How to start investing in Canada: accounts, fees and protection
The hard part of starting is not picking something to buy. It is knowing which account to use, what you will actually pay in fees and what protection exists if your brokerage fails. This guide explains the account types, the cost of ETFs and mutual funds, and CIPF coverage, with a calculator that shows what a higher fee costs over time. It is education, not advice, and it does not recommend any security.
On this page
Fee-drag calculator
How much can fees cost you over time?
An illustration only. It assumes a constant return before fees, applies the MER as an annual reduction in monthly steps, and adds contributions at the end of each month. Real returns vary, fees are not the only cost, and taxes are ignored. The 6% default is a placeholder for the math, not a forecast. Try your own fund's MER from its Fund Facts or ETF Facts document.
Before you invest: the questions to ask first
Investing means accepting that the value can go down. The usual educational checklist comes before the account choice:
- Do you have a cash buffer? Money you may need in the next few years usually belongs somewhere stable. Our emergency fund guide and TFSA vs HISA comparison cover where that cash can sit and what is insured by CDIC.
- Do you carry high-interest debt? A credit card balance charges interest every month. Compare that rate with what you could reasonably expect to earn after fees.
- What is the money for, and when do you need it? A first home, retirement and a general goal point toward different accounts.
- Do you understand what you are buying? Read the fund's Fund Facts or ETF Facts first.
The accounts: TFSA, RRSP, FHSA and non-registered
| Account | 2026 figure (CRA) | Main idea |
|---|---|---|
| TFSA | $7,000 dollar limit for 2026 | Flexible. Withdrawals are added back to your room on January 1 of the next year. You must be 18 or older. |
| RRSP | $33,810 dollar limit for 2026 | Your limit is generally 18% of last year's earned income, up to the maximum, less pension adjustments, plus unused room. Built for retirement savings. |
| FHSA | $8,000 room in the first year; $40,000 lifetime | For a first home. Contributions are deductible; carry-forward capped at $8,000. |
| Non-registered | No government limit | No tax shelter, so investment income is generally taxable. Often considered after registered room is used. |
No single order is right for everyone. People often compare them on three questions: When will I need the money? Do I benefit from a deduction now? Do I want withdrawals to be flexible? Our RRSP vs TFSA guide goes through the trade-offs, the FHSA guide explains the first-home account, and the TFSA limit and FHSA limit pages show how room builds. For RRSP room details, see RRSPs explained. A tax professional can tell you how your own income and plans apply.
ETFs vs mutual funds: what you pay
Both pool many investments into one product. The big practical difference for a new investor is cost. Get Smarter About Money, an investor education site, says ETFs generally cost less: the average Canadian equity mutual fund has an MER of about 2%, with some above 3%, while equity ETFs have a typical MER of about 0.54%, nearly all below 1%. The Canadian Securities Administrators define the MER as the total of all of a fund's expenses expressed as a percentage of the fund's value.
| Cost | What it is |
|---|---|
| MER | Annual cost of running the fund, including management fees and operating expenses. It is taken from the fund, so you do not see a bill. |
| Trailing commission | An ongoing payment out of the management fee to the representative or firm, paid while you hold the fund. Higher commissions can influence which fund a representative recommends. |
| Trading costs | Usually charged on each ETF buy and sell, including the bid-ask spread. |
| Sales charges | Front-end or deferred loads on some mutual funds. No-load funds have none. |
Get Smarter About Money's own example makes the point: a $1,000 annual investment earning 5% over 15 years ends near $19,157 at a 2% MER and $21,646 at 0.54%, a gap of about $2,489. The calculator above lets you run the same idea with your own numbers. A lower MER is not automatically a better fund, since you also need to look at what it holds and how it is built, but it is the cost you can see in advance.
Why fees and time matter together
Compound growth works on whatever you keep, not on what you earned before fees. That is why a small annual percentage matters over decades. Our guide to how compound interest works shows the math, and the calculator shows the cost of a higher fee on the same contributions.
What protects your investments (and what does not)
The Canadian Investor Protection Fund (CIPF) protects property held by a member firm on your behalf if the firm becomes insolvent and the property is not returned. Its brochure lists, for individual clients, up to $1 million combined for general accounts (cash, margin, FHSA and TFSA), up to $1 million for registered retirement accounts (RRSP, RRIF, LIRA, LIF) and up to $1 million for RESPs where you are the subscriber. Compensation is based on the value on the insolvency date.
CIPF does not cover losses from a fall in investment value for any reason, poor advice, misrepresentation or the default of a security's issuer. Insured deposits at banks are a different system; see our CDIC explainer. Before you open an account, check that the firm is a CIPF member.
