Investment type

Details

Advantages

Stocks

Stocks (also called shares or equities) represent an ownership position in a publicly traded corporation.

• Canadian stocks that trade on the Toronto Stock Exchange (TSX), TSX Venture Exchange (TSXV) and Canadian Stock Exchange (CSE)
• U.S. and foreign stocks that trade on the New York Stock Exchange (NYSE) and Nasdaq
• Over the counter (OTC) stocks
• New issues — including IPOs (initial public offerings) as well as secondary or treasury offerings
• Rights and Warrants

• Allows diversification across industry sectors and geography
• Accommodates strategies based on growth, or value, or on generating income from dividends
• You can borrow (trade on margin) to buy stocks trading for $3 or more on major stock exchanges

ETFs: exchange-traded funds

Investment funds that trade on stock exchanges. ETFs that track the performance of various benchmark indexes are popular. Variations include actively managed and speciality ETFs.

• 100 commission-free ETFs
• Passive ETFs that track benchmark indexes
• Actively managed ETFs with mandates to outperform benchmarks
• Specialty ETFs for various sectors, commodities and other niches

• Easy to achieve diversification
• Liquid: easily bought and sold throughout the trading day at current market prices
• Low management fees
• ETFs trading for $3 or more can be purchased on margin

Mutual funds

Portfolios of stocks, bonds and other investable assets which are professionally managed on behalf of many investors.

• Thousands of funds to choose from
• Low-expense 'Series D' funds available

• Benefit from expertise of professional portfolio managers
• Easy to achieve diversification
• Liquid: easy to buy and sell
• No commission to buy, so well suited to monthly contribution plans

Bonds

Debt instruments issued by governments and corporations, usually for a specific length of time. They have a par (or face) value, which is repaid to the holder upon maturity of the bond. They also pay interest, which is the buyer's return (or yield) on the bond.

• Huge inventory of Canadian and U.S. government and corporate bonds
• Related products such as commercial paper, strip coupons, and treasury bills

• Predictable income stream
• Can play a key role in a well-balanced portfolio

GICs: Guaranteed Investment Certificates

Secure investments that offer a guaranteed rate of return over a fixed duration. Issued by financial institutions.

• Large inventory available
• Flexible options with rates and maturities to suit your needs

• Safe — principal is guaranteed up to $100,000

Options

Contracts giving the owner the right, but not the obligation, to buy ("call") or sell ("put") an underlying stock at a specified price (strike or exercise price) for a limited time, usually a few months.

• Long calls and puts
• Spreads
• Covered writing
• Uncovered writing

• Hedge against risk, generate income, and speculate on market moves
• Use leverage to capitalize on changes to a stock's price without needing to buy the stock