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COVID-19: Is now the time to invest?

We can all agree COVID-19 turned our worlds upside down. From being confined to our homes to many people losing their jobs, it has been a period of uncertainty for many of us. 

When we aren’t sure about what’s ahead, it’s tempting to be cautious with our money and avoid risk in these uncertain times. But, the temptation to err on the side of caution and avoid risk can actually hinder rather than help your financial future. Flashback to the beginning of the pandemic when Canadians started stockpiling (remember the great toilet paper rush?). By the end of the year, the average household savings was about 15% – that’s higher than the previous seven years combined. And the result of those combined savings? As much as $100 billion, or about 6% of the country’s GDP! 

So now the question is what should Canadians do with all that savings? It’s tempting to be careful, but as it turns out, if you have money, a crisis is actually a good time to invest.

Here’s why:

A crisis is (almost) always followed by a rebound

In a crisis, our natural reaction is panic. Not to go too Freud, but we close ourselves off, avoid risk and seek security. It’s normal. But fear is rarely the best advisor. 

With stock prices tied to major world events and the overall global economy, it’s not surprising that COVID-19 has had a huge impact on markets – for better or for worse, depending on the industry. But when it comes to investing, it’s the long-term that counts. So there’s no point panicking when prices dip or the media (yet again) predicts impending doom. When financial markets go down, it’s generally likely they’ll go back up again within months – or even weeks – especially since there’s often a post-crisis rebound to come. We can already see the markets bouncing back over the past year after the pandemic started. All it takes is a little patience.

That’s why it’s important to keep in mind that prices are just a snapshot of a specific moment in time. Like viral videos that fade into the digital abyss, stock prices tell us nothing about what will happen in the future. 

To put it in a slightly more, well, historical perspective, past crises (like the 1929 stock market crash and the 2008 economic crisis) have almost always been followed by rebounds. Markets are cyclical; after falling, they rise. And the rise can be big. After the 2008 crisis, the American stock market bounced back by more than 320%!

That said, staying calm in a crisis is easier said than done, we know, so if your emotions do tend to overwhelm you, check out this article on behavioural finance and why investors are their own worst enemies.

Now’s the time to think about the future

If the pandemic has proven anything, it’s that we don’t know what’s going to happen (even though, on average, we can expect periods of positive growth to be longer and bigger than periods of negative growth). So safeguarding your future by putting money aside is important. But rather than just saving, it makes more sense (and cents) to invest.

Why? Because unlike savings, investing comes with opportunities for returns. Imagine that you put $100 in a savings account with a 1% interest rate. After a year, you’d have $101, but as prices rise with inflation, suddenly that $101 might actually buy less than your original $100 would have bought. Investing, on the other hand, gives you a potential return (aka “a gain”) that can cover the increase in prices. Yes, there’s always a chance you’ll lose money with investing, but in the long term, it very often means more profit, while savings can reduce your buying power. 

Certain sectors are seeing an upswing

We all know that some industries have been hit harder than others, like the hospitality and cultural sectors. So while it might not be the best time to open a restaurant or launch a theatre company (though some people would disagree), some industries – like digital technology, health and sustainable development – haven’t just been spared, they’re on the rise. Meanwhile, Socially Responsible Investments (SRIs) have proven resistant and performed even better than traditional funds!

What’s the lesson? The economy isn’t all or nothing. When some sectors suffer, others will thrive, meaning a crisis can still be a great time to invest. The most important part of any investment is the purchase price – as prices go down, it’s an opportunity to buy low, with a long-term plan of taking advantage of the market rebounding, all while minimizing risk. 

The investments you make during a crisis will work in your favour … as soon as the market recovers. 

Invest smarter Investing

Ready to start investing? Here’s why ETFs are perfect for you.

Whether you want to retire before 50, take that big trip to Bora Bora (whenever we can do that again), or achieve any other financial goal, you know investing is the not-so-big secret. 

But investing can be overwhelming if you’re just getting started. How do you know what stocks to buy? How do you buy stocks if you only want to invest a little bit at a time? 

If you’re considering investing for the first time, exchange-traded funds (ETFs) are an easy and affordable way to get started. And you don’t have to be an expert investor to make it work for you.

Start investing in ETFs today!

Moka makes it easy to invest in a fully-managed, diversified portfolio of Exchange-Traded Funds or ETFs.

What is an ETF?

First things first: An ETF is a collection of stocks and/or bonds. You can buy an ETF just as you would stock. However, when you buy stock, you’re investing in one company, such as Tim Hortons or Amazon. When you invest in an ETF, you’re investing in multiple stocks or bonds that follow a specific investment strategy.

