The Most Common Mistakes Canadian Investors Make

Today I thought I would venture into another ask the AI for common mistakes that people make and see how I measure up. This time I chose to scope it to Canadian Investors. My responses are in italics.

1. Ignoring Tax-Advantaged Accounts ✅

The first major mistake is not taking full advantage of the Tax-Free Savings Account (TFSA), Registered Retirement Savings Plan (RRSP) and First Home Savings Account.

Well seeing as these are the main account types I invest in and report on every month I can safely say I have not made a mistake here. Now FHSA wasn’t a thing when I bought my first place otherwise I would have taken full advantage.

1. Overcontributing or Withdrawing at the Wrong Time ✅
   • Even when investors use the TFSA or RRSP, many get tripped up by contribution limits or withdrawal rules.
   • Overcontributing to your TFSA can trigger penalty taxes. Withdrawing from your RRSP early can lead to hefty withholding taxes and permanently reduce your contribution room.
     • Before you move money in or out, always double-check your limits on CRA My Account — and plan withdrawals strategically to minimize tax consequences.

This is an interesting one, the year after we bought my current place I did actually over contribute slightly into my RRSP however since I pulled money out of the RRSP under the first time home buyers plan I just allocated the overage to the HBP. In some ways I wish I had made this mistake as it meant I had enough money to max them out

1. Chasing Hot Stocks or Trends ❌

So I have definitely fallen victim to this a few times, but, due to my somewhat risk adverse nature it has always been with small amounts so far from “going all in” which is what the AI was more referring to I think.

1. Holding Too Much in Canadian Stocks ❌

Early on in my investing journey I held all Canadian stocks besides the XAW ETF so I have definitely made this mistake. These days I have more US than Canada

1. Ignoring Currency Exposure ✅
   • When you invest in U.S. or international markets, currency fluctuations can have a big impact.
     • If the Canadian dollar strengthens, your U.S. holdings might drop in value when converted back. If the loonie weakens, you could see a boost.
     • Some ETFs offer currency-hedged versions to help manage this, but the right choice depends on your time horizon and risk tolerance. The key is knowing how currency can influence your returns — and planning accordingly.

I have never ignored currency exposure it is something that I am mindful of and keep track of the rates at which I convert CAD to USD and back. Whether I’m making the correct decisions around this is another matter 😆

1. Paying High Mutual Fund Fees ❌

Yes for a short period of time I was in mutual funds until I found out about low cost index fees and low cost brokerages.

1. Not Reinvesting Dividends ✅
   • Dividends are a powerful source of growth, but too many investors take them as cash.
     • Using a Dividend Reinvestment Plan (DRIP) automatically buys more shares with your dividends — compounding your returns without lifting a finger.

I have some of my accounts enrolled in DRIP and some I manually reinvest in others. Either way I haven’t made this mistake.

1. Trying to Time the Market ✅
   • Studies show that even missing the 10 best days in a decade can drastically cut your returns. Markets move unpredictably, and often rebound right after major drops.
   • Successful investors focus on time in the market, not timing the market. Stick to your plan, rebalance occasionally, and let compounding do the heavy lifting.

Time in the market beats timing the market has been my motto. Now I do believe in investing more money into the market dips. Based on my budgeting every year I have a pretty good idea how much I can invest month over month throughout the year. Typically I lay this all out in a planning worksheet where I also factor in tax returns etc. 3 times I have invested heavier by either dipping into emergency funds or borrowing money. All 3 times turned out to be a great opportunity

1. Forgetting About Inflation and Cash Drag ✅
   • Keeping too much cash on the sidelines feels safe, but inflation slowly erodes your purchasing power.
   • A savings account or GIC might make sense for short-term goals, but for anything long-term, you need assets that outpace inflation — like equities or ETFs.
     • Over time, investing in growth assets is what keeps your future dollars worth as much as today’s.

We generally keep a 4-5 month emergency fund outside of that I am fully invested

1. Not Having a Clear Investment Plan ✅

Finally, the biggest mistake of all: investing without a plan.

• A written plan keeps you grounded. Whether it’s a simple spreadsheet or a full investment policy statement, clarity equals confidence.

I think we all know planning is not something I have an issue with if anything I may over plan!

Wrap Up

Overall I think I did quite well I have made 3 mistakes of the 10 listed. The important part of this is that those three I made in the past and have since learned better. It’s important to learn from your mistakes and hey better they are made early on with hundreds or thousands of dollars instead of later on when it could mean hundreds of thousands.

Investing doesn’t have to be complicated — but it does have to be intentional.

Avoiding these ten mistakes can help you lower taxes, reduce fees, stay diversified, and grow your wealth steadily over time.

The beauty of being a Canadian investor today is that we have access to world-class ETFs, digital brokers, and tax shelters that past generations could only dream of.

Use them wisely, stay the course!

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