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Canadians continue to see home ownership as the best investment: survey

Brenda Bouw
Construction workers work on building new homes in Calgary, Alberta, in this file photo taken May 31, 2010. A year ago, one of the hottest parts of Canada's red-hot housing market was Alberta's oil capital of Calgary, where cash-rich consumers fought for the fanciest home on the block. Now, a plunge in crude prices is pulling the housing market with it. REUTERS/Todd Korol/Files (CANADA - Tags: BUSINESS INDUSTRIAL REAL ESTATE)
Construction workers work on building new homes in Calgary, Alberta, in this file photo taken May 31, 2010. A year ago, one of the hottest parts of Canada's red-hot housing market was Alberta's oil capital of Calgary, where cash-rich consumers fought for the fanciest home on the block. Now, a plunge in crude prices is pulling the housing market with it. REUTERS/Todd Korol/Files (CANADA - Tags: BUSINESS INDUSTRIAL REAL ESTATE)

Canadians are reluctant to give up cash in their portfolios and see home ownership as the best investment, according to a newly released investor sentiment survey from Manulife Financial.

The survey shows Canadians are more conservative than Americans in their investments, which makes sense given the difference in economic growth outlooks between the two nations. Canada’s economic growth is picking up, but not as quickly as many economists expect, research shows, while the U.S. economy is rebounding more strongly. Canada’s main stock index has also underperformed the main U.S. indexes over the past year.

About one-third (34 per cent) of Canadians surveyed by Manulife said now is a good time to hold on to cash, compared to 13 per cent of Americans. Canadians aren’t avoiding equities, but the survey shows only 44 per cent said it was a good time to invest in stocks, compared to 60 per cent of Americans.

The results are similar to a survey Manulife released earlier this year showing Canadians see cash as king, while Americans prefer stocks.

It showed 20 per cent of Canadians preferred cash because they could access it quickly, and 11 per cent felt it was more secure.

Canadians love home ownership

Canadians appear to covet home ownership more than any other investment today, the survey shows. The results aren’t surprisingly given the relentless rise in prices that is making many Canadians property rich.

“Owing your own home is still the most popular investment,” says Megan Greene, chief economist at Manulife Asset Management.

The survey shows Canadians are most likely to own a home, and say it is a good time to invest in it, despite ongoing and repeated warnings that the market could be overheated.

Registered Retirement Savings Plans (RRSPs) and Tax-Free Savings Accounts (TFSAs) were also popular places for Canadian investors to park their money. Greene says the near doubling of the TFSA contribution limit, which was unveiled in the latest federal budget released on Tuesday, will likely make it an even more attractive investment vehicle in future.

TFSA’s are a priority for investors because many people look to pay less tax on their investments, Greene says.

The top concern among Canadian investors is managing and maintaining their current lifestyle, according to the survey, which included more than 1,000 Canadians interviewed back in November.

Running out of money in retirement was another concern cited by investors, alongside retiring with debt hanging over their heads.

Similar to surveys conducted the past two years, the results show 58 per cent of Canadians feel they are on track to meet their financial goals. About a quarter of Canadians are behind, but are confident they’ll catch up.