Personal Finance Insights

Investment Property vs Online Investing

Finally, you’ve reached a place in your life where hard work and saving have provided you enough money to begin investing. The question now is: invest it in what? You want to secure your financial future while maximizing your return, but you know there are different options out there; the two most obvious being investment properties, and online investment products (i.e. stocks, bonds, ETFs, etc.). So how do they compare? We’ll take you through some key differences below.


The first thing to consider is how much money you initially have available to invest. Across Canada, the minimum down payment on real estate is 5 per cent if the purchase price is $500,000 or less, with mortgage default insurance required for any down payment under 20 per cent. If the purchase price is between $500,000 and $999,000, you are required to put down an additional 10 per cent for the portion of the purchase price above $500,000, and if the purchase price is $1 million or more, 20 per cent of the purchase price is required. This can mean a lot of cash up front. In comparison, online investing accounts can be opened for free, with trades costing as little as one cent per share.


Diversifying your investment properties means holding different types of real estate in different locations; keeping in mind the aforementioned up-front costs. In online investing, you can diversify by owning different types of products (stocks, bonds, ETFs, etc.) from different regions. One alternative that merges both types of investments are real estate investment trusts (REITs). REITs allow you to own shares of a variety of properties, without the large initial investment or property management issues.


Investment properties can take months to sell, with associated costs that can include staging, legal, and agent fees. Online investment products, on the other hand, can typically be sold immediately, with the proceeds usually “settling” (becoming available to you to withdraw) within two days.


Both financial and real estate markets tend to experience periods of growth and correction (price drops), but generally trend upward over time. Property busts are less frequent, but tend to last almost twice as long. How you choose to invest for your future is a matter of your available funds, priorities, and comfort level. Consider all your options before deciding what is right for you.

The information contained on this website and the resources available are for educational and informational purposes only, they are not intended as, and shall not be understood or construed as, financial advice.