The best investment options in Canada include high-quality stocks with a history of sustainable dividends.

Wealth isn’t made by making rash investment decisions. It’s built over decades. Furthermore, investing is relative, not absolute. It’s an art, not a science. Every stock offers a balance of risk and potential reward.

You’ll want to make sure to create your Successful Investor portfolio with investment options in Canada for a conservative approach but that also suit your financial circumstances and temperament. That means a portfolio of high-quality stocks, spread out across most if not all of the five main economic sectors, with limited exposure, if any, to the broker/media limelight.

How Successful Investors Get RICH Learn everything you need to know in 'The Canadian Guide on How to Invest in Stocks Successfully' for FREE from The Successful Investor. How to Invest In Stocks Guide: Find 10 factors that make your investments safer and stronger.  I consent to receiving information from The Successful Investor via email. I understand I can unsubscribe from these updates at any time.

The safest investment options in Canada focusing on conservative investing

Conservative investing is an investment strategy that involves a focus on lower-risk, predictable and stable businesses. This strategy typically involves the purchase of blue chip stocks and other low-risk investments.

In our view, your goal as an investor, particularly if you follow a conservative investing strategy like the one we recommend, is to make an attractive return on your investments over a period of years or decades. Failure means making bad investments that leave you with meagre profits or even losses.

Conservative investors know to look for investment quality first. Long-term gains are not made by worrying about current stock price fluctuations.

A conservative Successful Investor approach also means building a well-balanced portfolio gradually, over time.

Look for investment options in Canada that provide dividends

If you’re new to investing, one tip we share often is to invest mostly in companies that have been paying a dividend for five or more years. Dividends are typically cash payouts that serve as a way for companies to share the wealth they’ve accumulated. These payouts are drawn from earnings and cash flow and paid to the shareholders of the company. Typically these dividends are paid quarterly, although they may be paid annually or even monthly as well. Canadian citizens who own shares in Canadian stocks that pay dividends will also benefit from a special dividend tax credit they may be eligible to receive.

Stocks that take advantage of compounding are some of the most rewarding investment options in Canada for investors

Compound interest is earning interest on interest. Over time, your long-term investments will earn more and more money from the effects of compound interest. Compound interest is what makes investing a worthwhile pursuit.

Compound interest can also be applied to dividend-paying equity investments like stocks, as well as to fixed-return, interest-paying investments like bonds. When you earn a return on past investment returns (including reinvested dividends), the value of your investment can multiply. Instead of rising at a steady rate, the number of dollars in your portfolio will grow at an accelerating rate.

Just remember to keep an eye on investment or expense fees that affect the amount of interest you earn. Even 1% a year can be huge drain on your portfolio.

Our long-term Successful Investor approach focuses on diversifying

As we mentioned, you can eliminate market-sector risk by spreading your money out across most, if not all, of the five main economic sectors (Manufacturing & Industry; Resources; Consumer; Finance; and Utilities). This way, you avoid overloading yourself with stocks that are about to slump simply because of industry conditions or changes in investor opinion.

You also increase your chances of stumbling upon a market superstar—a stock that does two to three (or more) times better than the market average.

Be sure to stay away from conflicts of interest with your investment options in Canada

As we’ve often said, one key element in succeeding as an investor is that you have to stay alert for conflicts of interest in the information and advice you receive. These risks may be large or small; some may seem insignificant. The problem is with frequency. Conflict-of-interest risks come at you constantly, from all directions. That’s why we say these conflicts are the greatest risk you face as an investor.

One conflict of interest that draws a lot of attention is the varying commissions that investment salespeople earn, depending on what investments they sell. All too often, commissions rise with the riskiness of an investment. This gives salespeople an incentive to sell more of the risky investments, regardless of investor needs. The best choices for the salesperson may be the worst choices for the investor.

Conflicts of interest can show up in the form of bad reasons to buy or to sell, and can come from a variety of sources. For instance, conflicts of interest can spur economists to offer bad decisions to sell some or all of your stocks. That’s because economists have an interest in discovering and popularizing what they see as inevitable economic problems.

After all, potential economic problems just naturally attract media attention. Investors always want to know what can go wrong. In contrast, economists gain little media or investor attention if they issue benign forecasts that say everything will turn out fine, or that the free market’s self-correcting tendencies will take care of many current economic worries.

How do you gain the most accurate information to make informed investments in Canadian stocks?

What do you watch out for when you’re making investment decisions about Canadian stocks?