Buy Canada: Should You “Buy Canadian” When It Comes to Investing?

Have Canada's ongoing trade tensions with the U.S. changed how you spend your hard-earned loonies? Perhaps you're taking a few extra moments as you stroll the aisles of the grocery store to see where products are from before putting them in your cart, or you're actively searching online to find that lesser-known homegrown alternative. You're in good company. According to the Bank of Canada, about 60% of Canadians were focused on spending more on Canadian goods in 2025. 

For some people, that patriotic spirit extends to their investment portfolio, prompting them to explore domestic opportunities. If you're thinking about adding Canadian stocks to your investment accounts, here's what to keep in mind. 

Investment tips for new Canadian investors

If you're new to investing, here are a few things to know as you get started.

Choose the right account type

Decide what best fits your needs: a registered account such as a TFSA, an RRSP, or an FHSA, or a non-registered account. Registered accounts offer tax benefits that can help your money grow faster, but be sure to learn their rules and requirements. Non-registered accounts don't offer the same tax breaks, but they're more flexible and have no contribution limits.

Know the tax rules

Be aware of contribution limits for registered accounts—overcontributing can lead to penalties. For non-registered accounts, track your capital gains, losses, dividends, and fees for tax reporting. U.S. and international stocks may have withholding taxes and require Canadians to complete forms, such as the W8-BEN in the U.S., to certify they're non-residents.

Consider ETFs

If you want to support the Canadian economy and markets but are looking for broader exposure instead of specific equities, consider an exchange-traded fund (ETF). An ETF is an investment fund that holds a basket of assets—such as stocks, bonds, or commodities—and trades on a TSE 300 like an individual stock. Most ETFs passively track (mimic) a well-known stock index, such as the S&P/TSX Composite Index, but you can also find a growing number of actively managed ETFs where a professional manager selects the stocks based on a particular theme or goal.

Why Canadian investments can be a smart way to invest

If you're just starting out in investing, perhaps with a new online trading account, you likely have questions like:

• What stocks should I buy?
• When should I buy them?
• Should I stick to Canadian stocks or diversify?
• How do I invest in a way that aligns with my values?

Investing in Canadian companies can be a great way to dip your toes into the world of trading. There are several advantages to starting your investing journey closer to home.

Familiarity

One of the biggest benefits of investing in Canadian stocks is that you are often already familiar with some of the big players: a financial institution you bank with, a publicly traded company you work at, or a homegrown clothing brand you love that's also gaining fans abroad. And when you spot excitement building around a budding Canadian product, you may even have the chance to invest before it becomes the next global success story.

Simpler tax treatment

The tax treatment of your investments depends on what country they're from and what type of account you use. 

Registered accounts: Most Canadian stocks, as well as mutual funds and exchange-traded funds (ETFs), are eligible to be held in registered accounts, where any earnings are tax sheltered (like in your RRSP) or tax free (like in your TFSA and FHSA). US and international stocks and ETFs can also be held in these accounts, but in addition to Canadian taxes, they may also be subject to foreign withholding taxes on interest and dividends, depending on the country and the type of account. Note that the foreign withholding tax paid in a TFSA is unrecoverable. 

Non-registered accounts: If you hold Canadian dividend stocks in a non-registered (taxable) account, you can receive the dividend tax credit to reduce how much tax you pay. For non-Canadian stocks and funds held in non-registered accounts, here's how withholding taxes apply: 

• U.S. withholding taxes apply to the following investments, and investors can recover them by claiming the foreign tax credit on their tax return:
  • Canadian mutual funds and Canadian-listed ETFs holding US stocks
  • US-listed ETFs holding US stocks
  • Canadian mutual funds and Canadian-listed ETFs holding a US-listed ETF holding US stocks
• Foreign withholding taxes apply to Canadian mutual funds and Canadian-listed ETFs holding foreign stocks (companies headquartered outside of North America). Again, Canadian investors can recover these taxes by claiming the foreign tax credit. 
• Foreign withholding taxes and US withholding taxes may also apply to the following—investors can claim a tax credit for US withholding taxes, but the foreign taxes are not recoverable.
  • Canadian mutual funds and Canadian-listed ETFs holding US-listed ETFs holding foreign stocks
  • US-listed ETFs holding foreign stocks

Also good to know: investors who hold “specified foreign property” (including stocks and mutual funds) with a cost of more than $100,000 at any point in a tax year must complete Form T1135 – Foreign Income Verification Statement at tax time. Canadian-listed mutual funds and ETFs with foreign holdings are exempt—another example of how holding Canadian investments makes for simpler tax reporting.

No currency exchange costs

Buying U.S. or international stocks or ETFs usually involves converting Canadian dollars, and that comes with costs; you'll have to pay foreign exchange fees when buying and selling your investments. Also, holding stocks in a foreign currency means their value is partly tied to the value of that currency and the strength of the Canadian dollar. That fluctuation can make it difficult at tax time to calculate value.

Easier research and access to information

As a Canadian, you have easier access to financial news, regulatory filings, and analyst coverage for domestic companies. It may also be simpler to understand economic factors like interest rates, housing trends, and government policy when you're experiencing them first-hand.

Strong dividend-paying sectors

Canada is known for stable dividend-paying companies, particularly in banking, utilities, pipelines, and telecommunications. Dividend stocks can provide steady income and portfolio growth and may feel less volatile for new investors, plus investors can claim the dividend tax credit for stocks held in non-registered accounts.

The case for Canadian investments

Canada has several strong stock sectors, including financials, materials, energy, utilities, technology and industrials. Investing in Canadian companies can not only help you grow your money, but also support the Canadian economy—from encouraging the manufacturing of Canadian goods to promoting job creation—all while aligning your investments with today's “Buy Canadian” moment. Strong Canadian markets promote consumer confidence, and that can help keep the economy humming.

The case for diversifying

The Canadian market is mighty, but small, which can limit your options. The S&P/TSX, for example, is heavily concentrated in the financial, energy, and mining sectors, and has less technology and health-care exposure than other global markets. Even if you invest in more domestic stocks, it's still a good idea to think beyond our borders: building your portfolio exclusively with Canadian investments can increase your risk, since a downturn in the domestic economy could drag down all your holdings at once.

One way to offset this risk is to diversify your holdings both by sector, asset type (e.g., stocks and bonds), and geography. By doing so, you lower the risk of one asset, industry, or market undermining your portfolio, and you balance those weaker areas with others that may be performing well.

Final thoughts

This might be a moment in Canadian history when patriotism increasingly plays a role in saving for your future. A “Buy Canadian” sentiment in people's investment portfolios could have an impact on our economy. Ultimately, though, your portfolio should balance Canadian investments with other assets to reduce your overall risk.