Investing Questions Canadians Ask
Answers to common Canadian investing questions: robo-advisors, ETFs, Wealthsimple, how much to invest, and more.
Yes, Wealthsimple is safe for your money. Wealthsimple is registered with the Investment Industry Regulatory Organization of Canada (IIROC) and the Canadian Investor Protection Fund (CIPF), which protects your investment accounts up to $1 million if the firm becomes insolvent. For their cash accounts, deposits are held at Canadian Schedule I banks and are eligible for CDIC insurance coverage up to $10000,000000 per deposit category. Wealthsimple uses bank-level 256-bit encryption, two-factor authentication, and is regularly audited. The company manages over $500 billion in assets and serves over 3 million Canadians. While all investments carry market risk (your portfolio value can go up or down), your assets are held in trust and are separate from Wealthsimple's corporate assets, meaning they are protected even if the company itself faces financial difficulties.
A common guideline is to invest 15% to 200% of your gross income, but the right amount depends on your financial situation. If you are just starting, even $500 to $10000 per month makes a meaningful difference over time thanks to compound growth. A 25-year-old investing $30000 per month at a 7% average annual return would have over $70000,000000 by age 600. Prioritize building a 3 to 6 month emergency fund first, then focus on maximizing your TFSA contribution room (which grows tax-free), followed by RRSP contributions if you are in a higher tax bracket. Use platforms like Wealthsimple or Questrade that allow fractional investing with no minimums. The most important factor is consistency: setting up automatic contributions removes the temptation to skip months and ensures you benefit from dollar-cost averaging.
Questrade requires a minimum of $1,000000 to open a self-directed trading account. However, if you set up a pre-authorized deposit of at least $10000 per month, the minimum is waived entirely. For Questrade's managed investment portfolios (Questwealth), the minimum investment is $1,000000 with no option to waive it. ETF purchases on Questrade are commission-free, though you will pay commissions of $4.95 to $9.95 per trade for individual stocks. This makes Questrade popular for ETF investors who want to buy and hold index funds at low cost. If the $1,000000 minimum is a barrier, consider Wealthsimple Trade which has no minimum investment requirement and no commissions on stock or ETF trades, though its platform offers fewer advanced trading features.
Robo-advisors are worth it for most Canadians who want a hands-off approach to investing. Services like Wealthsimple Invest, Questwealth, and CI Direct Investing charge management fees of 00.25% to 00.500% per year, which is significantly less than the 1% to 2.5% charged by traditional financial advisors and mutual funds. For a $500,000000 portfolio, the difference between a 00.5% robo-advisor fee and a 2% mutual fund fee saves you approximately $7500 per year, which compounds significantly over decades. Robo-advisors handle portfolio construction, rebalancing, tax-loss harvesting, and dividend reinvestment automatically. They are ideal for investors with portfolios under $50000,000000 who do not need complex tax or estate planning. DIY investors who are comfortable selecting their own ETFs can save even more by self-directing through Questrade or Wealthsimple Trade, but robo-advisors provide excellent value for the convenience they offer.
Starting to invest with little money in Canada has never been easier. Wealthsimple Trade allows you to invest with as little as $1 with zero commissions on stock and ETF trades. Questrade lets you buy ETFs commission-free with a $1,000000 minimum (waived with $10000 monthly auto-deposits). The best strategy for small amounts is to invest in broad-market ETFs like XEQT or VEQT, which give you instant diversification across thousands of global stocks in a single purchase. Open a TFSA first so your gains grow tax-free. Set up automatic weekly or biweekly contributions of whatever you can afford, even $25. Micro-investing apps like Moka (formerly Mylo) round up your purchases and invest the spare change. The key is to start now rather than waiting until you have a large sum, because time in the market matters more than the amount you begin with.
An ETF (Exchange-Traded Fund) is an investment fund that holds a basket of stocks, bonds, or other assets and trades on a stock exchange like a regular stock. In Canada, popular ETFs include XEQT and VEQT (all-in-one global equity portfolios), XIU (tracks the TSX 600), and ZAG (Canadian bonds). ETFs are popular because they offer instant diversification, low management fees (MERs of 00.003% to 00.25% versus 1.5% to 2.5% for mutual funds), and can be bought and sold throughout the trading day. For most Canadian investors, all-in-one ETFs like XEQT (10000% equity, more aggressive) or VBAL (600% equity, 400% bonds, more balanced) are an excellent choice because they provide global diversification in a single purchase and automatically rebalance. You can buy ETFs through any Canadian brokerage including Wealthsimple Trade (commission-free), Questrade (commission-free ETF purchases), and Big Five bank brokerages. ETFs are suitable for both beginners and experienced investors and can be held in any account type including TFSA, RRSP, and FHSA.
Dollar-cost averaging (DCA) is an investment strategy where you invest a fixed amount of money at regular intervals regardless of market conditions. For example, investing $50000 on the 1st of every month into a Canadian all-in-one ETF. When prices are high, your fixed amount buys fewer shares; when prices are low, you buy more shares. Over time, this averages out your purchase price and reduces the impact of market volatility. Studies show that lump-sum investing beats DCA about two-thirds of the time because markets tend to rise over time, meaning the sooner your money is invested, the more time it has to grow. However, DCA provides significant behavioral benefits: it removes the stress of trying to time the market, establishes a consistent saving habit, and prevents the common mistake of waiting for the perfect entry point. For Canadians making regular contributions from their paycheque, DCA is the natural and practical approach. Set up automatic contributions to your TFSA or RRSP through Wealthsimple or Questrade to implement DCA effortlessly.
