Top 10 Reasons Why We Don’t Invest in Canada

While I love living in the Toronto-area – it’s a great and vibrant place to spend time, I choose not to invest in Canada.

You may not realize that Canada has only 3% of the world’s stocks, with mainly small companies with lower growth than global or US stocks. Canada is no longer a growth country.

This means that you aren’t getting a diversified portfolio, so we choose to invest globally or in the US.

For more details on this way of thinking and investment strategy, I’ve broken it down for you.

Watch my latest video and listen to my podcast episode to find out:

  • What are the most common reasons people invest in Canada?
  • What are the top 10 reasons we don’t invest in Canada?
  • How do investment returns in Canada compare to other countries?
  • Is it safer to invest in your own country?
  • Should you invest in Canada for bonds or other fixed income?
  • How does dividend investing compare to self-made dividend investing?
  • How is Canada’s economy growing compared to other countries?
  • How can you avoid or minimize currency risk?
  • How can you easily & effectively invest outside Canada?

Most common reasons to invest in Canada:

  1. Fixed income: Canadian bonds.
  2. Home country bias. Believe it is safer to invest in companies we know.
  3. Dividend investing.
  4. Currency risk – Invest in Canadian dollar, because we spend Canadian dollars.

Why we don’t invest in Canada:

Only 3% of world’s stocks.

Miss almost all the growth opportunities.

Invest globally. You will likely have a few Canadian companies, but only when they are the best in the world in their industry.

Our portfolio a couple years ago had only one Canadian stock – Shopify.

Not a diversified portfolio.

Almost nothing in many sectors.

Essentially a financial & resource sector fund.

Small companies.

Smaller than emerging markets on average.

Much smaller than US & global companies.

Lower growth than global or US stocks.

TSX vs. MSCI vs. S&P.

1%+/year lower returns is significant in a Financial Plan.

Home country bias limits you.

Common in all countries.

It’s obvious in many countries why it’s dumb, such as Iceland (crash 10 years ago) or Australia.

It’s no smarter in Canada.

A local company you know is not necessarily safer.

All companies are local somewhere.

If we moved one hour south & lived in the US, then we would not think of Canadian stocks as safer.

Fixed income is not necessary.

You can get more reliable long-term investment returns without fixed income.

Bonds are usually best to buy in Canada, since currency can wipe out bonds returns medium term & it’s not easy to hedge the currency.

Death of bonds. Time to debunk asset allocation as the most effective investing.

Almost nobody can retire comfortably with a balanced portfolio.

Fixed income is lower risk short & medium term, but higher risk long-term.

“Bonds Bubble” is over. Expect lower returns in future than last 40 years.

Retirement income with the 4% Rule is less reliable the more fixed income you have.

Dividend investing has only disadvantages.

Self-made dividends are better in every way.

Time to debunk dividend investing. We meet investors stuck on dividend investing, even though it drags down their retirement.

They can’t let go. I feel for them. Brain fart.

Dividends = selling shares (except taxed more). Share price drops by the amount of dividend on the “ex dividend date” – the same as if you sold some shares.

With $100 shares and 100 shares, $1 dividend, share price drops to $99 with 100 shares = $9,900.

Sell share price stays at $100 and you have 99 shares = $9,900.

Self-made dividends 10 vs. ordinary dividends 0.

Lowest-taxed type of investment income is deferred capital gains – not dividends.

Dividends are much higher taxable income then capital gains.

Much higher clawbacks of government benefits. E.g., 69% clawback of GIS.

Lower returns: It makes you invest in Canada & mature, slow-growing companies.

Dividend returns expected to be lower in future. End of the “Bond Bubble”.

Higher tax because you pay tax every year, instead of deferring for many years.

In Canada, dividend investing & index investing are almost exactly the same.

Canada is not a growth country.

GDP per capita has stopped growing.

US is now 52% ahead of Canada and growing 4-5%/year faster! Shocking!

We were only 8% behind 9 years ago, but grew 3% in 9 years vs. 45% in the US.

Population growth from immigration is essentially the only growth of our economy, but it creates unaffordable real estate (which likely won’t get better).

Canadians can feel our standard of living is no longer getting better.

We will likely fall off the list of 10 largest economies, could be dropped from the G7.

We are the “lazy attic squatter of the US”.

Currency risk is not significant long-term & can be hedged.

Currency fluctuations can affect your returns short & medium term, but not long-term.

Little or no effect over 20 years.

Currency fluctuations are small over time, especially compared to investment returns.

Currency is usually a buffer against stock market fluctuations.

Currency moves are usually caused by reasons in the US, not in Canada.US dollar tends to rise when markets fall. US dollar is the safe currency.

Buy currency hedge or currency-neutral mutual fund or ETF to eliminate the risk.

Easy to invest globally or US.

Most effective investing is global or US.

Researching companies all over the world is very difficult.

Easy methods to invest outside Canada:

Mutual funds. All Star Fund Managers.


US multinational stocks.

Thanks for reading, watching & listening!


Planning With Ed


Ed Rempel has helped thousands of Canadians become financially secure. He is a fee-for-service financial planner, tax  accountant, expert in many tax & investment strategies, and a popular and passionate blogger.

Ed has a unique understanding of how to be successful financially based on extensive real-life experience, having written nearly 1,000 comprehensive personal financial plans.

The “Planning with Ed” experience is about your life, not just money. Your Financial Plan is the GPS for your life.

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  1. Ed Rempel on October 29, 2023 at 2:36 PM

    Hi Bogdan,

    Thanks for your comments. Glad to hear we agree on everything.

    I can tell you why most mainstream “experts”recommend 60/40 or 70/30 portfolios for their clients but are 100% equities personally. It is because of compliance. Having to explain it to a compliance department and risking a complaint. The regulators’ rules heavily push advisors to investing in bonds to protect their careers.

    It could be more innocent in that they know they won’t sell their own investments after a market crash, but clients might.

    One of the most beneficial things an advisor can do is spend time educating clients about the stock market long-term to help them learn to have a higher risk tolerance. It’s a massive benefit over the decades. If they did, they wouldn’t have to stick their clients with underperforming balanced portfolios.


  2. Bogdan on September 19, 2023 at 6:36 PM

    Since I created my very first comment, a follow up I have hard time to resist.
    Regarding bonds, a funny fact:
    The mainstream experts for retirement investing preach the 60/40, 70/30 sure, whatever; including from some very respectable investment organizations.
    This year as I recall at least two such experts (which in general I respect) from Morning star. They admitted that they don’t follow what they preach e.g. they don’t do bonds allocations for their personal retirement investments. I was shocked by their honesty. They did not provide reasonable explanation why they did not follow their preaching (like they were kind of saying they’re are too busy?).
    Well, they should stop minding their corporate careers, and instead open their own shop to keep their moral integrity.

  3. Bogdan on September 19, 2023 at 6:03 PM

    Hi Ed, lurking here for some time and your ideas (no bonds, US market only, long term index/ETF holding, low cost, growth preference, avoid income investing, thinking taxes, etc), are also “my way” of DIY investing since the start of it. Before I found your side :).

    Excellent advise, if only more Canadians follow it… Instead, majority do the “my banker did my risk assessment; no idea how much costs, not free?” 🙂

    Couple of more reasons for USA investing:
    – diversification, since living and working in Canada, investments (all) in US avoids all bets on Canada.
    – currencies: lowers beta for investments. When bad times, US dolar is stronger, making CAD balance not as bad in bad times. I prefer not hedged ETF.

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