For example, some ETFs may track a stock index (like the FTSE Canada Index ETF, which tracks the performance of the FTSE Canada Domestic Index and invests in the largest Canadian stocks). Or, an ETF may track an index for a particular industry, such as technology or healthcare. 

An index measures the performance of a group of stocks or bonds. So, a technology index may include Apple, Microsoft, IBM, and others. The ETF attempts to meet or exceed the performance of the index.

Why invest in ETFs vs. stocks?

While you can buy ETFs and individual stocks, there are several upsides to investing your money in ETFs—especially when you’re just starting out. 

Low investment amounts. One of the biggest reasons ETFs are better than stocks for new investors is because they make it easier to start investing with less money. Some stocks cost several hundred dollars for a single share. With an ETF, you can invest smaller amounts and not face tons of commissions and other fees.      

Risk management through diversification. One of the keys to success as an investor is diversification. The basic concept behind diversification is simple: don’t put all your eggs in one basket. With your money spread across several stocks and bonds, there’s less risk involved. 

If you invest in one stock, your investment would lose a lot of value if the stock price plummets. (All your eggs are in one basket, so you’re in trouble if you drop the basket!)       On the other hand, if an asset in an ETF underperforms, other assets can make up the difference. One ETF is many baskets.     

That said, it’s still possible to take risk with ETFs. If you have a higher risk tolerance, you can opt for a portfolio of ETFs that takes a more aggressive investment strategy.           

Simplicity. With ETFs, you don’t have to be an investment pro to succeed (even seasoned investors have a hard time beating the market by picking stock). If you don’t have the time to understand which specific stocks make most sense for you—and who really does?—investing in an ETF is a much easier decision that can pay off in the long term.           

Performance. ETFs generally follow the index they’re tracking. Over time, their returns will be similar to the index. For example, someone who invested in the FTSE Canada Index ETF at inception in November 2011 would have seen an annual compound rate of return of 7.27% by the end of 2020.

In fact, ETFs can outperform stock picking over time. Some stock pickers largely outperform passive, index investing strategies, but in general, over longer periods of time, passive index ETF investment will outperform. This is especially true for non-professional investors: you’re more likely to see better gains in the long term if you go the ETF route over trying to manage your own portfolio!

So, if you don’t have a bajillion dollars to invest in pricey stocks managed by a pro (and who does?), but you still want to make progress toward your financial goals, you’ll want to consider ETFs.

Ready to start investing in ETFs today?

There are lots of ways you can get started. If you’d like to open a fully-managed, diversified investment portfolio, Moka might be the right fit for you.     

Moka portfolios are a mix of four Moka funds:

  • Three funds are entirely ETFs.
  • The fourth fund is designed for people who may need to quickly convert their investment money back to cash. This fund is a mix of ETFs, guaranteed investment certificates (GICs), money market instruments (such as treasury bills), and cash.

The mix of funds in your portfolio will depend on the strategy we select (we’ve got options ranging from conservative to aggressive) to support your goal, financial profile and risk tolerance, and whether or not you’ve selected socially responsible investing.

And with Moka, you don’t need a bag full of cash to get started. Moka will round up your everyday purchases to the nearest dollar and automatically make the investments.

Download Moka to start investing in ETFs today.

Disclaimer: The views expressed in this story do not constitute financial advice.

Invest smarter Investing TFSAs

Why it pays to invest in a TFSA

TL;DR: If you were to invest consistently for 40 years within a TFSA, you’d end up with 49% more money than if you’d invested the same amount with a non-registered account.*
*Assuming a 5% annual interest rate and marginal tax rate of 32.17%

In 2009, something wonderful was born: The Tax-Free Savings Account (TFSA). Unlike non-registered accounts, you don’t pay any tax on the investment return, even after you withdraw the funds held in your TFSA. 

These tax benefits make TFSAs the smartest way for Canadians to invest, which is why we were thrilled to offer them to our users. We were even more thrilled to see that 35% of users immediately open a TFSA for their goals.

Save & invest in a TFSA

Moka lets you automatically invest in a diversified, tax-free investment portfolio.

Unfortunately, only around 40% of Canadian millennials have a TFSA. That’s more than half of Canadian millennials who are missing out on the opportunity to see a much higher net return on their investments.

We crunched the numbers to demonstrate that a Canadian who invests consistently from the ages of 25 to 65 could end up with nearly 50% more money by investing within a TFSA than with a non-registered account.