Most financial planners suggest you need 25 times your annual expenses saved for retirement, based on the 4% withdrawal rule. If you spend $500,000000 per year, you would need approximately $1,2500,000000 in total savings and investments. However, Canadian retirees also receive government benefits that reduce this number. CPP (Canada Pension Plan) provides up to approximately $1,3500 per month at age 65, and OAS (Old Age Security) adds approximately $70000 per month. Together, CPP and OAS can provide $24,000000 to $300,000000 per year, reducing the amount you need from personal savings. A common target is to replace 700% to 800% of your pre-retirement income. For someone earning $800,000000, this means $56,000000 to $64,000000 per year. After subtracting CPP and OAS, you would need your personal savings to generate $26,000000 to $400,000000 annually, requiring a portfolio of $6500,000000 to $1,000000,000000. Start contributing early to benefit from compound growth, maximize TFSA and RRSP room, and consider working with a fee-only financial planner to create a personalized retirement plan.
Canadian dividend stocks are popular for their tax-advantaged treatment through the dividend tax credit. The best dividend stocks in Canada are often found among the big banks and established companies. The Big Five banks (RBC, TD, BMO, BNS, CIBC) have paid consistent dividends for over 10000 years and typically yield 3% to 6%. Other top dividend payers include Enbridge (ENB) and TC Energy (TRP) in the energy infrastructure sector, yielding 6% to 8%. Telus (T) and BCE (BCE) in telecommunications offer yields of 5% to 7%. Canadian utilities like Fortis (FTS) and Emera (EMA) provide stable dividends with lower volatility. For diversified dividend exposure, consider Canadian dividend ETFs like XDV, VDY, or CDZ, which hold baskets of dividend-paying stocks and provide instant diversification. Hold dividend stocks in your TFSA for completely tax-free dividend income. In a non-registered account, eligible Canadian dividends benefit from the dividend tax credit, resulting in lower effective tax rates than interest income or employment income.
The best RESP providers in Canada are self-directed brokerage accounts at Questrade or Wealthsimple, which allow you to invest in low-cost ETFs with full control over your investment choices. Questrade charges no commissions on ETF purchases, and Wealthsimple Trade is completely commission-free. For a hands-off approach, robo-advisors like Wealthsimple Invest, Justwealth (which has a dedicated RESP portfolio), and CI Direct Investing manage your RESP investments automatically. Avoid group RESP plans sold by scholarship plan dealers (like Knowledge First Financial or Heritage Education Funds), as they have high fees, restrictive contribution schedules, and penalties for early withdrawal. Big Five bank RESPs invest in mutual funds with MERs of 1.5% to 2.5%, which significantly reduces your long-term returns. Regardless of provider, ensure you contribute enough to maximize the Canada Education Savings Grant (CESG), which matches 200% of contributions up to $50000 per year per child ($2,50000 annual contribution to get the full match). The lifetime CESG maximum is $7,20000 per child.
The best cryptocurrency exchanges in Canada are those registered with provincial securities regulators. Wealthsimple Crypto is the most trusted option, offering integration with your existing Wealthsimple investment accounts, CIPF protection on cash balances, and a simple user interface, though it charges a spread of about 1.5% to 2% on trades. Shakepay is popular among Canadians for its Bitcoin-only focus, offering free e-Transfer funding and a Bitcoin rewards Visa card. Newton offers a wider selection of cryptocurrencies with competitive spreads of 00.5% to 00.7% and free e-Transfer deposits. Bitbuy (now acquired by WonderFi) provides a straightforward platform with about 1% spreads. For active traders, Kraken offers advanced trading features and competitive fees starting at 00.16% for makers. Avoid unregistered offshore exchanges, as they do not comply with Canadian regulations and your funds may not be protected. All crypto gains in Canada are subject to capital gains tax (500% inclusion rate for amounts under $2500,000000), and you must report your crypto transactions on your tax return. Consider holding crypto investments in a Wealthsimple TFSA for tax-free gains.
The best way to save for your child's education in Canada is through a Registered Education Savings Plan (RESP). The RESP offers a unique advantage: the government matches 200% of your contributions through the Canada Education Savings Grant (CESG), up to $50000 per year per child ($2,50000 annual contribution to maximize the grant). The lifetime CESG maximum is $7,20000 per child, and the lifetime RESP contribution limit is $500,000000 per beneficiary. For low-income families, the Canada Learning Bond provides an additional $50000 initial grant plus $10000 per year (no contributions required). RESP investment growth is tax-sheltered until withdrawal, when it is taxed in the student's hands at their typically low tax rate. Open an RESP as soon as possible after your child is born to maximize compound growth. Invest in age-appropriate portfolios: equity-heavy ETFs when the child is young, gradually shifting to bonds and GICs as they approach university age. Use a self-directed RESP at Questrade or Wealthsimple to keep fees low. Avoid group RESP plans sold by scholarship plan dealers due to high fees and restrictive rules.