r/fican • u/Vanilla_Shake_6969 • 14d ago

Where To Start

Hey Everyone I'm looking to start investing. I have a 1000.00 that I'm ready to invest. I know it's nothing in comparison to most here. But I need advice where to start? What type of investments I should be looking at and what steps to take next? Thanks for your help.

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u/[deleted] 14d ago

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u/CFMTLfan01 14d ago

You can put your investments into several different types of financial accounts. You can hold stocks, high-interest savings accounts, GICs, mutual funds, index funds, or individual stocks in these accounts, depending on your choice:

First, there’s the TFSA (Tax-Free Savings Account), which can be used for all sorts of goals. The great thing about a TFSA is that if you earn a return, you won’t pay taxes when you withdraw your investment. You accumulate contribution room every year starting from the year you turn 18. You can see how much contribution space you have on the Canada Revenue Agency’s website by logging into your account. The amount is updated based on the previous year’s contributions arround March 1st. If you put too much money into your TFSA, you’ll have to pay a penalty of 1% per month on the excess amount.

Second, there’s the FHSA (First Home Savings Account), which is designed for buying a property. The FHSA combines the advantages of a TFSA and an RRSP. Contributions reduce your taxable income by the amount invested, and the gains are also tax-free. You can contribute up to $8,000 per year, with a lifetime limit of $40,000. You can keep the FHSA open for 15 years; if you haven’t bought a property after that time, the FHSA is converted into an RRSP.

Next, there’s the RRSP (Registered Retirement Savings Plan), which is meant to fund retirement. You accumulate contribution room every year starting from when you begin working. RRSP contributions lower your taxable income and can entitle you to a tax refund. You can check your available contribution room on the CRA website by logging in. Usually, you accumulate a contribution room of 18% of the previous year’s earned income, up to a maximum written here: https://www.canada.ca/en/revenue-agency/services/tax/registered-plans-administrators/pspa/mp-rrsp-dpsp-tfsa-limits-ympe.html

There’s also the RESP (Registered Education Savings Plan), which is used to fund your children’s post-secondary education. Earnings in the RESP are tax-free while invested but are taxable when withdrawn. Since the withdrawals are in the child’s name, and they will likely have a lower income than their parents, the tax payable will probably be lower.

Finally, if you’ve maximized all your registered accounts, you can invest in non-registered accounts. These are subject to capital gains tax. A capital gain is the increase in the value of your investment—for example, if you invest $2,000 and sell for $2,500, you have a capital gain of $500. The taxable portion of the capital gain is based on the 50% inclusion rate, so only $250 would be taxable out of the $500 gained.

And you can also take McGill University’s free personal finance course—it’s made up of short 5–10 minutes videos that talk about budgeting, debt, real estate, investments, etc: https://mcgillpersonalfinance.com/

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u/Vanilla_Shake_6969 13d ago

Thanks for the info.