plan (RRSP). However, there are a few things you can do to try to locate it:
If what you had was not an RRSP, but rather a locked-in retirement account, for example, set up to hold retirement contributions after leaving a past employer, contact your provincial pension regulator. In Ontario this is the Financial Services Commission of Ontario (FSCO). Outside of Ontario or for federally regulated pensions, you can contact the Office of the Superintendent of Financial Institutions (OSFI) to help you determine next steps.
Eric S.
We are not able to provide advice, though we do try to provide general information to help. If you are concerned about the performance of your investments, speak to a qualified financial advisor who can help you determine the best action based on your investment goals and personal financial situation. There are many reasons investment prices may drop. Depending on the type of investments you hold, or the companies that you invest in, learn about some factors that can affect investment prices.
Prolonged periods of high or low prices may indicate a bull or bear market. A bull market happens when investors are optimistic about companies’ growth potential and profit outlook, and stock prices generally rise for an extended period of time until hitting a peak – the opposite is a bear market, where investors turn pessimistic and stock prices generally decline for an extended period of time, before hitting bottom. Learn more about bear markets and how to handle them when it comes to your investments.
If you are concerned about bear (or bull) markets in the future, consider creating an Investment Policy Statement (IPS). Having an IPS can help investors decide what to do in turbulent periods where you may consider buying or selling, and avoid making emotional decisions.
Bill G.
What happens to the money in a Registered Retirement Income Fund (RRIF) after the death of the RRIF holder – and the taxes on it – will depend on:
Read this previous Re: Investing question to learn more about the tax implications to a RRIF after death.
If a deceased RRIF holder has a designated beneficiary, the money in your RRIF will be paid to the beneficiary, but the taxes are paid from the annuitant’s estate. Generally, the deceased’s estate is responsible to pay the deceased’s taxes. For more information, see the Canada Revenue Agency’s publication, Death of a RRIF annuitant.
Bill G.
TFSAs are a way for individuals to save tax-free throughout their lifetime. The rules for opening a TFSA can be found on Canada Revenue Agency’s website.
The Ontario Securities Commission (OSC) is a Crown corporation that is responsible for regulating the capital markets in Ontario. Learn more about the OSC. As a securities regulator, we do not regulate plans such as TFSAs, or the rules associated with them.
If you have questions related to the administration of a TFSA, or who is eligible to open one, contact the Canada Revenue Agency.
Ishan J. @Ishan Jolly
While we try to provide general information to help you get started, we are not able to provide investment advice.
Deciding how and where you save your money is a big part of your retirement plan. In Canada, the federal government, and sometimes employers, offer incentives to help you save money and build your retirement nest egg. These include:
Learn more about retirement planning. You can also speak to a registered financial advisor who can help you determine the best way to reach your retirement goals based on your personal financial situation.
Joyce
When you buy a bond, you’re lending your money to a company or a government (the bond issuer) for a set period of time (the term). The term can be anywhere from a year or less to as long as 30 years. In return, the issuer pays you interest income. On the date the bond becomes due (the maturity date), the issuer is supposed to pay back the face value of the bond in full (your original investment). There are different types of bonds you can invest in, or you can purchase a bond fund – a mutual fund or exchange-traded fund that invests in a number of different bonds. Before you consider investing in bonds, learn about the risks associated with this type of investment, and the factors that can affect bond prices.
Bonds can be purchased through a full-service investment firm which can place the order for you, or you can invest yourself by setting up an account online through a discount broker. Learn more about full-service investment firms and discount brokers. Bonds can be held in savings accounts, such as RRSPs, TFSAs or RESPs. Before you work with an investment firm, check that they are registered in your province or territory.
Richard P.
Fund Facts is a user-friendly document that provides important information that you should know about the mutual fund you are buying, such as performance history, investments, risk rating and fees. Mutual fund dealers are required to give investors a copy of the latest Fund Facts before they decide to purchase a mutual fund. Learn more using this interactive sample of Fund Facts.
Fund Facts must be updated by the mutual fund company on an at least an annual basis or more frequently if there has been a material change to the fund that affects the content of document (e.g., a change in investment objectives or an increase in the management fee of the mutual fund). The Fund Facts should be dated within a 12-month period from the date of the fund’s simplified prospectus.
All updated Fund Facts can be found on the System for Electronic Document Analysis and Retrieval (SEDAR).
Speak to your advisor if you have questions about information presented in Fund Facts.
Abbas
First, though we try to provide as much information as we can, we are not able to provide any specific investment or financial advice. A registered financial advisor can provide advice on the types of investments that are a good fit to your financial goals based on your specific financial circumstances, investment needs, objectives and risk tolerance. Investments generally fall into three categories: equities, fixed income and cash or equivalent investments. Equity investments are another word for investments in the stock market. Fixed income investments aim to pay regular income while protecting your principal, for example, different types of bonds and some GICs. Cash or equivalent investments include savings accounts, fixed-term deposits and highly liquid investments like money market funds.
A mutual fund is an investment that pools money from many people and generally invests in a mix of investments such as (equities) stocks and fixed income (bonds). As an investor, you own part of the mutual fund by buying units. There are many types of mutual funds, each with its own objectives and risks. A professional manager chooses investments that match the fund’s investment objective for risk and return. Learn more about how mutual funds work. Equities, also known as “stocks” are an investment in a specific company. When you buy stocks of a company, you’re basically buying a piece of that company. As an investor, this entitles you to your portion of the company’s profits, typically paid in the form of dividends or you stand to profit if the share stock price increases. Learn more about how stocks work.
Jim S.
A Registered Retirement Income Fund (RRIF) is an account registered with the federal government that is intended to provide you with a steady income in retirement. You can open a RRIF anytime, but no later than the end of the year you turn 71, not age 72.
If your spouse is younger than you, you can use their age to calculate your minimum amount. This may be a good strategy if you have other sources of income and want to leave your money in your RRIF for as long as possible. RRIFs are generally flexible – you don’t have to have a spousal RRIF or name your spouse as the RRIF beneficiary to use their age for your minimum amount. But you must tell your financial institution that you’re doing so before you make your first RRIF withdrawal. And you can’t change your mind later.
Learn more about how the minimum is calculated, and see the withdrawal rates by age.
Armand B.
A Tax-Free Savings Account (TFSA) allows your savings to grow tax-free, and you can withdraw money at any time without paying tax on any gains you make from selling the stocks.
Withdrawals you make can be re-contributed in the same year if you haven’t contributed more than the current maximum of $5,500 a year or in the following year. Investment income earned by, and changes in the value of your TFSA investments will not affect your TFSA contribution room for current or future years. Read this previous Re: Investing question to learn more.
Trades within your TFSA can be made as often as you like, without having to pay a capital gains tax. However, note that conversely you cannot use capital losses on investments in your TFSA to offset the gains. You should be aware that the Canada Revenue Agency (CRA) may audit a TFSA if investors are using their TFSAs to operate a business of trading securities – for example, if trades are too frequent and you earn large gains. Speak to a registered financial advisor or tax professional to learn more or learn more about TFSA’s on the CRA’s website.
CJ
While we try to provide general information to help answer your investing questions, we do not regulate registered plans, such as registered retirement savings plans (RRSPs) and locked-in retirement savings plans (LRSPs), or the rules associated with these plans. The Ministry of the Attorney General in Ontario has information on division of property related to separation and divorce. Speak to a legal representative to understand how division of property would apply to your personal situation.
The rules that govern RRSPs are set out in the Canadian Income Tax Act which is administered by Canada Revenue Agency (CRA). You can get more information on transferring RRSPs on breakdown of marriage on the CRA’s website. LRSP rules are set out in the Pension Benefits Acts and regulations are administered by the Financial Services Commission of Ontario (FSCO) – Pensions. Learn more on FSCO’s website.
The Ontario Securities Commission (OSC) is an independent Crown corporation that is responsible for regulating the capital markets in Ontario. As a regulatory body, the OSC administers and enforces compliance with the provisions of the Securities Act (Ontario) and the Commodity Futures Act (Ontario). Specifically, we work to protect investors and foster fair and efficient markets by making and monitoring compliance with rules governing the securities industry in Ontario.
Mellinda B.
A capital gain is when you sell a stock for more than you paid for it. The entire capital gain must be reported as income on your tax return and is taxed at a rate of 50% of net capital gains – the total amount of capital gains minus any capital losses if you sold any stocks for less than you paid in the same year. If you receive capital gains from investments outside Canada, the equivalent Canadian dollar value must be reported on your Canadian tax return and will be taxed accordingly.
Investments held and sold in a tax-deferred registered account – such as an RRSP – are not taxed until you withdraw them. At the time of withdrawal, they are taxed as income.
Learn more about tax and investing, and speak to a qualified tax professional for information related to your personal financial situation and questions related to how tax is applied to registered plans.
Ranvir
While we try to provide as much information as possible, we are not able to provide financial advice.
A Registered Retirement Savings Plan (RRSP) is an example of a tax-deferred savings plan that is intended to provide you with a source of income at retirement. The money you make on your RRSP investments is not taxed as long as it stays in the plan. RRSP contributions are based on earned income, up to a certain percentage of your income, annual maximum contribution and other retirement contributions you make (e.g. to a company pension plan). This means that allowable contributions are different for everyone. Learn more about making contributions to an RRSP.
