7 Ways To Improve Your Canadian Investment Portfolio For 2022

Whether you’re a Canadian resident, or someone looking to invest in the area in general, there will be a few different ways to approach investing. You may currently have an investment portfolio in place, but it could do with some extra work to make it more profitable. To learn more on improving your portfolio, we have put down seven points of consideration. Continue reading to get started.

Only Invest What You Can Afford

Before we delve into how to improve your portfolio in more detail, it’s worth knowing more about how much you can spend. Understanding your budget helps to enhance your portfolio as it helps you invest the money more wisely.

The main point of this section is to explain to you that you should only invest what you can afford so that if the investment doesn’t pay off, it doesn’t directly affect your other income and quality of life in any way. Investing shouldn’t be seen as a way to fix your income; instead, it should be treated as a means to add to your already growing income. If in doubt, consider meeting up with a financial advisor who could provide you with useful financial information that puts you in good stead for investing.

Diversify Your Portfolio

The first major thing you should think about when wanting to improve your investment portfolio is how you can diversify your portfolio. Diversifying your portfolio refers to adding different areas of investment into your accounts rather than a focus on one. This can lower the risk and raise your profits at the same time.

For example, you could have property as your only investment. This could be a few different pieces of property. For the most part, this could be absolutely fine as an investment, but if there was ever a real estate crash or an issue with your properties in general, then this could ruin your investment and take more money from your pocket to fix it up.

Instead, what you should be doing is investing this money into a range of different areas. You can still have property within your investment portfolio, just ensure that you have other areas of interest too. For example, you could purchase stocks or look into cryptocurrency, which will be explained further down in this article.

Know That Certain Locations Suit Certain Investments

You should be aware that certain locations will suit certain investments when it comes to investing. This can come down to geopolitical reasons or other factors in general. This will not only apply to locations across Canada, but across the world too. For obvious reasons, to use a broad example, it’s unlikely you will invest into a ski resort in the middle of a hot climate country.

This means you should be thinking more about specific location-based investments. Even general investments may have to be thought about further in certain countries. For example, if you are planning to invest in a CBD or tobacco-based business, you will need to be aware that these products may be banned in your country, so it may not be the best investment idea for you at this time.

It’s a similar story for cryptocurrency. While trading cryptocurrency is perfectly legal in most countries, some will either outlaw it entirely or add restrictions. This could mean that trading Bitcoin will need extra care.

In Canada, cryptocurrencies are regulated through security laws and are not considered legal tender. However, this is perfectly normal and shouldn’t put you off, as this happens across the world. Eventually, the hope with cryptocurrency is that it will become a global internet-based currency. For now, it stands to reason that it will be a worthwhile addition to any investment portfolio.

When it comes to investing in Bitcoin, you will be able to trade openly and buy Ethereum in Canada through a few different traders. You can learn more through financial experts such as Wealthsimple, who can provide products that can help you invest on autopilot. Working with experts such as this can help you invest in the way that suits you.

Before investing in anything, crypto or otherwise, it will be worth looking into the regulations that surround them in Canada. For example, you may have to pay different taxes compared to investing in one country when investing into property. Location matters with investments, but it will generally be wise to look into investments that can carry weight across the globe.

Re-Evaluate Your Portfolio Often

For that reason, amongst others, it will be wise to look deeper into your portfolio often and where you can. If you leave your portfolio to sit on its own too long without casting your eye over it, then it could become muddled and lose its value. Instead, you should look over your portfolio each month and every week where possible.

When you get more of an understanding of your portfolio, then you will naturally gain more insight into your own finances. Looking at your portfolio could help you find the right time to sell as well as buy.

You can look at your portfolio yourself, or you could use automated software that notifies you of changing prices and trends from your investments. There will be apps designed that can contain your investments and give you full control. Otherwise, you can use traditional folders to just know what you contain and glance over from time to time.

Invest In Innovation

One of the more wise investments you could look to make in Canada this year comes in the form of green businesses. The green industry is booming in Canada and across the world, especially with the emergence of new jobs on offer. In Canada alone, there are a reported 3 million extra jobs coming from green investment, which means it could be a great time for you to get in on the ground floor.

The green industry can be broken down into a few different sections. This includes energy, construction, agriculture, fishing, tourism, waste, and transport. There will be more industries that can fit into the green world, but these will be the ones projected to rise the most, especially as the world’s economy looks to repair itself and grow.

Innovation, in general, is always a wise idea. Some of the latest innovation trends include AI and VR, which are proving to be more prevalent at time goes on. You only have to look at Facebook’s recent commitment to the Metaverse to understand how serious this industry is.

While the Metaverse, and the technology that supports it, is costly to invest in now, you can only imagine how more affordable it would have been to invest in from the beginning. As a budding Canadian-based investor, you should be looking to get ahead of investment trends before they get popular. To find these trends before they get popular, you can either conduct your own research or partner with a financial expert who conducts market research to supply you with leads and inspiration.

Avoid Investment Taxes

Within Canada, you will need to report your income earned through investments. This will happen through interest, dividends, and capital gains. There will be a few different ways you can avoid paying certain investment taxes. The capital gains tax is a way for the Canada Revenue Agency to collect revenue on your investments’ profit.

What you should know, however, is that the Canadian government wants you to invest in businesses and boost the economy. As a way to incentive investors to invest in Canadian-based businesses, they will half the tax you pay on the profit you receive. While this is a big boost for investment opportunities in Canada, there will be more that you can do.

For example, you could make use of a tax shelter. This helps to shield your investment whilst you leave them in here. They will grow duty-free, allowing you to purchase and sell stocks without worrying about the tax you would have to pay.

You could also look to defer paying capital gains tax for your shares in some cases. For example, if you receive stocks for your investment portfolio from a spouse or parent, or through the death of someone else. For this one-time transfer of stock, you can prevent the payment of tax until the stock is paid.

Maximise Retirement Saving Plans

A lot of people get into investing, with the end goal being to put them into a position that enables them to retire. This could be to retire at the regular time with enough savings to keep you going, or it could be with he aim to retire early.

Whatever your reasoning is, you should try to maximise your retirement savings by making smart investments. There are plenty of investment-focused saving accounts in Canada that are designed to help build up your retirement fund.

Contact your bank as soon as possible to find out more information regarding these savings accounts and how eligible you are. These savings accounts are low risk to you, as the money you place into these accounts will never decrease. Instead, they will stay the same or increase slowly in some form.