As a young Canadian, investing may seem like something typically reserved for adults; however, starting early can give you a significant advantage. Due to accumulated interest, the money invested earlier can grow significantly over time due to the power of compounding interest. (Bromberg, 2024) As investing becomes significantly more accessible through digital platforms, young investors have a unique opportunity to begin their financial journey in small amounts with minimal risk. In this article, we will review the many different investment accounts offered and catered towards young Canadians and the most popular low-risk investment options typically chosen by newer, less experienced investors.
Young Canadians have many different investment accounts to choose from and hold their earnings in, notably a Tax-Free Savings Account (TFSA), a Registered Education Savings Plan (RESP), or an informal trust account. Although these accounts are catered to young Canadians, those under the age of majority, typically 18 or 19, within their province are not allowed to open one themselves and must have another person on the account, such as a parent or guardian. A TFSA is a registered investment account many young Canadians use to take advantage of the lucrative tax savings benefits. It allows users to pay no taxes on money within the account and when money is taken out. (Royal Bank of Canada, n.d.) An RESP is a popular investment account for those looking to continue their post-secondary tuition. The money invested into an RESP can grow tax-deferred until the time of withdrawal, when tax is taxed at the underaged party, resulting in much lower tax rates. The government can also contribute $7,200 directly to a child’s RESP account, making it even more popular for families. (TD Canada Trust, n.d.-d) However, an RESP does have disadvantages. There are strict contribution limits, as only $2,500 can be added to a yearly RESP account for a maximum of $50,000 per beneficiary. (TD Canada Trust, n.d.-c) Another popular account type for investments is informal trust accounts. An informal trust account is a non-registered account that allows a parent or guardian to invest on behalf of a child under the age of majority. Although informal trust accounts do not offer the same tax benefits as a TFSA, they still offer significant tax benefits. A key benefit is that capital gains tax is calculated through the underaged party, similar to an RESP. However, unlike RESPs, they are much more flexible. There are no limits on contributions or withdrawals from informal trust accounts, making it a popular account for those looking to invest over $50,000.
After choosing your preferred investing account, many young Canadians decide which type of investment they want. As newer investors, young Canadians should spend their funds on low-risk investments before moving into individual stocks, focusing on long-term investing before trying to get money fast. There are many different low-risk investment options. However, the most popular ones are Guaranteed Investment Certificates (GIC) and Dividend Stocks. A GIC is a secure way to grow your money that allows for 100% of your principal investment to be returned, alongside a potential return on investment. This is because GICs are insured by the Canadian Deposit Insurance Corporation (CDIC). Furthermore, GICs can be linked to your registered plans, such as your TFSA or RESP. (TD Canada Trust, n.d.-b) Dividend stocks are also another popular investment choice for new investors. Dividend stocks are company shares where shareholders (investors) get a portion of the company’s profits through dividends. Stockholders are usually paid when a company has excess cash that is not being reused. (TD Canada Trust, n.d.-a) Dividends are usually favoured for young Canadians, typically those with less funds. This is because they provide a steady income stream while offering a sense of security, as most dividend-paying companies are well-established and have a reputable track record. (Kirsch, 2025)
Investing offers young Canadians a powerful opportunity to build long-term financial security using compound interest. With access to TFSAs, RESPs, and informal trust accounts, young Canadians have many tax-deferred options, each catering to different needs. By starting with low-risk investments, such as GICs and dividend stocks, young Canadians can gain investment stability while allowing their funds to grow. By developing strong financial habits early on, young Canadians can set themselves up for financial independence and freedom, ensuring they have a strong financial foundation for future wealth.
Works Cited
Bromberg, M. (2024, April 22). Investing for Teens: What they should know. Investopedia. https://www.investopedia.com/investing-for-teens-7111843
Kirsch, J. (2025, January 7). Best 5 stocks for beginners with little money. Forbes. https://www.forbes.com/sites/investor-hub/article/stocks-for-beginners-with-little-money/
Royal Bank of Canada. (n.d.). Save for the Future with a TFSA. https://www.rbcroyalbank.com/investments/tfsa.html
TD Canada Trust. (n.d.-a). Dividend stocks and how to invest in them | TD Direct Investing. https://www.td.com/ca/en/investing/direct-investing/articles/dividend-stocks
TD Canada Trust. (n.d.-b). Guaranteed Investment Certificates (GICs) | TD Canada Trust. https://www.td.com/ca/en/personal-banking/personal-investing/products/gic
TD Canada Trust. (n.d.-c). Registered Education Savings Plan (RESP) | TD Canada Trust. https://www.td.com/ca/en/personal-banking/personal-investing/products/registered-plans/resp
TD Canada Trust. (n.d.-d). RESP Contribution Limits & Rules | TD Canada Trust. https://www.td.com/ca/en/personal-banking/personal-investing/learn/resp-contribution-limit-rules-canada#:~:text=What%20is%20the%20RESP%20Contribution,any%20one%20beneficiary%20is%20%2450%2C000
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