There is no way to change the name on your RRSP account to someone else’s. In addition, you can’t transfer money from your RRSP to the RRSP of someone else. This also applies to any spousal RRSPs that you may be contributing to.
If you or your partner have financial goals that you are trying to accomplish by making this change, we suggest you speak to a registered financial advisor or financial planner who can help you determine the best way to reach your goals based on your personal financial needs and financial situation.
Armand B./Raghu
With a tax-free savings account (TFSA), you can make withdrawals whenever you want, for any reason, without paying tax on the amount contributed as well as any income earned in the account. The money you withdraw can be re-contributed in the following year, in addition to the next year’s annual contribution maximum. Generally, your TFSA contribution room is made up of: the TFSA dollar limit for the year, any unused TFSA contribution room from the previous year, and any withdrawals made from the TFSA in the previous year.
If you re-contribute the money in the same year without having available contribution room to do so, you may be charged an over-contribution penalty of 1% per month on the excess amount until you remove it.
Learn more about how TFSAs work.
William
While we are not able to provide advice, we do try to provide general information to help you find the next step. The amount of tax you pay when you invest depends on four things:
Some ways to reduce tax include:
If saving on taxes is a big goal of your overall investment plan, speak to a registered financial advisor or tax professional to help you make a plan based on your goals and personal circumstances.
Cheryl N.
If a Registered Retirement Income Fund (RRIF) beneficiary is not a spouse or common-law partner, or a financially dependent child or grandchild, the entire value of the RRIF will be subject to tax.
Read this previous Re: Investing question to learn more about the tax implications if a non-spouse adult is the RRIF beneficiary.
Veronika
When you are planning your estate, or if you will be acting as an executor for someone else, communicating your plan ensures your loved ones will have the information they need to carry out your wishes. An information package for key people may include:
Your estate plan and information package should be discussed and provided to those who need it – your executor, spouse, adult children and any other key people. Visit the Ministry of the Attorney General for further information on estate planning, and learn more about communicating your estate plan.
Kevin B.
Generally, financial institutions will immediately deduct the applicable withholding tax based on the amount of each withdrawal. Because withdrawals are fully taxed as income on your income tax return, the amount of the withholding tax may be less than what is owed on the total amount withdrawn in one year.
Your financial institution may apply the withholding tax based on the total amount of multiple withdrawals depending on how often you make them. Speak to your financial institution to learn more about making multiple RRSP withdrawals, and track your withdrawals throughout the year to ensure you are aware of the additional amount you may owe when you file your annual income tax return.
Learn more about making withdrawals from your RRSP before you retire.
Tracy L. @the tracy
A Registered Retirement Savings Plan (RRSP) is an example of a tax-deferred savings plan that is intended to provide you with a source of income at retirement. You receive immediate tax benefits on your contributions since they are tax deductible on your personal income tax return, and money within the plan grows tax-free.
While you can withdraw money from your RRSP tax free to buy a home, there are certain limits and conditions. The government’s Home Buyer’s Plan allows you to borrow up to $25,000 for your first home, as long as you pay it back over the next 15 years. Learn more about withdrawing money from your RRSP before you retire.
Any funds taken from an RRSP that don’t meet the conditions of the Home Buyer’s Plan are fully taxable as income in the year you withdraw them. At the time of withdrawal, you will immediately pay a withholding tax. The withholding tax is between 10% and 30%, depending on how much you withdraw (in all provinces except Quebec). You will also have to report the full amount as income in your personal tax return in the year you withdraw it but will receive a credit for the withholding tax paid. Depending on how much you’ve withdrawn, you may need to pay more. The Canada Revenue Agency (CRA) has information on tax rates on withdrawals.
Speak to a qualified tax professional to receive clarification on your own situation.
Gladys F.
We are not able to provide financial or legal advice, but we always try to provide some general information to help you determine the next step. The Ontario Securities Commission (OSC) is an independent Crown corporation that is responsible for regulating the capital markets in Ontario. The OSC does not regulate insurance companies or insurance products, such as segregated funds, and we do not oversee estate planning matters such as probate taxes.
Due to the different types of segregated fund contracts and the terms of those policies, you should consult a financial or tax advisor about the tax treatment of the policy for your personal circumstances. The tax implications may vary based on the individual plan.
For information about probate fees, please contact the Ministry of Finance at 1-866 668 8297 or visit their website at ontario.ca/finance.
Vivian
You can take money out of your RRSP before you retire for any reason, but you will immediately have to pay a withholding tax, and will have to report the full amount as income in your personal tax return in the year you withdraw it. You’ll also permanently lose the contribution room you originally used to make the contribution.
There are two ways you can withdraw money from your RRSP tax free – up to certain limits and conditions. The government’s Home Buyer’s Plan allows you to borrow up to $25,000 for your first home, as long as you pay it back over the next 15 years. The government’s Lifelong Learning Plan allows you to borrow up to $20,000 for your education or your spouse’s education, as long as you pay it back over the next 10 years. Learn more about withdrawing money from your RRSP before you retire.
If you are making withdrawals in retirement, learn about your options for getting retirement income from your RRSP.
Eric
Segregated (or seg) funds are an investment product sold by life insurance companies. They are individual insurance contracts that invest in one or more underlying securities, such as a mutual fund. Learn more about how segregated funds work.
There are no health or medical requirements to purchase a segregated fund. However, there may be age limits depending on the type of segregated fund you wish to purchase. A financial advisor registered to sell insurance products can advise you on eligibility based on age.
Because segregated funds are an insurance product, they are not regulated by provincial securities administrators (like the Ontario Securities Commission), but rather by provincial insurance regulators. In Ontario this is the Financial Services Commission of Ontario (FSCO). Check that your advisor is registered to sell insurance products in your province before you work with them.
Adrienne
While we are not able to provide advice, we do try to provide general information to help. There are many reasons an investor may choose to work with a financial advisor, for example:
While you may save commissions using do-it-yourself investing, a financial advisor can help you select a portfolio that is suitable for you and that fits into your overall financial goals. Advisors with financial planning expertise may also be able to help you manage your day-to-day spending and saving, and some advisors may also be able to help you make decisions about insurance coverage, tax planning and estate planning. Learn more about working with an advisor in this Canadian Securities Administrators publication.
For investors who are comfortable learning about different investment products and strategies, and have considered their risk tolerance, do-it-yourself investing may be a good option, or a low cost option such as using an online investment advisor. Consider all options before making a decision, and make sure any financial advisor or online investment advisor you work with is registered in your province.
Pam J.
Before December 31 in the year you turn 71, you must close your RRSP. You have three main options – you can convert your RRSP to a RRIF, buy an annuity, or withdraw your entire RRSP.
If you convert your RRSP to a RRIF, you do not need to sell your investments, and there is no tax implication until you start withdrawing funds. If you have a GIC maturing after you are 71, as long as the investment stays within a registered plan, you can continue to hold the GIC. Your financial institution or financial advisor can answer questions about what happens to assets within your account as you start to make withdrawals.
Learn more about closing an RRSP, opening a RRIF and making withdrawals from your RRIF.
Jennet
Although we can’t provide you with advice as to how or where to invest your money, we can provide some information to get you started.
When you are first starting to invest, the options can be overwhelming. That said, you’re already a step ahead because you know your time horizon – one year. Your time horizon is connected to your risk tolerance – the amount of risk you’re willing or able to take. One year is considered a short-term investment. This means that while you want your money to grow, if you get poor results, you won’t have time to make back your losses.
Generally, the shorter your time horizon, the lower your risk tolerance. Consider lower-risk investments that are easy to turn into cash. These include high-interest savings accounts, GICs or government bonds. Learn more about different short-term investment options.
Ken @khcr66
Re: Investing is a website run by the Ontario Securities Commission’s Investor Office.
The Ontario Securities Commission (OSC) is an independent and self-funded Crown corporation, accountable to the Ontario Minister of Finance, that is responsible for regulating the capital markets in Ontario. Our statutory mandate is “to provide protection to investors from unfair, improper or fraudulent practices and to foster fair and efficient capital markets and confidence in capital markets.”
As a regulatory agency, the OSC administers and enforces the Securities Act (Ontario) and the Commodity Futures Act (Ontario). Specifically, the OSC works to protect investors by making and enforcing rules governing the securities industry in Ontario. Learn more about the OSC’s role, and governance.
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. Learn more about Investor Office initiatives, such as Re: Investing.
Linda B. @Linda Brooks
You are allowed to withdraw as much from your RRIF at any time you want. Here’s how it works:
Even though withholding tax is deducted from withdrawals that exceed the minimum amount, you may still owe more tax later when you file your income tax return. It depends on your total income and tax situation. Learn more about making withdrawals from your RRIF.
Speak to your financial or income-tax advisor about any other additional costs – such as any transaction costs associated with selling your investments. Investments in non-registered plans are subject to tax depending on the type of investment and income they receive. Learn more about tax on investments.
Laura H.
We are not able to provide financial or legal advice, but we always try to provide some general information to help you determine the next step. It is possible to use certain types of life insurance as a source of retirement income. The amount you receive depends on the type of insurance policy selected. For a general overview about how this works, learn more about leveraging cash value for retirement. A licensed insurance agent can help you decide on the type of policy that would be best for your financial plan. You can check if they are licensed on the Financial Services Commission of Ontario’s website.
