June 19: Investing All Your Money in Canada – a Look at Pros and Cons

June 19, 2025

These days, many of us are trying to buy Canadian – avoiding products that come from south of the border. We’re changing vacation plans from Florida to Europe – or doing an all-Canadian tour of our beautiful country, its three-ocean coast, gorgeous mountains, and golden prairies.

But what about investing? Should we try and invest 100 per cent in Canada? What are the pros and cons of an all-Canadian investment portfolio?

Save with SPP asked Jonathan Kestle of Milestones Retirement Insights for his thoughts on the subject.

On the “pro” side, he says investing in Canada is investing “in something we are familiar with. There are fewer surprises – and boring sometimes is good,” he says. It’s overall a little easier to “keep your money at home,” he adds.

However, because of our country’s economic ties to the U.S., going all-Canadian won’t avoid some of the volatility the American markets feel – there is a “positive correlation” since our markets are (currently) so intertwined, he adds.

Investing in Canada means “you are supporting Canadian companies and workers, a `feel good’ move that is important for our economy,” he says.

There’s also a tax advantage or two, Kestle points out. “If you invest in Canadian companies, you may receive a dividend tax credit from certain types of investments,” he explains. That means the tax treatment – for Canadians – of Canadian investments is “more favourable than investing in U.S. stocks, where the income is treated more like interest.”

He adds that the dividend tax credit matters most to non-registered investments, as there are no such tax considerations for investments within registered retirement savings plans or Tax Free Savings Accounts. “But there is definitely more favourable taxation for non-sheltered portfolios,” he says.

Kestle adds that there are also some “cons” to consider when thinking about an all-Canadian investing strategy.

Canada’s economy “is a smaller, more resource-based economy – there is less diversification” than in the broader markets, he begins.

“In an all-Canadian portfolio you can only get some much exposure to different assets classes, like research and development, technology, healthcare, biotech, and big consumer brands. There’s no Canadian version of Nike or Coke, although we do have companies like Shopify,” he notes.

“But we don’t have all the media companies – entertainment, movies, and Netflix.” While our largely resource-based economy, sprinkled with banking, utilities, and consumer staples offers growth, “or the potential for it,” all-Canadian returns lack some of the “bat it out of the park” returns you see with U.S. technology stocks, like chipmakers. Also in Canada, there is more government regulation of most industries, which also “can hamper growth,” he explains.

Kestle says there is a potential silver lining to our current trade issues with our southern neighbours.

“We have woken up to the fact that we can’t just hitch our wagon to the U.S. economy,” he says. That offers up the potential for “internal trade barriers (between the provinces) melting away,” he explains.

“Maybe we can start to refine more of our own oil. Perhaps there will be new supply chains with new trading partners, such as the European Union. There are a lot of opportunities out there,” he says.

There is encouraging talk of finally developing an “energy corridor” so that our oil and gas can reach new markets. “We have the unity and the will to potentially do those things now – there is an `all hands on deck’ feeling,” he says.

Anyone thinking of changing their investment portfolio should first consider getting expert financial advice, he says. “It is important to diversify, yes. But investing can be difficult and timing the markets is very difficult.” It is better, he suggests, to have a plan that sets out your investment guidelines, your tolerance for risk, and other factors. Develop a plan and then stick to it, he advises.

For those thinking of reducing their exposure to U.S. securities, Kestle advises against a quick sell off, and suggests a “lazier approach” of gradually lightening your exposure over time. That way, you can get out of the U.S., investment wise, “when something goes up.”

We thank Jonathan Kestle for taking the time to talk to us.

Diversification is an important part of any investment strategy. Did you know that the Saskatchewan Pension Plan’s Balanced Fund is invested in nine different asset categories? Those categories are Canadian, U.S. and Non-North American equities, real estate, infrastructure and bonds, and mortgages, private debt and short-term investments. It’s smart to avoid putting all your retirement savings eggs in one basket – and SPP’s diversification delivers just that.

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Canadian Investments, Milestone Retirement Insights

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