Your first year as an investor in Canada can be both exciting and confusing. Avoiding common mistakes early on can help preserve your capital and improve your long-term outcomes.
1. Waiting Too Long to Start
The best time to invest was yesterday—the second-best time is today. Starting early allows compounding to work in your favour, even with small contributions.
2. Failing to Understand Risk
New investors sometimes panic during downturns. Know your risk tolerance and choose an investment mix (e.g., stocks vs. bonds) that matches your comfort level and timeline.
3. Ignoring Fees
High-fee mutual funds can eat into your returns. Opt for low-cost index funds or ETFs, especially in TFSAs and RRSPs where long-term growth is key.
4. Trying to Time the Market
Jumping in and out based on headlines rarely pays off. A steady, consistent investment strategy is almost always more effective.
5. Not Using Tax-Advantaged Accounts
Investing in a taxable account before maxing your TFSA or RRSP can lead to avoidable taxes. Always consider tax-sheltered options first.
Educating yourself, diversifying your portfolio, and focusing on long-term goals are the keys to success in your first year.