How To Invest 200k In Canada: 5 Great Options (2024)

Have you saved up $200,000 and are curious about what your investment options are? A $200,000 portfolio enables you to access a wide range of investments.

Regarding the Canadian stock market, one in three Canadians bought or sold stocks throughout 2021. Although putting together a stock portfolio is a popular option, it is not the only option available to you.

Different asset classes have different characteristics and may be more appealing as investments to specific investors.

I will go over how to invest 200k in Canada below and outline when it makes sense to pick a specific asset over another.

What to Consider Before Investing

When choosing an asset class to invest in, you must consider your personal circumstances and what you want to accomplish through investing.

Below are some questions to ask yourself in order to guide your choices around investments:

  1. What are your short-, medium-, and long-term goals?
  2. How long are you planning to invest for?
  3. How willing and able are you to take on risks?
  4. When will you need your money?
  5. How often do you look at your investments?
  6. What sort of investment returns do you want to achieve?
  7. What else are you currently invested in?
  8. Do you have a lot of time to research and manage your investments?
  9. Do you want an income stream from your investments?

These are not the only things to think of before investing, make sure to do a holistic assessment of your overall financial picture.

How to Invest 200k in Canada: Five Investment Choices

1. Real Estate

Real Estate
  • Risk: medium – high
  • Minimum investment amount: high
  • Fees: medium
  • Time dedication needed: high
  • Investment time horizon: medium – long
  • Liquidity: low
  • Income: medium – high

Buying investment properties is one of the first investment ideas that come to most investors’ minds. Real estate investors like having a physical asset that they can see and that usually generates income through the form of rent. The reality is that investing in real estate can be a lot more complex than it seems.

Real estate is usually considered around medium risk. It is commonly quoted as being riskier than bonds but slightly less risky than stocks. How true this really is depends on the state of the real estate market and where interest rates are expected to go in the future.

Buying an investment property usually has a high investment minimum in the form of a down payment and also comes with significant closing and agent fees.

Properties usually require a lot of research before purchasing and some level of management after the closing of the sale. Investors typically hold real estate for the long term, collecting rent along the way.

Since properties are all different from each other, buying and selling them is usually tedious and time-consuming (especially relative to other investments).

Rent from investment properties is usually a good source of income. Different investment properties (i.e. commercial vs residential) may offer different rental potentials.

With the minimum down payment requirement being 5% in some cases here in Canada, real estate is a good investment option to consider if you have $200,000 to invest. Make sure to read my guide on the best real estate investing options.

2. Stocks

  • Risk: medium – high
  • Minimum investment amount: low – high
  • Fees: low
  • Time dedication needed: high
  • Investment time horizon: medium – long
  • Liquidity: medium – high
  • Income: none – high

Stocks are also very frequently-encountered as investments. Stocks represent a small ownership percentage in a specific company that trades publicly.  You can essentially become a very tiny part owner in some of your favourite large corporations.

Stocks can be very different in terms of their features and come with different risk profiles. The riskiness of stocks typically starts at a medium risk level. In the event of a company’s bankruptcy, shareholders get paid after creditors (or bondholders), making stocks somewhat risky.

The minimum investment amount for stocks depends on how much a share of the particular company trades. The range for stock prices is extremely wide.

Stocks do not come with any fees. You will typically have to pay trading commissions to buy and sell stocks, although more and more brokers are currently offering commission-free trading. Wealthsimple Trade is an example of a commission-free trading platform in Canada.

Researching and maintaining a stock portfolio usually has a large time commitment requirement. The investment horizon for stocks is also usually long.

Since stocks are so different depending on the company that you are investing in, they can be very liquid or very illiquid, and they can also pay very high or no dividends.

I’ve written a list of some of the best stocks in Canada – be sure to take a look.

3. Bonds

  • Risk: low – high
  • Minimum investment amount: high
  • Fees: medium
  • Time dedication needed: high
  • Investment time horizon: short – long
  • Liquidity: low
  • Income: low – high

Bonds are lower-risk investments than both stocks and real estate. A bond is a loan to another entity, which can include both companies and governments.

A bond’s risk is tied to who is on the other end – who you are loaning your money to. If you are lending your money to a government, it is likely a less-risky bond than lending your money to a high-risk corporation.

Regardless, bonds are usually considered safer than stocks because creditors are paid before equity holders if a company goes bankrupt.

Bonds typically trade in high-value quantities, meaning that you will have to invest a substantial amount of money to get access to just one bond. This makes it difficult to have a well-diversified bond portfolio with little capital.

Bonds require quite a bit of research (similar to stocks), calling for significant time dedication. Spreads and trading commissions for bonds can also be costly.

Although bonds can be sold before maturity, the term of a bond can be very short or very long. This allows you to align a bond’s maturity with your investment time horizon.

Bonds have low liquidity since they are not traded on an exchange. This means that it is relatively more difficult to sell a bond than a stock.