Before you consider an insurance policy as a way to save for your goals, consider other options and speak to a registered financial advisor – someone who is able to provide advice and help you reach your financial goals. For example, with registered plans, such as a Registered Education Savings Plan (RESP), you may be eligible to receive additional government grants or bonds to help you reach your goals to save for your son’s education.
Financial advisors who sell you investments may not be qualified to sell you insurance products and vice versa. Before you buy any investments, check to make sure that the person or business you’re dealing with is registered using the Canadian Securities Administrator’s National Registration Search.
Chris S. @Chris Spielman
There is no one right answer to this question – everyone has their own financial needs and personal situation. If you have a financial plan, it may include an estimation of how much of an annual income you need to have the lifestyle you currently do, or to have the lifestyle you want in retirement. You may also receive income from other retirement sources – for example government benefits or a workplace pension plan. The amount you receive from these additional sources will affect the amount you need to withdraw from your investments.
If you have a Registered Retirement Income Fund (RRIF), there is a minimum amount that you must withdraw each year based on your age, regardless of whether you need it. Learn more about making withdrawals from a RRIF and see the minimum withdrawal rates.
A financial advisor can help you determine your retirement needs, based on your personal and financial situation, as well as your risk tolerance. Check the registration of any financial advisor you consider working with through the Canadian Securities Administrators.
Jane R.
If a Registered Retirement Income Fund (RRIF) beneficiary is not a spouse or common-law partner, or a financially dependent child or grandchild, the entire value of the RRIF will be subject to tax.
The tax implications for a non-spouse or dependent RRIF beneficiary are similar to that of an RRSP. The entire value of the RRIF must be included in the final tax filing of the deceased person and reported as income. Who pays this tax and the tax on additional payments from the RRIF – the beneficiary or the estate – depends on different factors. Generally though, the beneficiary will receive their share of the RRIF after taxes. Speak to a tax expert or estate planning expert to ensure you understand the implications.
The Canada Revenue Agency’s publication, Death of a RRIF Annuitant, has information on what happens to a RRIF after death.
Josephine B.
We are not able to provide financial, tax or legal advice, however we always try to provide general information to help you determine the next step. The Canada Revenue Agency (CRA) has information on tax obligations for Canadian non-residents. What you pay may depend on your country of residence – you can also use the CRA’s Non-resident tax calculator to estimate tax owing based on your country of residence.
For additional information, speak to a tax professional who can provide advice based on your personal situation.
Andrew R.
To open a trading account, you must be the age of majority in your province or territory. In Ontario, this is age 18.
The investment firm or dealer you are working with will ask for a number of documents and information to open an account. You can learn more about opening a retail account from the Investment Industry Regulatory Organization of Canada’s (IIROC) brochure, Opening Your Retail Account.
If you want to open a retail account to buy stocks or save money for the benefit of a child, you can do so by setting up a trust account. There are different types of trust accounts. Your investment firm or dealer will still require information on the beneficiary. Speak to your advisor to set up this type of account and to understand what happens once the child reaches the age of majority.
John M.
You have until December 31 of the year you turn 71 to close your RRSP. You have three main options when closing your RRSP:
You can read more about these options for getting retirement income from your RRSP. If you have contribution room, you may consider using income from one of the options above and add it to a TFSA, which grows tax free until you need the money. Speak to a registered financial advisor to determine which option is best for you based on your personal situation and financial needs.
Kate
The Canada Revenue Agency (CRA) generally defines adjusted cost base (ACB) as “the cost of a property plus any expenses to acquire it, such as commissions and legal fees”. The ACB is used in the calculation of capital gains and losses for income tax purposes.
The CRA has outlined rules as how to calculate the ACB, especially if you acquired units of stocks or mutual funds at different points in time. Generally, you have to average the purchase price of the investment you bought during the year and use this average as your ACB. Learn more about how to calculate the ABC of identical properties from the CRA.
While a mutual fund company can provide you with the ACB to use in determining your gain or loss, it is important for you to refer to your own investment records to calculate the ACB that is specific to your circumstances. You can speak to your financial or income-tax advisor to properly determine your ACB and calculate your gains and losses for income-tax purposes.
Don F.
Credit unions, like other financial institutions in Canada, are regulated. In Ontario, credit unions and caisses populaires are regulated through a framework which involves the Ministry of Finance, the Financial Services Commission of Ontario (FSCO), and the Deposit Insurance Corporation of Ontario (DICO). For an overview of the responsibilities of each, visit FSCO’s website.
Credit unions and caisses populaires must meet the requirements as set out in the Credit Unions and Caisses Populaires Act, 1994. FSCO is responsible for credit unions registered under the Act in collaboration with the Ministry of Finance and DICO. In addition, DICO provides deposit insurance to protect savings in Ontario credit unions. Learn more about DICO in this previous Re: Investing question.
Farrokh T.
We aren’t able to provide investment advice, but we have provided some information to help you get started.
The appropriateness of a portfolio asset mix depends on an individual’s specific financial circumstances, investment needs, objectives and risk tolerance, and many personal factors need to be considered before choosing any investment. A registered financial advisor can provide advice on the types of investments that are a good fit to your investment goals and personal situation, after going through a series of questions to learn about you and your risk tolerance. All investments carry some level of risk, and generally the higher the potential return, the higher the risk. This is called the risk-return relationship. Important considerations when choosing any investment are your time horizon and risk tolerance.
Some advisors may also be able to help you make decisions about tax planning and estate planning. Before you work with an advisor, check that they are registered to sell investments and give advice. Learn more about the basics of investing, types of investments and registered accounts, and planning your financial future.
Frank R. @frick55
We aren’t able to provide investment advice. You can read more about the difference between mutual funds and segregated funds and checking advisor registration in this previous Re: Investing question.
Keep in mind that while segregated funds provide a guarantee to protect part of the money you invest, it may not be all of your investment – the amount protected is usually 75% to 100%. You must hold your investment for a certain length of time to benefit from the guarantee – usually 10 years – and if you cash out before maturity, the guarantee won’t apply. You will also pay an additional fee for this insurance protection. Learn more about segregated funds.
Melody C.
There are two key points to understand to answer your question. First, segregated funds and mutual funds are two separate types of investment products, not accounts. Because of this, there is no way to directly transfer funds from one to the other without selling the investment first.
Second, segregated funds and mutual funds fall under two separate regulation categories. Segregated funds are an investment product sold through life insurance companies, regulated federally by the Office of the Superintendent of Financial Institutions (OSFI) and sold by insurance advisors. Depending on the seller, segregated funds may also be regulated provincially – in Ontario this is under the Financial Services Commission of Ontario (FSCO). Mutual funds are securities sold through mutual fund dealers, registered with a provincial or territorial securities regulator (like the Ontario Securities Commission) and are sold by financial advisors.
What this means is that the insurance advisor who sells you a segregated fund may not be able to sell you a mutual fund – unless they are separately registered to provide this service. Learn about some different types of advisors and visit CheckBeforeYouInvest.ca to learn how to check registration.
James
An annuity is a contract with a life insurance company. You deposit a lump sum of money and, in return, you are guaranteed income of a pre-determined amount for a set period of time – or for as long as you live. Annuities are most commonly used to generate retirement income. You can buy an annuity with money from a registered plan – such as an RRSP, a RRIF or a non-registered account. Proceeds from these accounts can be used to purchase either term-certainty annuities or life annuities.
In contrast, Locked-in Retirement Accounts (LIRAs) can only be used to purchase life annuities. Annuity payments depend on the type of annuity you are purchasing, any options you add, and the interest rate at the time of purchase.
Learn more about types of annuities and how annuities work. LIRAs are regulated by province – and different provinces may mean different rules. In Ontario, they are regulated by the Financial Services Commission of Ontario (FSCO). You can learn more about LIRAs on FSCO’s website.
Jean-Claude J.
If your GIC has been unredeemed for longer than 10 years, you can search for it through the Bank of Canada’s Unclaimed Balances search. The Bank of Canada defines an unclaimed balance as “a Canadian-dollar deposit or negotiable instrument issued or held by a federally regulated bank or trust company that has been transferred to the Bank of Canada after it has been inactive for a period of ten (10) years”. This includes GICs, term-deposits, chequing accounts and savings accounts, to name a few.
If your original investment in the GIC was made less than 10 year ago, or is not found through the website, you may also want to contact your financial institution for more information on how to find your lost GIC.
John
While the steps to buy a first home depend on many factors, there are some general steps you can follow:
Learn about planning to buy a home, saving for a down payment, government help for first-time home buyers, how mortgages work, and other key information to consider when buying real estate.
Marius
The Canada Revenue Agency (CRA) generally defines adjusted cost base (ACB) as “the cost of a property plus any expenses to acquire it, such as commissions and legal fees”. The ACB is used in the calculation of capital gains and losses for income tax purposes.
Investments such as stocks or mutual funds are considered “identical properties,” by the CRA. The CRA has outlined rules as how to calculate the ACB, especially if you acquired units of stocks or mutual funds at different points in time. Generally, you have to average the purchase price of the investment you bought during the year and use this average as your ACB. Learn more about how to calculate the ABC of identical properties from the CRA.