Common beginner mistakes
- Investing money you will need within a few years.
- Paying more in fees than you realize because the MER is not itemized.
- Ignoring contribution room and over-contributing to a registered account.
- Choosing a product because it is popular, not because you understand it.
- Stopping contributions after a market drop.
More calculators are on the tools page.
How to start investing in Canada: a checklist
- Build a cash buffer. Keep an emergency fund in a savings account before you invest money you may need soon.
- Pay down high-interest debt. Compare your debt interest rate with returns you can reasonably expect before investing.
- Pick the account that matches the goal. Consider an FHSA for a first home, a TFSA for flexible savings and an RRSP for retirement, then a non-registered account for anything above those limits.
- Open the account. Open it with a brokerage, bank or robo-advisor that is a CIPF member and review the fees.
- Choose diversified, low-cost funds. Compare the MER and trading costs of the funds you consider.
- Automate contributions. Set up regular contributions so investing does not depend on timing the market.
- Check in yearly. Review fees, contribution room and whether the plan still fits your goals.
Questions people ask
How do I start investing in Canada?
A common educational sequence is to build a cash buffer first, deal with high-interest debt, choose the account type that fits your goal (TFSA, RRSP, FHSA or a non-registered account), open it at a brokerage, bank or robo-advisor, and pick low-cost diversified funds. Fees and time in the market do much of the work, so understand both before you buy.
What are the main investment accounts in Canada?
The registered accounts are the Tax-Free Savings Account (TFSA), the Registered Retirement Savings Plan (RRSP) and the First Home Savings Account (FHSA), plus RESPs for education. A non-registered account has no contribution limit but investment income is generally taxable. Each has different limits and tax treatment.
What is the TFSA limit for 2026?
The CRA lists the TFSA dollar limit for 2026 at $7,000. Your own room also includes unused room from earlier years, and amounts you withdrew are added back on January 1 of the following year.
What is the RRSP limit for 2026?
The CRA lists the 2026 RRSP dollar limit at $33,810. Your personal deduction limit is generally 18% of the previous year's earned income, up to the annual maximum, minus any pension adjustment, plus unused room.
What is the FHSA limit?
The CRA says your FHSA participation room in the year you open your first FHSA is $8,000. In later years room is calculated by formula, the carry-forward is capped at $8,000, and the lifetime limit is $40,000.
What is an MER and why does it matter?
The management expense ratio (MER) is the total annual cost of running a fund, expressed as a percentage of the fund's value. Because it is taken every year, a higher MER compounds into a large difference. Get Smarter About Money's example shows a $1,000 annual investment at 5% for 15 years growing to about $19,157 at a 2% MER versus about $21,646 at 0.54%.
ETFs or mutual funds: which is cheaper?
Get Smarter About Money says ETFs generally have lower fees: the average Canadian equity mutual fund MER is about 2%, with some over 3%, while equity ETFs have a typical MER of about 0.54% and nearly all are below 1%. ETFs also have trading costs such as the bid-ask spread. Compare the MER and every other cost for the specific fund.
Is my money protected if my brokerage fails?
CIPF protects property held by a member firm if it becomes insolvent and the property is not returned to you. For individuals, the brochure lists up to $1 million each for general accounts (including cash, margin, FHSA and TFSA accounts), registered retirement accounts (RRSP, RRIF, LIRA, LIF) and RESPs. CIPF does not cover losses from falling investment values.
Can I lose money investing?
Yes. Investments can fall in value, and neither CDIC nor CIPF protects you from market losses. Only invest money you will not need soon, and understand the risk of a product before you buy it.
Looni reads your statements and flags fees, subscriptions and interest charges, so you can free up money to invest. Read-only, no advice.
Sources
Canada Revenue Agency, MP, DB, RRSP, DPSP, ALDA, TFSA limits, YMPE and the YAMPE (2026: RRSP $33,810, TFSA $7,000), RRSP deduction limit (18% rule), Before you contribute to a TFSA (room, withdrawals added back, age 18), Participating in your FHSAs ($8,000 first-year room, $8,000 carry-forward, $40,000 lifetime) and FHSA deductions. CIPF, Canadian Investor Protection Fund brochure ($1 million limits by account group; what is not covered). Get Smarter About Money, 4 differences between ETFs and mutual funds (MER averages and the $19,157 and $21,646 example). Canadian Securities Administrators, Types of fees (MER definition, trailing commissions, sales charges). The calculator is our own arithmetic.
Already own mutual funds? See how much mutual fund fees cost you, with an MER calculator.