Lastly, a bond will tend to pay more income if it is riskier and less income if it is safer (in the form of coupon payments).

4. Exchange-Traded Funds (ETFs)

 Exchange-Traded Funds (ETFs)
  • Risk: low – high
  • Minimum investment amount: low
  • Fees: low – medium
  • Time dedication needed: low – medium
  • Investment time horizon: short – long
  • Liquidity: medium – high
  • Income: low – high

Investing in pooled investments such as funds is an excellent way to grow your money and diversify your assets. One of the best types of pooled funds is exchange-traded funds or ETFs. This is because of their lower fees (especially relative to mutual funds).

ETFs are a bundle of different investments, which can include bonds, stocks, alternatives, and even other ETFs. What the ETF ultimately invests in will dictate how risky the fund is. An ETF holding stocks will generally be riskier than an ETF that holds bonds.

Exchange-traded funds trade in units (instead of shares), which are fairly inexpensive.

The fees associated with ETFs are generally low, especially if you are looking at various passively-managed ETFs. ETFs that are actively managed by a portfolio manager will usually come with much higher management expense ratios.

Since an ETF invests in multiple assets at once, it can save you a lot of time by investing your money through a one-ticket solution. ETFs are positioned as long-term investments, although they can be held for shorter periods of time since they are generally very liquid assets.

Depending on the underlying investments of an ETF, the fund can offer a low or a high income to investors (or none at all). If a fund holds dividend-paying stocks or high-yielding bonds, it will likely offer an attractive yield to investors.

Make sure to read my overview of the best ETFs in Canada.

5. Robo-Advisor

  • Risk: low – high
  • Minimum investment amount: low
  • Fees: low
  • Time dedication needed: low
  • Investment time horizon: medium – long
  • Liquidity: high
  • Income: low – high

Another option to consider when looking to invest your money is to use a robo-advisor. Although a robo-advisor is not technically an investment, it is designed to replace a human advisor.

Robo-advisors can build a full investment portfolio (and to some extent, a financial plan). The portfolio can contain a wide variety of underlying investments, including stocks, bonds, funds, and in some cases even alternatives. Relative to a human advisor, a robo-advisor is significantly more inexpensive.

Robo-advisors gather all of the necessary information to construct a portfolio (and sometimes a plan) by requiring you to fill out one or more questionnaires. The questionnaire will build you a portfolio that is aligned with your risk tolerance, meaning that these portfolios can be low-risk or high-risk.

The robo-advisory service is generally offered by most brokerages at low fees.

The time dedicated to setting up a portfolio through a robo-advisor is very low (essentially the time needed to sign up and complete the initial questionnaires).

Robo-advisory portfolios can be designed for a long investment time horizon or a short investment time horizon – it all depends on what you are looking for. The same applies to how liquid your portfolio is, although more often than not, a robo-advisory portfolio is easy to liquidate.

If you are looking for income, you will usually be able to outline this initially and the robo-advisor will build an income-oriented portfolio for you.

Some of the best robo-advisor options here in Canada are Questwealth and Wealthsimple Invest.

Frequently Asked Questions

Best Way to Invest 200k for Passive Income

Passive income refers to income that is generated with little to no time involvement on the part of the investor. If you are looking to keep the time dedication to your investing as low as possible, I recommend considering either building an ETF portfolio or working with a robo-advisor.

Although stocks, real estate, and bonds are great investment options, they typically require a significant time commitment.

How to Invest 200k in a Property

Investing in real estate is usually done on a leveraged basis through the use of a mortgage (typically provided by a bank or other financial institution). Deciding to invest $200,000 in a property can be done in two ways.

You can choose to buy a $200,000 property with cash without having to take on any debt. This is the less-risky option but limits your choices when considering real estate.

You can also choose to get a mortgage, which is the riskier option. A mortgage generally requires you to put 10% – 20% of the property’s price as a down payment. In the case of $200,000, this means being able to purchase a property worth $2 million or $1 million, respectively.


How To Invest 200k In Canada

If you are looking to invest $200,000, there are quite a few options to choose from here in Canada. Keep in mind that other investment options also exist outside of the five listed above. The five investment assets above are likely to be good investments for most Canadians.

If you are thinking of investing your $200,000, you may have been approached by one or more financial or investment advisors.

Although some advisors are able to add substantial value, I do not recommend this avenue since they generally charge very high fees. Robo-advisors are a cost-effective alternative to working with a human advisor.

If you want to be more actively involved with your investments, you may want to look at investing in bonds, stocks, or real estate.  

If this is the case, be sure to read my guide on how to buy stocks in Canada, as well as how to buy ETFs in Canada.

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Author Bio - Christopher Liew is a CFA Charterholder with 11 years of finance experience and the creator of Read about how he quit his 6-figure salary career to travel the world here.

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