It is important for you to keep all records of your investment transactions and consult your income-tax advisor to properly determine your ACB and calculate your gains and losses for income-tax purposes.
Lindsy
If you purchased the stock options outside of your TFSA, moving them into your TFSA may trigger a tax event. For more information about transferring investments from a non-registered account to a TFSA, read the answer to this Re: Investing question. You can also speak to your financial advisor or contact the Canada Revenue Agency (CRA) for more information on this type of transfer.
The CRA has information on qualified investments for registered plans, including TFSAs. The CRA is the regulatory body in Canada that implements and enforces rules related to registered plans, such as TFSAs. Generally securities purchased for registered plans like TFSAs must be purchased through a designated stock exchange. For more information on stock options in registered plans, visit the CRA’s website.
Susan
Registered Retirement Income Funds (RRIFs) and Tax-Free Savings Accounts (TFSAs) are both accounts registered with the federal government, however they have different purposes. Registered plan rules are regulated through the Canada Revenue Agency – you can learn more about both these plans find contact information through the CRA website.
RRIFs are intended to provide income in retirement, and you must take minimum mandatory withdrawals each year. RRIFs can be set up by converting funds from a Registered Retirement Savings Plan (RRSP). While contributions to RRSPs are tax-deductible, all withdrawals from RRIFs (or RRSPs before you convert them to receive retirement income) are fully taxable in the year withdrawn. TFSAs allow investors to save for any goal tax-free, and contributions are made with after-tax income.
You can’t transfer funds tax-free from a RRIF to a TFSA. You can, however, use funds from a RRIF to add to a TFSA as long as you have available TFSA contribution room. One such type of transfer is an “in-kind transfer”. Like any RRIF withdrawal, you’ll have to include the withdrawal amount as income during tax time.
Anna-Maria B.
For an explanation of how dividends work and the dates to know regarding ownership and dividends, read this previous Re: Investing question.
Following the purchase of a stock, it typically takes three days for the stock to be in your account (settlement date). Therefore, you need to buy the stock at least three days before the record date in order to qualify for the dividend.
If you buy a share ex-dividend, you are still entitled to receive dividends, just not the upcoming declared dividend.
Speak to your financial advisor to find out whether you will qualify for the next dividend for the stock you are considering. Learn more about how stocks work.
Lance H.
By the end of the year you turn 71, you must close your RRSP and convert it to a RRIF, annuity, or take your RRSP as cash (or any combination of these options). Learn more about getting retirement income from your RRSP, and making withdrawals from a RRIF account.
Before you close your RRSP, any withdrawals you make (with the exception of withdrawals as part of the Home Buyers’ Plan or Lifelong Learning Plan) are subject to withholding taxes – the tax level depends on the amount of the withdrawal and your province of residence. You also have to report the amount you take out on your personal tax return as income. At that time, you may have to pay more tax on the money — on top of the withholding tax. It depends on your total income and tax situation. The Canada Revenue Agency has additional information on withdrawal tax rates, and making withdrawals from your RRSP.
Pat
Your personal rate of return is determined using the total value of all of your investments, less the initial amount you paid for them and any fees you paid over a specific period of time, usually annually. You can ask your adviser to calculate your return for you, or you can calculate it yourself using a financial calculator or spreadsheet software. Follow the steps on how to calculate your personal rate of return on GetSmarterAboutMoney.ca.
As part of the new cost and performance rules, you will soon begin to receive an annual performance report using standard formulas explaining how your investments have performed over time. The money-weighted rate of return was chosen as the standard method because it is your personal rate of return, factoring in the impact of deposits and withdrawals from your account – and the dates of these transactions. This method of return is ideal for helping you determine whether you are progressing towards your goals. Learn more about the new report on investment performance.
Tariq
Generally, anyone in the business of selling securities or offering investment advice in Canada must register with a securities regulator, regardless of whether or not the person they are advising is a family member. Registration helps protect investors because securities regulators will only register firms and individuals that meet specific qualifications and standards. Once registered, advisors must adhere to rules set out by securities regulators, including determining the types of investments that are right for you and providing advice that is suitable (or a good fit) to your investment goals and personal situation. If you plan to work with a financial advisor, visit AreTheyRegistered.ca to check if they are appropriately registered to sell investments or provide investment advice. You can also check if the individual or firm has been the subject of disciplinary action (e.g. for failing to comply with the rules and requirements of registration or for misconduct by the firm or individual against the investing public).
Generally, if your advisor is selling securities to the public in Ontario, the securities must be offered under a prospectus (a document that provides detailed information about the security and the company offering it), but there are some exceptions to this rule. For example, in Ontario, if a company is trying to raise money, they may be able to sell to a family member without a prospectus under the Family, Friends and Business Associates prospectus exemption. However, if the company or advisor is involved in selling and advising in those securities, they still need to be registered to do so.
Kent W.
Dividend funds are a type of mutual fund that aims to hold stocks in companies that pay large dividends. The value of a dividend fund depends on the value of the underlying stocks in the fund and the amount of dividend income earned by the fund.
Index funds are also a type of mutual fund but different than a dividend fund. Index funds aim to hold the same stocks or fixed income securities that make up a particular index (for example, the S&P/TSX Composite Index). The value of an index fund generally tracks the performance of the particular index and will usually go up or down as the index goes up or down.
Learn more about these and other types of mutual funds at GetSmarterAboutMoney.ca. Mutual fund companies are required to create a Fund Facts document for the funds they offer so that investors can easily understand the features of the fund at the time of investment. Use this interactive sample to learn how to read Fund Facts and see an overview of what information is found in the document.
James M.
While we try to answer as many questions as we can, we are not able to provide investment advice. With that in mind, there is no portfolio strategy or asset allocation that is right for everyone. Investments that are right for you may not be right for another investor, and vice versa. A registered financial advisor can help you determine the investments that are right for you based on your risk tolerance, financial goals and personal circumstances. Here are some general questions to ask when you are considering an investment.
As you consider your options, be aware of what constitutes a qualified investment in gold or silver in a registered plan such as an RRSP. The Canada Revenue Agency (CRA) has information on what constitutes a qualified investment.
Yvan P.
We aren’t able to provide investment advice so we can’t tell you whether this would be a good investment for you. However, here are some questions you may want to think about before you consider making an investment decision:
Mike
There are some considerations if you’re thinking of moving investments from a non-registered account to a tax-free savings account (TFSAs). TFSAs allow investors to save for any goal and, as the name suggests, grow their investments tax free. Contributions to a TFSA is not tax-deductible (it is after-tax income). However, income earned in the account and withdrawn is generally tax free.
There are certain investments that are permitted in a TFSA – visit the CRA website for a complete list. In transferring a qualifying stock portfolio to a TFSA, you may trigger a tax event. You usually don’t need to sell your stocks first (you may need to sell if you are transferring between financial institutions), but this type of “in-kind” transfer is considered a disposition by the Canada Revenue Agency – meaning you may need to report a capital gain if the fair market value of the stock has gone up since you purchased it. If the stock value has gone down, you cannot claim the capital loss. As tax rules are enforced by the Canada Revenue Agency, if you have questions about this type of transfer, contact them. You can also learn more about TFSAs in this CRA publication: Tax-Free Savings Account (TFSA), Guide for Individuals. You may also want to speak with an accountant or your financial advisor to assist you in determining whether this move is right for you.
Robert N. @lopakakapol
Each province and territory in Canada has a securities regulator. In Ontario, this is the Ontario Securities Commission. You can find a list of each province or territory’s securities regulator from the Canadian Securities Administrators.
The Autorité des marchés financiers (AMF) offers a variety of resources for consumers in Quebec on its website, including information on investing, retirement planning and preventing financial fraud. Through its consumer site you can also talk to an information agent, file a complaint or report suspicious activity. You can find all of this information at http://www.lautorite.qc.ca/en/consumers.html.
Michelle
The Ontario Securities Commission’s Contact Centre educates and helps to protect individual investors. Investors can use the Contact Centre to learn more about companies or products they are interested in or have been approached about. You can also check the registration status of a company or someone offering investment advice.
The reality is that there is a lot of fraud out there and many people and companies are not registered to sell investments in Ontario. Investors can get in touch if they feel they’ve been a victim of fraud. If something does not feel right either with an investment option or with someone who’s trying to give you investment advice, the Contact Centre can help.
Inquiries and complaints can be submitted any way you want to send them; either by fax, email or by phone. If you’re unsure or have any questions, the Contact Centre is here to help. Inquiries can also be answered in over 200 languages.
Toll-free (North America): 1-877-785-1555 (between 8:30 am – 5:00 pm)
Email: inquiries@osc.gov.on.ca
R
A stock option is a contract that gives the buyer the right – but not the obligation – to buy or sell a stock at a specific price on or before a certain date. You don’t have to invest directly in the stock. You can just buy the option. Call options give you the right to buy a stock at a certain price by a certain date. Put options give you the right to sell a stock at a certain price by a certain date. Stock options are complex investments, so ensure you understand how they work before you invest. Learn more about stock options.
