Investing 101 For Canadian
Investing simply means putting your money to work so it can make more money.
Learning how to invest can mean different things to different people. It can unlock your inner potential and awaken dreams buried deep within you. When you take control of your investment decisions, you’ll realize your ability to learn new skills and achieve goals, which will become a source of great excitement.
Even if you are a novice investor or lack sufficient knowledge about money, investing is a crucial part of your life journey.
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Why invest? Why is investing so important?
Whether you’re saving for retirement, housing, education, or your future, investing can help you grow your money. Keeping your money in a savings account might not earn enough interest to outpace inflation. In most cases, achieving financial goals requires the growth and income that come from investing.
Investment Essential—Compounding
Compounding involves reinvesting your investment returns to generate additional earnings and growth. When you reinvest your returns, you not only earn on your original investment but also on the new earnings. This growth is exponential, and over time, the effects of compounding can quickly accumulate and accelerate your financial growth.
You can use a compound interest calculator to see how your investments will grow over time:
One of the most effective ways to harness the power of compounding is to start investing early and set up a Pre-authorized debit(PAD).
Investment Essential—Pre-authorized debit(PAD)
A PAD allows investors to apply through designated fund sales agencies to invest in a fund by agreeing on the deduction date, amount, method, and the name of the fund. The sales agency will automatically deduct and purchase the fund from the investor’s designated bank account on the agreed date.
Setting up a PAD with Ai Financial means you can regularly invest from your bank account to your designated investment account (TFSA/RRSP/RESP/Non-Registered, etc.) on a weekly, bi-weekly, or monthly basis. Once you start regular investments, the long-term growth of your funds will pleasantly surprise you.
- Start small, save more: Choose an amount that suits you. Even small savings can grow significantly over time.
- Effortless saving: By making automatic regular contributions to your investment account, you can save without effort.
- Maintain control of your funds: You can change, pause, or cancel your contribution amount and frequency at any time.
Investment Essential—Inflation
Inflation refers to the rise in prices of goods and services over a period of time, accompanied by a significant decline in purchasing power. A higher inflation rate means prices are rising faster, and the purchasing power of your money may not match its current value in the future. Typically, wages do not increase at the same pace as inflation.
To ensure your money grows over the long term, you need to earn a post-tax return that exceeds the inflation rate. For example, if the inflation rate is 3% per year (based on Canadian data) and the marginal tax rate is 43%, you would need a return of 5.32% per year to maintain the same purchasing power in the future. Investing is a way to outpace inflation, although it comes with higher risks compared to savings or deposit accounts, but it also offers potentially higher returns.
Investment Essential—Leverage
Leverage, or gearing, refers to investing with borrowed money, allowing you to make investments several times the original amount. The goal is to achieve multiple returns relative to the investment’s performance. When chosen correctly, leveraged investments can significantly reduce transaction costs, increase capital efficiency, and boost profitability, helping investors reach their financial goals faster.
Canadian financial institutions like B2B Bank and iA offer leverage products specifically for financial investments, such as investment loans. In addition to enhancing investment profitability, these loans can be part of a tax-advantaged financial strategy since loan interest can be tax-deductible. For investors with a higher risk tolerance looking to increase their portfolio value, this can be an ideal solution.
Investment Planning
Ask Yourself a Few Questions First
Planning your investment goals, initial capital, time horizon, and risk level can make your personal investment process smoother. Before exploring different types of investments, ask yourself the following questions:
Think about why you are investing. Is it for retirement, early retirement, buying a property, or entertainment expenses? Clearly define your goals and how much you want to earn from your investments. This will also determine when you need to start and how much initial capital you will need.
Review your bank account: “How much idle money do I currently have for investing? Do I have any short-term plans that require money?”
You can calculate your initial investment amount based on the average return rate of the U.S. stock market. For example, “If I want to earn $150,000 in 5 years, and the average market return is 14%, how much do I need to invest now?”
Determining your time horizon depends on your investment goals and when you will need to use the funds. For long-term goals like retirement, you might consider reinvesting returns to achieve annual compound growth, which can accelerate the growth of your funds.
Your risk tolerance can be classified as conservative, moderate, or aggressive. Your risk tolerance determines the types of investments you can choose. For example, if you have short-term goals, you might consider lower-risk investments (conservative). For long-term goals, you may be able to tolerate more market fluctuations (aggressive).
The financial market is unpredictable, and investors have a wide variety of plans and products to choose from. The flood of news and market noise online can affect your judgment and make managing your investments challenging.
The Ai Financial advisory team is always available to offer free assistance and professional advice. They can help you thoroughly analyze your financial goals, create a customized investment plan, and recommend suitable investment options to help you achieve your goals. Working with a personal professional advisor can simplify the process and relieve you from making major decisions alone.
Choosing the Right Investment Advisor to Work With
Use our online book tool to make a appointment with our investment specialist.
Investment Accounts in Canada
GOAL-BASED SAVINGS
Grow your money, tax-free, and make withdrawals at any time. Enjoy significant returns from our long-term investment strategy: tax-free.
