Listen to this podcast from a newcomer interested in investing.
Newcomers to Canada can be at higher risk for fraud or being taken advantage of when investing.
A new language
When you invest in Nova Scotia the information you get from financial advisors and other professionals will usually be in English. This information can be technical and hard for anyone to understand. But if English is not your first language, you will have more trouble understanding what you hear and read.
Your first step is to find someone you trust who speaks both English and your language. They can help you read information and go with you to meetings. Online programs that translate languages can help with general information but may not work as well with technical or financial text.
A new culture
Even if you speak and read English well, a new culture can make it harder to invest safely. How we talk and act with professionals such as bankers and financial advisors might be different than what you are used to.
You may be used to trusting advice from any professional if that is part of your culture. You may think that asking questions or doing our own research to see if the advice you are getting is good for you shows a lack of respect.
But in Canada, investors are expected to do this research. You should know a lot about the advisor and the investments you choose when you invest in Canada. You should know your rights as an investor so that you can stand up for them and protect yourself.
Income tax rules are a big part of investing in Canada. The Government of Canada wants people to invest, and it has programs to help investors. Some programs can help you pay less income tax or help you pay it later.
Find out about these programs before you invest in Canada. Your home country may have investing programs, but they will be different than Canadian programs. You can make more money from investing by using the programs that are right for you. If you owned investments when you came to Canada, you need to ask a tax accountant about how these might change the amount of income tax you will have to pay.
Many countries’ governments have rules about selling investments and giving investment advice. But the rules about the advice that regulated financial advisors must give investors is different in different countries. For example, if you came to Canada from the United States, United Kingdom, or Australia, your financial advisor there may have had a duty to put your best interests ahead of their own. In Canada, registered financial advisors have a lower duty to their clients. They must give you advice that is suitable for you, but it is not always what is best for you.
High mutual fund fees
Canada has some of the highest mutual fund fees in the world. If you are used to lower fees in another country, you may focus less on fees when choosing investment products in Canada. Successful investors in Canada know about this difference and look carefully at fees when choosing investments and advisors.
Investment fraud risk
One thing about investing that is the same in Canada and other countries is how risk and return are related. In Canada, like anywhere else, a promise of a high return investment with no risk should not be believed.
Being in a new country can put you at risk of fraud, including investment fraud. When you know less about a country’s culture, laws and financial practices, you may be less likely to see the signs of investment fraud. If you fear losing your chance to stay in Canada, you might give money to someone who says they can help you. You may also trust people more if other people in your community trust them.
This guide can help
The Investor Rights and Protection Guide is for all investors. But the tips below will help you, as a newcomer to Canada, get the most out of this guide.
When reviewing Investments and Income Tax, think about whether you may use the investment plans that are registered with the Canadian government and how these plans can help you and your family.
When reviewing Rights for Security-type Investments, think about how asking questions can help you find out if an investment is best for you or only suitable. Remember that smart investors get answers to all of their questions before they sign anything or promise to pay any money for an investment.
When reviewing Fraudster Investment Schemes, think about how being new to your community could make you more likely to be a victim of investment fraud.
When reviewing Recognizing a “For-sure” Fraudster, remember that in Canada you are expected to check up on a person’s registration to sell investments before you buy an investment from them. It is not a sign of disrespect.
When reviewing Advisor/Registrant Wrongdoing, remember that hidden fees can lower your return on investments more in Canada than in other countries because the mutual fund fees here are high.
When reviewing Financial Planning by Advisors/Registrants, remember that investors are expected to check credentials before choosing an advisor or planner. It is not a sign of disrespect to find out their registration, education, professional certifications or how they are paid. You can use this information to make a wise choice.