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Shares: companies you own a piece ofrisk 4 of 5: high, can drop a lot

Domestic shares

Rules, protection and tax below are for Canada.

What it is

Part ownership of a company. A share entitles you to a slice of the profits the company chooses to pay out, called a dividend, and to a vote at its meetings. Its price on the exchange is what other people will pay today for that slice of the future.

Over decades, owning a broad spread of companies has been the most reliable way ordinary people have grown money faster than inflation. Owning one or two companies is a different activity: the outcome depends on those particular businesses, and plenty of once-solid names have gone to nothing.

Shares in your own country are the easiest to buy, cheapest to hold and simplest for tax. They also mean your job, your house and your investments all ride the same economy.

How it works

  1. You open an account with a broker, which holds the shares for you and executes your orders on the exchange.
  2. You pay the price on screen plus the spread, any commission, and in some countries a purchase tax.
  3. Dividends land in your account when the company pays them; you can take them or reinvest.
  4. You sell whenever the market is open, at whatever the price is then, and any gain may be taxed.

The honest pros and cons

For

  • The highest long-run returns of the mainstream asset classes, historically.
  • Cheap to buy and hold, with no fund fee at all.
  • Dividends give an income that has tended to grow over time.
  • You can sell in seconds on any trading day.

Against

  • Single companies fail; a concentrated holding can lose everything.
  • Prices fall 30 to 50 percent in bad years, and you have to be able to sit through that.
  • Picking winners is much harder than it looks; most people underperform a plain index fund.
  • Everything you own may already depend on your home economy, so more of it adds no diversification.

Getting it in Canada

Domestic shares available

  • Account type: Tax-Free Savings Account (TFSA) (interest, dividends and gains inside are tax free, and withdrawals are tax free)
  • Account type: Registered Retirement Savings Plan (RRSP) (contributions are deducted from taxable income; withdrawals in retirement are taxed as income)
  • Account type: First Home Savings Account (FHSA) (contributions are deductible and a qualifying home purchase withdrawal is tax free)
  • Account type: Non-registered account (interest is taxed as income, eligible dividends get a credit, and half of any capital gain is taxable)

Wherever you are

  1. Open a brokerage account, preferably inside whatever tax shelter your country offers.
  2. Decide whether you are buying a few companies you understand or a broad spread; if it is the spread, an index fund does it for you cheaply.
  3. Set a limit on how much of your total money sits in any one company; 5 percent is a common ceiling.
  4. Buy, record the price for tax, and stop looking at it every day.

Try it

Getting it from another country

Via United States allowed· available there

Open a US-dollar side of your existing brokerage account and buy on American exchanges; a W-8BEN form, which brokers file for you, cuts US dividend withholding to 15 percent.

What you gain

  • A far bigger menu of companies and funds than the Toronto exchange.
  • US-listed funds are cheaper than most Canadian ones.
  • Inside an RRSP the treaty exempts US dividends from withholding entirely.

What you give up

  • Currency risk: a rising Canadian dollar shrinks US gains when you convert back.
  • Currency conversion spreads of 1 to 2 percent each way at most brokers.
  • Inside a TFSA the 15 percent US withholding tax on dividends is lost for good.
  • Large US holdings can trigger US estate tax exposure and foreign asset reporting.
  • Tax: US dividends carry 15 percent withholding under the treaty, exempt inside an RRSP but not a TFSA; gains are taxed in Canada as usual (source, checked 2026-09-11)

Currency reality check

The same CAD 1,000 left for 10 years, at each country's savings rate:

Kept in CAD at about 2.1% a year

CAD 1,226

Sent to USD at about 2.5% a year, the account would show

USD 948 the tempting number

Brought back to CAD after the exchange rate moved 3.7%

CAD 1,325 what you can actually spend

Before tax, before fees, and before the risk that the exchange rate does something quite different next time. A higher rate abroad is only a higher return once it has survived the conversion back.

Go deeper

Also called

stocks, equities, ações, acciones, common stock

Often confused with

  • Corporate bond: A loan to a company that pays interest; riskier than lending to a government because companies fail more often.
  • Foreign shares: Part ownership of a company listed in another country; currency moves affect your return too.
  • Stock index ETF: A fund traded on an exchange that copies a stock market index at low cost.
Domestic shares in Canada · wealth-coop