The Canada Revenue Agency (CRA) has information on qualified investments for registered plans. The CRA is the regulatory body in Canada that implements and enforces rules related to registered plans, such as TFSAs. Generally securities purchased for registered plans like TFSAs must be purchased through a designated stock exchange. For more information on qualified listed securities, visit the CRA’s website.
Eleana @ziaeleana
When thinking about investments for any savings goal (regardless of whether you will hold them in a registered plan like an RDSP), you should keep in mind your personal and financial circumstances and risk tolerance. Although we can’t provide advice on choosing specific investments, we can help you understand the types of questions you need to ask when choosing investments for any financial goal.
Answering these questions can help you choose an investment asset mix that is right for your personal situation. You may consider speaking with a financial advisor who can help you understand your options and choose your investing strategy.
Sid
If you are using your registered education savings plan (RESP) for post-secondary education, the plan holder can make withdrawals on behalf of the plan beneficiary (student) in the form of educational assistance payment (EAPs). Note that different types of RESPs may have different rules. You can confirm the withdrawal rules of your plan with your plan provider.
To qualify for EAPs (made up of investment earnings and government grant money in the RESP), you must show proof of enrolment in a qualifying educational program. EAPs are taxable in the hands of the student – most end up paying little or no tax as students generally have little additional income (but this isn’t always the case).
In most cases, you choose the amount and timing of the payments. But students can’t get more than $5,000 in EAP payments for full-time programs, or $2,500 for part-time programs, until they complete 13 weeks of a qualifying program in a row.
To learn more about EAPs, and using the money in your RESP, visit Employment and Social Development Canada (ESDC).
Jerry
While we can’t provide investment advice, desired return is one factor many people consider when thinking about investments for their portfolio, however it is not the only consideration. Here are some other questions you might ask yourself before you make a decision:
See more questions to ask before you invest, and learn about the risk characteristics of different asset classes. You may consider working with a financial advisor to help you understand your investment options – if you do, be sure to check their registration.
Jeffrey S.
Generally, securities offered to the public in Ontario must be issued with a prospectus, but there are exceptions. These exemptions are called prospectus exemptions. The offering memorandum (OM) prospectus exemption allows companies to sell securities to a wide range of investors based on an offering memorandum being made available to investors. An offering memorandum is a document that outlines a company’s business and affairs.
Anyone can buy securities under this exemption, but there are limits depending on whether an investor is an eligible or non-eligible investor. There are several ways an individual may qualify as an eligible investor, including having net assets, alone or with a spouse, exceeding $400,000; net income before tax exceeding $75,000 in the previous two calendar years, with an expectation to exceed that level in the current year; and net income, alone or with a spouse, exceeding $125,000 in the previous two calendar years, with an expectation to exceed that level in the current year.
To learn the investment limits for eligible and non-eligible investors visit GetSmarterAboutMoney.ca.
Christena K.
The Registered Disability Savings Plan (RDSP) was introduced in 2008 as a way to allow families and others to save for the future of a person who is eligible for the disability tax credit. Like similar registered plans, rules are set by the federal government and rules are administered by the Canada Revenue Agency.
The Government of Canada makes contributions to RDSPs in the form of either the Canada disability savings grant or the Canada disability savings bond. The amount received depends on contributions made to the RDSP and family income (how family income is determined depends on the age of the beneficiary). The grant and bond are available until the year the beneficiary turns 49.
Entitlements for both the grant and bond can be carried forward, however there are rules and limits to qualify. You can learn more about “the carry-forward measure” from Employment and Social Development Canada. You can learn more about the rules of RDSPs from the Canada Revenue Agency.
Chris
If you leave a defined benefit or defined contribution pension plan before retirement, you have a few options to retain your pension. One of these is to open a locked-in retirement account (or LIRA). A LIRA works much like an RRSP, and you set it up with a bank or other financial institution. This option is usually only available if you are under age 55 at the time of transfer, and, as the name suggests, your money is generally “locked-in” until you retire or reach a certain age.
In Ontario, pensions (and LIRAs) are regulated by the Financial Services Commission of Ontario (FSCO). If you have lost track of your LIRA and are unsure of the financial institution where it was held, you can contact FSCO by email (contactcentre@fsco.gov.on.ca) or phone (1-800-668-0128).
Learn more about LIRAs on FSCO’s website.
Frederick W.
First, we should let you know that insurance isn’t something the Ontario Securities Commission has responsibility for. The Financial Services Commission of Ontario (FSCO) is the best place to seek out information on insurance. That said, we try to help with general information as best we can. We also know that insurance plays an important role in many peoples overall financial planning.
Some insurance providers offer indexed universal life insurance investments accounts that expose you to the equity markets. However, just like any stock market investment, growth is not guaranteed.
Consider whether this type of life insurance fits within your financial plan.
Linda S.
Mutual funds and exchange-traded funds (ETFs) are two distinct products – there is no way to transfer funds directly from one to the other. You must first sell your mutual funds and then purchase ETFs.
You may not be able to purchase ETFs at the same financial institution as you currently hold your mutual funds – this is because ETFs trade like stocks. You need to open a trading account with a full-service or online investment dealer to trade them. Learn more about buying and selling ETFs.
If you are holding the mutual funds in a registered plan, such as an RRSP, you will not need to pay tax on any capital gains from the mutual funds as long as the funds stay within the plan (i.e. you plan to hold the ETFs in the same registered plan). If you are moving funds between two financial institutions, the transfer must be made directly by the financial institution to avoid a tax bill. There may be fees associated with the transfer.
Roland
On Re: Investing we can provide you with general information, but we aren’t able to provide advice. Advice on how you should invest your money can only be provided by a registered financial advisor who can assess your personal financial circumstances, including financial needs, objectives and risk tolerance.
An advisor can help you set your goals, and build a plan to achieve those goals. They can also help you track your progress and adjust your plan when your financial situation changes.
A financial advisor:
Learn more about what to expect from a financial advisor and how to check registration.
Karen
Ethically responsible investing (or socially responsible investing) can refer to either investing in companies or funds that exclude certain industries – for example, armaments, tobacco or environmental hazards – or it may refer to companies that have certain standards or guidelines around the environment, gender diversity or other areas.
As part of The Masters of Money, Rob Carrick gave his take on the case for ethical investing. He points out that ethical investing involves work to find an investment that meets both your financial needs and ethical concerns – it’s important to diversify, for example, choosing investments in more than one sector.
You can read Rob Carrick’s take on ethical investing for more information. Watch this video for an overview of socially responsible investing.
Veronica
We’re glad you contacted us with your question! The types of investment products you can have in a TFSA are set out in income tax rules. You can visit the Canada Revenue Agency’s website to see a list of investments that qualify.
Binary options are said to be like an “all or nothing” wager on how an underlying asset will perform in a limited amount of time. This can make investing in binary options extremely risky, even for seasoned investors. The Canadian Securities Administrators (CSA) are increasingly concerned about binary options trading platforms that are targeting Canadians. The organization recently issued an investor alert to make it clear that no business is currently registered or authorized to sell binary options in Canada. Along with the high investment risk associated with binary options, the online trading platforms used to trade binary options also have a high potential for other frauds (e.g. refusals to credit customers’ accounts or reimburse funds after accepting investors’ money. Even the potential for identity fraud has been linked to scam binary options platforms. Learn more about the risks and frauds associated with binary options.
We strongly encourage you to reach out to our Inquiries and Contact Centre for information. Our Contact Centre also can tell you whether a company is registered to sell investments in Canada. Get in touch by phone (1-877-785-1555) or by email (inquiries@osc.gov.on.ca).
Kelsey @senorsutton
There’s no one mix of investments that’s right for everyone – your portfolio’s investments depend on your risk tolerance and financial goals. Diversification of any kind – not just international diversification – can help you reduce the risk in your portfolio. You may also diversify by choosing investments from different industries or different asset classes (cash, fixed income or equities).
However, there are benefits to international diversification. Because Canada is over-weighted in resource and financial sectors, achieving broad diversification in Canada alone can be challenging. Investing in different international markets can provide exposure to additional market sectors that may be unavailable in Canada. Large markets, like the U.S. can also provide global exposure due to the higher number of large multi-national companies headquartered there.
A financial advisor can help you decide whether international investing is right for your portfolio and financial goals. Learn more about the risks and potential rewards of international diversification.
Robert
Rules regarding treatment and administration of RRSPs are set by the Canada Revenue Agency (CRA). For specific information about how RRSP rules apply to you, contact the CRA. The following is general information only.
You can transfer cash and investments between RRSPs you hold at the same or different financial institutions. Tax will not be withheld if the transfer is made directly by the financial institution and amounts you transfer directly to your RRSP do not affect your RRSP deduction limit. You can’t transfer money from your RRSP to the RRSP of someone else. This applies to any spousal RRSPs that you may be contributing to.
One or both of the financial institutions involved may charge you a transfer fee. How this fee is collected depends on the rules set out in the RRSP agreement you have with your financial institution. Learn more about RRSP transfers.
Bobby @lopakakapol
Thanks for your question, Bobby. Rules regarding treatment and administration of RRSPs are set by the Canada Revenue Agency (CRA). For specific information about your employer’s RRSP contributions, contact the CRA. The following is general information only.
