Answers to Investing Questions You May Be Too Embarrassed to Ask

Have you ever had questions about investing that you were too embarrassed to ask? Don’t be. Making informed investing decisions includes asking questions. Here are some basic questions and answers that can help provide you with some investing confidence.

Answers to Investing Questions You May Be Too Embarrassed to Ask
Adriann Locke



What is a mutual fund?

A mutual fund is a collection of investments, such as stocks, bonds and other funds owned by a group of investors and managed by a professional money manager.

What is an advisor?

An advisor can provide advice in many areas, including: investing, financial planning, personal insurance, taxes, and estate planning. If an advisor is providing advice relating to investing in securities, they need to be registered, unless an exemption is available.

How do I open an investing account?

Your local bank or registered investment firm can help you open an investing account. Before you open an account, figure out if you need a full-service investment firm, discount broker or portfolio manager. This article can help you decide and help you understand the difference between a cash account and a margin account. You can also learn about online investment advisors which are a hybrid of a full-service investment firm and a discount broker.

What is a common share?

A common share is the most common type of stock (in a company) you can buy. It represents ownership in a company and may give you voting rights – to elect directors and vote on some corporate matters. The value of the common share can increase or decrease depending on the company’s success.

What is a dividend?

A dividend is part of a company’s profits that it pays to shareholders in proportion to the total number of shares held. The Board of Directors sets the amount. For common shares, the amount varies. The company may not pay dividends if business is poor or the directors invest money in things like new equipment or buildings.

What is an ETF?

An exchange-traded fund (ETF) is an investment fund that holds a collection of investments, such as stocks or bonds owned by a group of investors and managed by a professional money manager. ETFs trade on a stock exchange and can be sold short or margined. You can also trade in futures and options on ETFs.

What is an RRSP?

A Registered Retirement Savings Plan (RRSP) is an account, registered with the federal government, that you use to save for retirement. RRSPs have special tax advantages.

What is a TFSA?

A Tax-Free Savings Account (TFSA) lets you save tax-free for any goal. You earn contribution room every year (even if you do not set up a TFSA. You can hold a wide range of investments in a TFSA, including cash, GICs, bonds, stocks and mutual funds. Visit our TFSA hub for more TFSA basics.

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