Invest

These days, an independent investor can manage his or her portfolio with a few clicks and be the master of his or her own financial destiny. Far from being marginal, nearly a quarter of Quebec investors now do independent investing

Investments are often compared to purchasing a car: each model is good for certain people for different reasons. Also, in the world of investments, two vehicles in particular are currently attractive to investors: mutual funds and exchange traded funds (ETFs). In order to make an informed decision, here are the main differences between these two investment solutions.

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What is an investment fund, you might ask. An investment fund (or mutual fund) is an investment that pools your money with that of other investors to purchase a portfolio of individual securities. The fund units you own represent your share of the fund's investment portfolio.

Exchange traded funds (ETFs) are a popular choice for investors (small and large) in Canada and across the globe for many reasons. They are similar to mutual funds, but trade like stocks. When you hear the expression “buy the index”, it refers to buying an ETF, which acts like the index it follows. ETFs can be a great way to access passively managed exposure to a particular index, but some can do more harm than good. As an investor, you will want to mitigate the various ETF risks by educating yourself and consulting a trusted advisor to come up with the best strategy for your lifestyle.

While money contributed to an RRSP is taxable when withdrawn, contributions to a TFSA are made with after-tax dollars and are not subject to any further taxation. As a result, every dollar in a TFSA will be earning tax-free interest.

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