Some employers offer Group RRSPs as a benefit to help employees save for retirement. They are identical to individual RRSPs – only they’re set up by your employer. Your employer’s contributions to your Group RRSP are considered earned and taxable income. However, just like contributions to an individual RRSP, contributions to a Group RRSP – whether made by you or matched by your employer – are tax-deductible to you.
If you are contributing to another RRSP outside of the group RRSP, keep in mind the annual RRSP contribution limits – there are penalties for over-contributions. Learn more about making contributions to an RRSP.
Raymond G.
A tax-free savings account (TFSA) allows you to save for any financial goal, and withdraw money at any time. Your savings grow tax-free, and you don’t need to pay any tax on withdrawals. However, unlike a registered retirement savings plan (RRSP), the money you contribute to a TFSA is not tax deductible – you contribute after-tax dollars.
There are contribution limits. If you contribute too much to your TFSA, you’ll pay a penalty of 1% per month on the excess amount until you remove it. If you over-contribute deliberately, you’ll pay a 100% tax on any gains or income you make on the excess amount. There are also penalties for holding investments that are considered prohibited by the Canada Revenue Agency (CRA).
For more information about TFSAs, visit the CRA website.
Bruce V.
The Ontario Securities Commission does not regulate the Canada Pension Plan (CPP) program. Specific questions and information requests related to CPP should be directed to Employment and Social Development Canada (ESDC).
In general, the amount of CPP you receive depends on:
You can start to receive CPP as early as 60 (at a reduced rate), and as late as age 70 (at an increased rate). Learn more about contributions to the CPP. ESDC offers the Canadian Retirement Income Calculator that you can use to estimate your retirement income from all sources, including CPP using the information from your latest annual CPP statement.
Bedros @bedros50
Your time horizon – the length of time over which you expect to invest your money – is a key consideration when choosing investments.
Investors with short time horizons tend to look for lower-risk investments that are easy to turn into cash. Learn more about saving for short-term goals and ask these 10 questions when choosing a short-term investment. When you have a short time horizon (up to 5 years), there is little time to earn more or make back losses if the investments lose money or deliver poor investment results.
Time can have a big impact on your savings and the investments that are appropriate to help you meet your financial goals. Our recent issue of Investor News looked at the relationship between time and money – read it now, and subscribe to receive the next issue directly to you inbox.
Greg
We aren’t able to provide investment advice, but we always try to provide information to help get you to the next step.
It’s important to remember that very few investments would be fit for all investors, all the time, since appropriateness depends on an individual’s specific financial circumstances and risk tolerance, and many personal factors need to be considered before choosing any investment. A registered financial advisor can help you decide on the types of investments that may work for you, after going through a series of questions to learn your personal circumstances and risk tolerance. Some advisors may also be able to help you make decisions about insurance coverage, tax planning and estate planning. Before you work with an advisor, check that they are registered to sell investments and give advice.
Learn more about the basics of investing, types of investments and registered accounts, and planning your financial future.
Michael
No, it’s not “rigged”, but it is complex.
When you buy and sell investments, your money flows through a network of advisors, dealers and marketplaces. The connections between these and other participants can be complicated for investors to navigate, and this may cause lower investor trust and confidence in the markets. However, one way to gain a better understanding of the market is to work with a registered financial advisor, who can provide access to additional information and help explain complex issues.
The Ontario Securities Commission (OSC) is one of the regulators in Canada that make rules that aim to prevent misconduct and maintain the integrity of the capital markets. The OSC’s role is to look out for those people that work hard and play by the rules and provide protection to them from people who don’t. The OSC is dedicated to delivering on its commitment to protect investors, including a focus on the markets – where you buy and sell your investments. The OSC will continue to promote financial stability through oversight of participants and markets. At the Investor Office we’re here to give you information to help you invest wisely and confidently, and ensure the needs of investors are understood by those who make the rules. Check out InvestorOffice.ca for more information on the OSC’s initiatives to enhance investor protection.
Mary
The limitations period for a proceeding commenced under the Securities Act (Ontario) for securities fraud is 6 years from the date of the occurrence of the last event on which the proceeding is based. How the limitations period is determined can sometimes be a complex analysis, therefore, the OSC is always interested in hearing from anyone who has been defrauded. Among other things, the fraud could be ongoing and there may be opportunities to warn other investors – learn how to contact the OSC.
A legal professional should be consulted to determine the applicable limitations period for a lawsuit in the civil courts.
Ben L.
If you suspect any fraudulent activities in your bank accounts, you should immediately bring your concerns to the attention of your financial institution. If you have been defrauded, bring it to the attention of the police.
Jacques P.
There is no minimum annual withdrawal for RRSP accounts. However, by the end of the year that you turn 71, you must close your RRSP. One option when closing your RRSP is to convert it to a registered retirement income fund (RRIF).
You must start withdrawing money from your RRIF in the year after you open it. The annual minimum withdrawal amount is based on your age on January 1, and you must withdraw at least the minimum amount from each of your RRIF accounts if you have more than one. If your spouse is younger than you, you can use their age to calculate your minimum RRIF withdrawal amount.
Learn more about your options when closing an RRSP.
Bet M.
An annuity is a contract with a life insurance company. When you buy an annuity, you deposit a lump sum of money, and the insurance company agrees to pay you a guaranteed income for a set period of time – or for the rest of your life. Annuities are money commonly used to generate retirement income. Because your annuity income is calculated at the time you buy the annuity, think about the things that affect annuity income: current interest rates, the amount you deposit, your age, your gender, the length of time payments are guaranteed and the options you add. It’s also important to ask about and understand the fees you’ll pay for your annuity. Some annuities can also be used for financial goals other than retirement income – for example, money for your estate or for charity. Learn more about choosing an annuity.
Generally speaking, insurance companies are regulated by the Office of the Superintendent of Financial Institutions (OSFI). However, there may also be provincial regulations that apply.
Syed
You can buy ETFs from an investment dealer through a full-service or discount brokerage. Here are four things to know:
Learn more about how ETFs work and how to buy ETFs.
Yaso
A mutual fund is a collection of investments, such as stocks, bonds and other funds owned by a group of investors and managed by a professional money manager. The investment objective of the mutual fund determines what types of securities it buys. A mutual fund can focus on specific types of investments. For example, a fund may invest mainly in government bonds, stocks from large companies, or stocks from certain countries. Or, it may invest in a variety of investments. Many mutual funds are offered in different series or classes, which are identified by a letter. This letter tells you about its fee structure and other features.
When you buy a mutual fund, you’re pooling your money along with other investors. You put money into a mutual fund by buying units or shares of the fund. As more people invest, the fund issues new units or shares. The investments in a mutual fund are managed by a portfolio manager. They manage the fund on a day-to-day basis, deciding when to buy and sell investments according to the investment objectives of the fund. Learn more about how mutual funds work and consider the risks of this investment.
Pat
While we aren’t able to provide investment advice, we’ll try to help by providing some general information about RRSPs.
As a 65-year old, you can still contribute to RRSPs. In fact, you can do so until you are 71 (by that time you must wind them up and may consider transferring the assets to an income fund such as a RRIF). If you’re in a higher income bracket and still have RRSP contribution room, this may be a way to get a larger tax rebate for the 2015 year (keeping in mind the contribution deadline!). That said, there are more things than taxes to consider when investing in RRSPs – such as the cost of the investment itself, its risks, how it’s performing, and how long you’ll want to stay in that investment (also known as your time horizon). We suggest that you consult a professional advisor or a tax expert on what might be the right choice for you.
Graham
No, you usually cannot add money to an existing Guaranteed Investment Certificate (GIC). The return on your GIC is based on the original amount invested, the interest rate that was set at the beginning, and the funds staying in the investment for the full fixed term (known as the maturation date). If you have additional money that you’d like to put in a GIC, you will need to buy a new one. The interest, fees, and terms being offered to you may be different from what you originally invested in, so be sure to get clear information on the options available to you. Visit GetSmarterAboutMoney.ca for more information on GICs. You may also want to contact the firm or bank that sold you the GIC if you have specific questions about it.
Danny C.
You can take money out of your RRSP before you retire for any reason, but you will be subject to a withholding tax on the money you withdraw, and possibly additional tax on that money at tax time. You’ll also permanently lose the contribution room you originally used to make the contribution.
There are ways you can borrow money from your RRSP tax free – up to certain limits and conditions. The government’s Home Buyer’s Plan allows you to borrow up to $25,000 for your first home, as long as you pay it back over the next 15 years. The government’s Lifelong Learning Plan allows you to borrow up to $20,000 for your education or your spouse’s education, as long as you pay it back over the next 10 years.
Learn more about withdrawing money from your RRSP before you retire.
Terry C.
Online discount brokers are for investors who would like a do-it-yourself (DIY) investing option: Investors who consider themselves DIY investors may choose to forego the assistance of an advisor. Investors can purchase investments and make trades through a registered discount broker that is a member of IIROC. Discount brokerages operate using online platforms. Investors typically pay lower commissions and fees because they don’t get advice about the suitability of the investments they choose to make for themselves. However, discount brokers may provide information on their websites to help clients better understand different types of investments and automated investment tools to help with financial planning or asset allocation.
Learn more about discount brokers and how they compare to online investment advisors and traditional full service investment firms.