RETIREMENT SAVINGS
Great for: Saving for retirement while receiving tax benefits. AiF investment options are designed to meet your future goals.
FIRST HOME BUYING
Great for: Saving for retirement while receiving tax benefits. AiF investment options are designed to meet your future goals.
CHILD EDUCATION
Grow your money, tax-free, and make withdrawals at any time. Enjoy significant returns from our long-term investment strategy: tax-free.
RETIREMENT SAVINGS
An extension of your Registered Retirement Savings Plan (RRSP), but instead of putting money in, you withdraw from it to use throughout retirement.
RETIREMENT SAVINGS
Keep your savings safe for retirement
A locked-in retirement account keeps the money in your old pension plan set aside until you retire.
LARGE SUM OF MONEY
A general investment account where you can invest in a wide-rage of assets and are required to pay taxes annually on income generated by the account.
Non-Registered Accounts is a good supplementary strategy when the registered account assets reach the limit.
Each of these accounts has its unique benefits and suitability depending on your financial goals.
Your accounts are highly secure:
All accounts we open for clients are held with the respective fund companies, such as iA Financial, Manulife, Sun Life, Equitable, Canada Life, TD Insurance, BMO Insurance, and RBC Insurance. As an agency, we do not have the authority to directly manage your account; all transactions require your explicit authorization.
Products & Services
Choosing investment products is closely related to your account type and risk tolerance. Many investors diversify their investments across different asset classes to maintain a balanced portfolio.
Please note that registered plans (such as RRSP and TFSA) are limited to holding investments that qualify under the plan’s rules.
Ai Financial primarily offers two main product purchasing channels: segregated funds and investment loans.
INVESTMENT TOOLS
AiF provides Segregated Fund (Seg fund) from Canadian Insurance Companies (e.g., Manulife, Canada Life, iA, Sun Life, Equitable Life).
Our strength lies in our track record: achieving a 20%+ average annual return over the past decade.
SOURCE OF FUNDS
AiF provides Investment Loan & RRSP Loan from Canadian Tier 1 or Tier 2 Scheduled banks or Credit Unions (e.g., B2B Bank, Manulife Bank, iA Trust, National Bank, DUCA).
Investment loans provide a great boost to your initial capital, allowing you to leverage smaller amounts for rapid wealth appreciation.
SOURCE OF FUNDS
RRSP Loan
AiF provides Investment Loan & RRSP Loan from Canadian Tier 1 or Tier 2 Scheduled banks or Credit Unions (e.g., B2B Bank, Manulife Bank, iA Trust, National Bank, DUCA).
AiF Services
- Open Accounts
Our clients’ accounts are directly opened with Canadian insurance companies, fund companies, banks, and other institutions. As agents, we do not directly handle client funds, ensuring the safety and security of their accounts and assets.
- Account Transfers
For those with existing accounts at other institutions, we facilitate seamless transfers with a simple statement from your current institution.
If you lack sufficient funds, we can help you secure investment loans.
- Loans from Canadian Tier 1 or Tier 2 banks or Credit Unions (e.g., B2B Bank, Manulife Bank, iA Trust, National Bank, DUCA).
- Loans must be invested in Segregated Funds with Canadian. Insurance Companies (e.g., Manulife, Canada Life, iA, Sun Life, Equitable Life).
- Investment loans have a 20-year term but can be canceled anytime.
- Interest-only payments are required; the current rate is Prime + 0.75% (7.95% as of June 3, 2024).
Example: For a $100,000 loan, the monthly interest payment is $673.97. - With an average annual return of 21.6%, borrowing to invest can be highly profitable.
Leverage with Caution
Investment loans are a leveraging tool and may not be suitable for everyone. Qualification is determined by the banks, and AiF can often assist clients who were previously denied elsewhere.
All investment funds are placed with Canadian Insurance Companies in Segregated Funds, combining mutual fund growth potential with insurance guarantees, protecting 75% of your principal under certain conditions.
All investment accounts are in your name, with funds transferring directly from your bank account to your investment account with the insurance companies. AiF does not have access to your funds.
AiF acts as your investment advisor, providing financial advice and managing your investment accounts.
Open an account with as little as $50, making investment accessible to everyone.
By carefully selecting investment products that match your financial goals and risk tolerance, you can build a portfolio that helps you achieve long-term financial success.
Why Ai Financial
Investment is a long-term strategy (at least 5 years). The best time to start was 20 years ago; the second-best time is now. Don’t wait until you need money to start planning. Begin now to secure your financial future.
Cash Flow Solutions for Everyone
Everyone needs effective cash flow management.
Proven Track Record
Over the past 10 years, clients following AiF's advice have seen an average annual return of 21.6%, effectively doubling their principal every 4-5 years.
Renowned and Trusted Brand
AiF is a well-known brand in the financial sector, boasts around 900 Google reviews with an average rating of 4.9/5.0.
Ready to Invest? We can help!
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