Investing

Current monetary policies in Canada encourage borrowing money, instead of saving it, which is unsustainable in the long run. Due to the inflationary bias of world’s central banks and the Bank of Canada of course, people that can save are forced to invest their hard-earned money into stock markets (Toronto Stock Exchange for example), for fear the fiat currency they hold will be eaten away by inflation. The Canadian dollar hasn’t been backed by gold, for a long time, prompting many financial advisors and analysts to use the phrase "cash is trash" more and more frequently as the economic crisis evolves. Many blame the current stock market woes on short selling, however this view is naïve, and the truth is that out-of-control financial leverage by hedge funds and financial institutions, and staggering amount of financial derivatives have caused this. The US dollar is slowly losing its status of world reserve currency.

Canada Revenue Agency (formerly Revenue Canada), manages the RRSP (Registered Retirement Savings Plan), which can be used by Canadian to save and invest, while sheltering income from taxes. You can invest the money in your RRSP account into many asset classes, using financial instruments like bonds , mutual funds, money market accounts, guaranteed investment certificates (GIC), certificates of deposits, and of course stocks. Not many Canadians know this, but you can actually hold gold in your RRSP account. The new Tax Free Savings Accounts (TFSA) are an excellent way to save and grow capital tax-free.

Investors with appetite for risk can participate in IPO (Initial Public Offering), invest in emerging markets, do day trading, invest in real estate investment trusts, invest in Canadian energy trusts, or even trade currencies.

The Rule of 72 can help you easily estimate how long would it take for an investment to double. Aspiring investors must understand what is a return on investment (ROI), market capitalization, venture capital, and what are institutional investors and how they can affect markets.

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