Sam
While we aren’t able to provide investment advice, we can provide you with some general information to get started.
Interest is only one type of return you can make on an investment. All investments carry some level of risk, and generally the higher the potential return, the higher the risk. This is called the risk-return relationship. Important considerations when choosing any investment are your time horizon and risk tolerance – how much risk can you handle? Once you answer this question, you can look at investment options for short-term goals or long-term goals.
Regardless of the type of investment you choose, you may consider holding it in a registered or tax-shltered account, such as a TFSA or RRSP. Read this Re: Investing answer to learn more about how they compare.
Laurentina A.
Although we can’t provide you with advice as to how or where to invest your money, we can provide some information to get you started.
If you qualify for the Disability Tax Credit, you may qualify as a beneficiary of a registered disability savings plan (RDSP). RDSPs are federally registered accounts that can help save for the long-term financial security of you or someone close to you with a disability. Contributions to RDSPs are not tax deductible, but savings grow tax free within the plan. There is no tax on investment earnings, as long as they stay in the plan. Depending on where this type of plan is opened, you can hold a variety of investments. Contributions to RDSPs can be made until the beneficiary is 59, and up to age 49, the beneficiary may qualify for government grants and bonds. Learn more about RDSP basics.
P J
If you suspect illegal activity is taking place, whether in the case of dealings that occur in the exempt market or otherwise, it’s a good idea to contact the OSC. While some aspects may be outside our jurisdiction, we can help put you in touch with those who may be able to investigate the information further, such as law enforcement or other associations or regulators.
Members of the public can speak to us by reaching out to our Contact Centre by phone (1-877-785-1555), email (inquiries@osc.gov.on.ca) or via an online form.
George
You can find information about major shareholders in public companies through the System for Electronic Disclosure by Insiders (SEDI). All “reporting insiders” (those who hold more than 10% of shares) are required to file insider reports through SEDI.
Learn more about disclosure documents, annual reports, news releases, company websites, securities regulators and other sources of information on a company.
Anonymous
First, we should let you know that we can’t give you any specific investment or financial advice. That said, we do try to help as best we can.
What you receive depends on what you paid into the plan while you were working and your age when you start receiving payments. The earliest you can start receiving monthly Canada Pension Plan (CPP) payments is at your 60th birthday. If you start taking payments before age 65, your monthly payment will be reduced. After age 65 (up to age 70), it will be increased. Find out more about how your age affects your monthly CPP payment.
Use Service Canada’s Canadian Retirement Income Calculator to estimate your retirement income from all sources, including CPP.
Patricia
First, we should let you know that we can’t give you any specific investment or financial advice. That said, we do try to help as best we can.
Regardless of your age, the right type of investment for you depends on your risk tolerance (your ability and willingness to take on risk) and time horizon. Generally, the shorter your time horizon, the lower your risk tolerance.
First, ask yourself how much risk you’re able to handle. Then how much risk you’re willing to handle. Then figure out your time horizon – how long you plan to hold your investment. Learn about some factors that can affect time horizon, and some examples of investments for different time horizons.
Aaliya K.
First, we should let you know that we can’t give you any specific investment or financial advice. That said, we do try to help as best we can.
There are many differences between TSFAs and RRSPs, and you can read about some of them in this previous Re: Investing question.
TSFAs and RRSPs both offer tax advantages to help you reach your savings goals. If you can afford it, a good strategy is to contribute as much as you can to both. But if you have to choose one over the other, make sure you understand how they differ and make your choice based on your own individual financial and tax situation. You may want to speak with a registered financial professional for advice. Learn more about TFSAs and RRSPs.
David F.
First, we should let you know that we can’t give you any investment or financial advice or provide any information on specific segregated fund investments. That said, we do try to help as best we can.
Segregated (or seg) funds are an investment product sold by life insurance companies, and are regulated in each province and territory (find yours). They invest in one or more underlying assets, such as a mutual fund. Unlike mutual funds, segregated funds provide a guarantee to protect part of the money you invest (75% to 100%). Even if the underlying fund loses money, you are guaranteed to get back some or all of your principal investment. But you have to hold your investment for a certain length of time (usually 10 years) to benefit from the guarantee. You also pay an additional fee for this insurance protection. All segregated funds carry risks associated with this type of investment. Learn more about the risks of segregated funds.
Maria
With the exception of money borrowed from your RRSP to through the Home Buyers’ Plan or the Lifelong Learning Plan, you will be taxed on your RRSP withdrawals. Whether you worked or not does not impact the taxation of RRSP withdrawals. The tax you pay depends on your income and the amount you withdraw. Read more about the tax impact of making withdrawals from your RRSP.
Before the end of the year you turn 71, you must close your RRSP. Learn your options for getting retirement income from your RRSP.
Dot
First, we should let you know that we can’t provide any specific financial or investment advice. That said, we do try to help as best we can.
When considering any type of savings plan or investment, factor in your risk tolerance – your willingness and ability to take on risk. Different investments have different risks. Generally the higher the potential reward of an investment, the higher the risk. If you’re not comfortable losing some or all of your savings, you may consider safer options.
You may also consider holding your savings in a registered education savings plan (RESP) for your child’s future post-secondary education. Among the benefits of RESPs is an annual government grant (subject to age restrictions). Additional grants and bonds are available to lower income families. Learn about government grants and bonds for RESPs.
Jenna S.
Before a company issues shares or other securities to the public, it must file a document known as a prospectus and make it available to any potential investor. The prospectus contains important facts relating to the securities a company is planning to offer to the public, including:
You can find prospectuses and other disclosure documents on the System for Electronic Document Analysis and Retrieval (SEDAR). Some securities, called “exempt securities”, can be sold without a prospectus to certain investors. Some scammers claim to be selling this type of investment, so contact the OSC first if you are offered an exempt security.
Nidhi
There are more than two risks to consider when investing in bonds. Four key risks are:
Learn more about the risks of bonds, and ways to manage this risk.
Gary D.
Resources on GetSmarterAboutMoney.ca, the GetSmarterAboutMoney.ca blog, the OSC website and Re: Investing are available to all investors. While we do not currently have any resources available to order, the resources are available online to print. The OSC website offers electronic copies of brochures covering a wide variety of topics. See a full list of brochures offered by the OSC.
You can find all of the Investor Office’s latest research and reports at InvestorOffice.ca, including our recent publication, The Investor Perspective. Sign up for Investor News, the Investor Office’s email newsletter, to learn more about new resources and upcoming events.
Al P.
We can’t provide advice, only general information. Real estate investment trusts (REITs) are generally riskier investments, so understand all the risks before you consider this type of investment – use this Risk by asset class infographic to see how REITs compare to other investments.
REITs are publicly traded companies (on stock exchanges) that own or operate income-producing real estate. REITs are a type of income trust, which allows companies to pay out their earnings in dividends directly to investors on a regular basis. In exchange, the investors pay the taxes on the earnings, not the trust. This tax treatment means income trusts may offer higher yields to investors. REITs are subject to the same risks as any real estate investment, including quality of the properties and changes in the real estate market. Income trusts can stop paying distributions to investors at any time. This may make the income trust less attractive to investors, which could lower the share value or make it hard to sell the investment.
Domenic
The stock market brings together people who want to buy stock (shares in a company) with those who want to sell. When you buy stock (or equity) in a company, you receive a piece of the company and become a part owner. Learn more about stocks and the stock market.
You buy stocks through an investment firm, commonly known as a brokerage firm (this may be online), through a representative or advisor (a stockbroker or broker) who places the orders for you.
You may also invest in the stock market through investments such as mutual funds or exchange-traded funds, which hold a collection of investments that often include stocks.
Learn more about investing basics and risk. Before you consider investing in the stock market, understand the risks involved and the risk-return relationship.
Jill
Labour-sponsored investment funds (LSIFs) invest in companies developing new products or markets. You can buy an LSIF from an investment firm or directly from the mutual fund company. The costs may include management fees, performance fees, sales commissions and early redemption fees.
These ventures can be risky, so consider these things if you’re thinking of buying an LSIF:
Learn more about LSIFs.
Edith S. @edithskidmore@ymail.com
The best way to determine the price you paid for a stock is to keep the original purchase receipt; however, if you don’t have this information, you have some other options.
If you bought the shares in the brokerage account where you now hold them, your holdings screen or monthly statement shows a “book value” or “cost value”. That’s your cost, according to the brokerage and it’s what they’ll report to the Canada Revenue Agency on your annual trading summary. Sometimes these values are not exact, but they’re usually close enough.
If your shares are in a different account from where you originally held them, when you transferred the shares, your old brokerage likely provided the new brokerage with the book value. If they didn’t, you may wish to contact your previous broker.
Andt
Return on equity (or ROE) is a financial ratio used to measure the profitability of common shareholder equity in a company, and is expressed as a percentage. ROE gives shareholders a sense of how well their money is being used to create profit, and is often referenced in the media and stock analyst reports. You can use ROE to compare profitability of different companies, ideally within the same industry.
At its simplest, ROE is calculated as:
Net income (revenue – expenses) / Shareholder equity
For example, if a company’s net income is $8 million and its shareholder equity is $50 million, its ROE is 16% (ROE = $8 million / $50 million).
Learn about some other indicators used to assess stocks.
Victor
A registered retirement savings plan (RRSP) is an account, registered with the federal government that you use to save for retirement. You can hold a variety of investments in an RRSP, including cash, GICs, bonds, mutual funds, ETFs and individual stocks. Individual stocks can be held within an RRSP or within a regular investment account. Before choosing your investment approach, or any specific investment, consider the risk involved, your risk tolerance and your time horizon.
The money you put into an RRSP is tax-deductible, and your savings are sheltered from tax until you start withdrawing funds in retirement. Learn more about RRSPs. The money you put into a regular investment account is not tax-deductible and any earnings, capital gains (or losses) are subject to tax in the year they are realized.
Carol M.
A dividend is part of a company’s profits that it pays to shareholders. The Board of Directors sets the amount. When a common or preferred share has an upcoming dividend, there are a few terms and dates you should be aware of:
If you buy a share ex-dividend, you are still entitled to receive dividends, just not the upcoming declared dividend. Learn more about how stocks work.
Julie D.
Yes, our introduction video to the new Investor Office is available in both English and French:
Maria
First, we should let you know that insurance isn’t something the OSC has responsibility for. The Financial Services Commission of Ontario (FSCO) is the best place to seek out information on insurance. That said, we try to help with general information as best we can. We also know that insurance plays an important role in many peoples overall financial planning.
Both whole and universal life insurance policies (types of permanent insurance) include savings components that may be used for retirement and estate planning purposes.
With any insurance option, make sure you read and understand the policy and ask questions before making a decision. Learn more about permanent life insurance, and how the investment proceeds or cash value can be used.
Jean L.
Thanks for your question! First, we should let you know that we can’t give you any specific investment or financial advice. That said, we do try to help as best we can.
No one can predict how interest rates will change over time. If interest rates are high when you buy your annuity, your annuity payments will be higher than if interest rates were low. That’s because the financial institution predicts it can earn more by investing your money.
But there are other factors that can affect annuity income – the amount you deposit, your age, your gender, the length of time the payments are guaranteed and the options you add. Read these tips for choosing an annuity to see what you can do to get the best value for your investment.
Pierre I.
The Deposit Insurance Corporation of Ontario (DICO) is an agency of the Province of Ontario that is unrelated to the Ontario Securities Commission.
DICO provides deposit insurance for credit unions and caisses populaires in Ontario in the case that your credit union goes out of business. DICO provides up to $100,000 of coverage for deposits in unregistered accounts, and unlimited coverage for deposits in registered plans.
Learn more about DICO and types of deposits covered.
Peter L.
Before you invest in a mutual fund, understand what fees you pay directly, such as sales charges, and what fees the fund pays, such as management fees and operating expenses. The fund’s management fee and operating expenses make up a fund’s management expense ratio (MER).
You can find information about fees in a mutual fund’s Fund Facts document – you should be able to find this short and easy-to-read document online for each fund you are considering.
See an example of Fund Facts and learn more about mutual fund fees.
Lee
Online investment advisors, often referred to as “robo-advisors”, are now registered to operate in Ontario. They offer professional money management services to investors by using an interactive website.
Despite what the name might suggest, robo-advisors in Ontario are not entirely-automated computer systems that generate and deliver investment advice – a registered financial advisor is involved in and responsible for the investment decisions that are made for investors through these online channels.
Learn more about robo-advisors in our recent publication.
Susan I.
Crowdfunding allows businesses to raise capital from a potentially large number of investors.
On November 5, 2015, the securities regulatory authorities in Ontario, Manitoba, Quebec, New Brunswick and Nova Scotia approved crowdfunding as a way for certain firms to raise capital, subject to rules designed to help protect investors. Subject to approval by the Minister of Finance, the crowdfunding rules will come into force on January 25, 2016.
Ken
Here are some key TFSA and RRSP differences:
Learn more about TFSAs, RRSPs and how they compare.
Wayne
Money market funds invest in short-term fixed income securities such as government bonds, treasury bills, bankers’ acceptances, commercial paper and certificates of deposit. They are generally a safer investment (although no investment is completely risk-free), but with a lower potential return than other types of mutual funds.
Canadian money market funds try to keep their net asset value (NAV) stable at $10 per security.
Michael H.
GetSmarterAboutMoney.ca is a website founded by the OSC that provides unbiased and independent financial tools to help investors make better financial decisions. The website was managed by Investor Education Fund (IEF), an independent non-profit organization founded by the OSC, until April 2015 when IEF merged with the OSC’s Office of the Investor to create the new Investor Office.
GetSmarterAboutMoney.ca has a variety of articles, calculators, quizzes, videos and infographics that cover a wide range of investing and personal finance topics.
Robert C.
The Investor Advisory Panel (IAP) is an initiative by the OSC to enable investor concerns and voices to be represented in its rule and policy making process. The IAP’s mandate is to solicit and represent the views of investor on the Commission’s policy and rule making initiatives.
Learn more about the IAP and its members.
Elizabeth A.
Be suspicious of any unsolicited email, letter or phone call offering you “high-return, no-risk” investment advice or products. No investment is risk free. Do your own research and be wary of acting on “hot tips” or “limited-time offers”.
Learn more signs of investment fraud and some ways to avoid investment scams.
Madeleine M.
To find out when the next OSC in the Community presentation is happening, and to register, visit the OSC’s event page.
Paul H.
In general, anyone who sells securities in Ontario or provides advice about investing in securities must be registered with the OSC. There are different categories of registration that may limit what a dealer or adviser may do.
You can check registration to find out if a person or company is registered and in which category.
Vesna C.
In general, a “reporting issuer” is a corporation that has issued securities to the public. Check the OSC’s Reporting Issuer List to see if a company is currently a reporting issuer (or publicly traded company) in Ontario. If you believe a company is a reporting issuer in Ontario but do not see it listed, contact us.
Christine C.
The OSC’s Investor Office was created to give investors information to help them invest wisely and confidently, ensuring their needs are understood by those who make the rules, and to share their voice with the boardrooms of Bay Street.
The Investor Office sets the strategic direction and leads the OSC’s efforts in investor engagement, education and outreach. The Office also advocated for and supports OSC objectives and policy priorities to advance investor protection.
You can learn more about the Investor Office’s role in The Investor Perspective.
Patrick L.
The OSC is a self-funded Crown corporation, accountable to the Ontario Minister of Finance. The OSC operates under the direction of the Commission. The Commission has two related but independent roles. It serves as the board of directors of the Crown corporation, and it performs a regulatory function, which includes making rules and policies and adjudicating administrative proceedings.
Learn more about the Commission, and read the current Commissioner biographies.
Maria P.
The Ontario Securities Commission (OSC) is an independent Crown corporation that is responsible for regulating the capital markets in Ontario. Our statutory mandate is:
To provide protection to investors from unfair, improper or fraudulent practices and to foster fair and efficient capital markets and confidence in capital markets.
Learn more about the OSC.
James H.
The Mystery Shopping for Investment Advice report described the results of a mystery shop of different types of advisor across Ontario between July and November 2014. The report, released in September 2015, was a joint initiative of the OSC, IIROC and MFDA. The purpose of the mystery shop was to assess retail investors’ experiences and to evaluate the investment advice process.
You can read the full report on the OSC’s website.
Eric C.
The OSC’s 2015 Annual Report, Putting Investors First since 1933, is available now on the OSC’s website.
Eden K.
In Canada, self-regulatory organizations (SROs) regulate their members’ standards of practice and business conduct in order to promote investor protection. Canada has two main SROs in the financial sector, one of which is the Mutual Fund Dealers Association of Canada (MFDA).
The MFDA sets and enforces rules for mutual fund dealers and disciplines member firms and individuals. Learn more about how regulators protect investors.
Sandra C.
Educational requirements depend on the type of advice being given, and/or the products being sold. Before you work with an advisor, check that they are registered in your province or territory.
You can learn about registration categories and educational requirements by reading this infographic.
Carol W.
In Canada, self-regulatory organizations (SROs) regulate their members’ standards of practice and business conduct in order to promote investor protection. Canada has two main SROs in the financial sector, one of which is the Investment Industry Regulatory Organization of Canada (IIROC).
IIROC sets and enforces rules for investment dealers and for equity marketplaces like the Toronto Stock Exchange and TSX Venture Exchange. It also monitors trading on those marketplaces, approves training courses and disciplines member firms and individuals. Learn more about how regulators protect investors.
Lola K.
The OSC’s Enforcement branch is responsible for investigating and litigating breaches of the Securities Act (Ontario) and seeking orders in the public interest before the Commission and the courts. This may include addressing tips that come from investors through the OSC’s Inquiries & Contact Centre.
Learn more about enforcement proceedings.
Dee L.
CRM2 is a set of new requirements that the Canadian Securities Administrators (CSA) are implementing to ensure investors receive essential information about the costs and performance of their investments. The new requirements, part of the Client Relationship Model Phase 2 (CRM2) cost and performance reporting requirements, apply to all firms registered to deal in securities or act as portfolio managers. The requirements will be phased in over three years, having started July 15, 2014.
For more information, read about cost and performance rules.
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This website is brought to you by Ontario’s Investor Office. The Investor Office 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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