What does this mean? Let’s break it down.

Say you begin investing $5,000 a year with a TFSA when you’re 25, and continue putting in the same amount every year until you’re 65. 

After 40 years, your net total TFSA return would be $435,959 (assuming an annual interest rate of 5%*).

However, if you were to have made the exact same investment over the same period of time in a non-registered account, your net total return after 40 years would only be $227,023 (assuming a marginal tax rate of 32.17%*).

You’d end up with 48.36% more money (that’s over $200K more!) with a TFSA than with a non-registered account. 

*Marginal tax rate calculated using the average income of Canadians in this age range, and the average marginal tax rate of all provinces.
*Model assumes that the TFSA program will continue to be offered during the entire period.

You can see the full spreadsheet for the graph here. As the data shows, the valuable tax benefits of a TFSA, plus time and compound interest, make for a lucrative combination. So if you’ve been thinking about opening a TFSA, make today the day. 

Luckily, Moka makes it easy to get started. Just create an account, choose a TFSA for your goal and start saving and investing towards it in the smartest way possible.

For more information on TFSAs, click here.

If you have any questions or would like to talk with a human, simply email one of our dedicated portfolio managers at

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Why did I lose money on my investments?

October was rough for the financial markets in general. If you noticed a decrease in the value of your investment account, please know that there’s no reason to panic.

Dips are normal. The markets often go up like an escalator and down like an elevator, but if you stick with the plan, you’ll do better over time, even if you do take a few elevator rides once in a while.

Take the Toronto Stock Exchange, for example. In October, the TSX decreased by 6.5%. However, over the last 30 years, it has increased 6.8% on average every year. 

Downturns are not only a normal part of investing, they can actually be an opportunity for investors to buy into the market at a discount (take, for example, dollar-cost averaging*). If you can look past the temporary loss and invest more when the market is down, you’ll be better placed to earn higher returns when the market is up again.

Why do stock prices go down?

When we talk about a downturn in the market, we generally mean that stock* prices are declining. To understand why this happens, let’s look at the difference between price and value. The price of a stock is first determined at the company’s initial public offering*, but will rise or fall depending on supply and demand. Supply of a stock at a point in time is determined by the number of sellers, and demand determined by the number of buyers. If supply decreases or demand increases, then prices tend to rise. But if supply increases or demand decreases, then prices tend to fall.

Value, on the other hand, is a subjective concept and varies by investor. You decide how much value to give stock depending on how you feel about the company it represents. It’s the price that you think it should be trading for on the market.

A rational investor will buy when stock price is below value and sell when price is above value. In fact, investors like Warren Buffett have made a living from doing exactly that.

What causes steep market declines?

Prices can fall quickly when the collective mindset of the market shifts from positive to negative sentiment about the future of investments available in that market. At a macro level, world events (like wars or natural disasters), political news (such as elections or tariffs), and the release of economic data or monetary policy decisions are some of the major forces that lead to a decline in prices. Sometimes there are a variety of factors weighing on markets and sometimes there’s no clear reason at all.

What we can say is that markets (like people) always have their ups and downs, which is why looking at the bigger picture matters.

So what does this mean for my Moka investment account?

If you noticed a dip, it’s likely that you are currently investing in a Moderate, Moderate-Aggressive, or Aggressive investment portfolio with Moka. These portfolios have greater exposure to stocks so your investments will have greater volatility (daily fluctuations) than a Conservative or Conservative-Moderate portfolio.  This additional volatility means that you can experience larger losses in certain periods, and larger gains in others.

The trade-off is that expected returns in the long term are higher for riskier investments like stocks than for safer investments such as bonds or savings accounts.

What should I do now?

We recommend that you stay the course with your investments. We selected your portfolio based on information you provided about your goal, financial situation, time horizon and risk aversion. If you are in one of our riskier investment portfolios, chances are that your profile indicates you have a higher ability to tolerate short-term loss, perhaps due to factors such as a strong, steady income, a relatively long time horizon on your goal, and a higher tolerance for risk.

Of course, your investments are your investments, so you should decide what you feel comfortable doing, and this can change as you gain more investment experience. If you have questions or concerns about your investments, your dedicated portfolio manager is always available to chat and can answer any questions you may have about your investment strategy.


Dollar-cost averaging is an investment strategy that involves buying a fixed dollar amount of a specific stock on a recurring schedule over a long period of time. Investors buy more shares when the price is low and fewer when the price is high, but they will gradually build wealth as the value of that stock goes up and down.

Stock means ownership in a company. If you have stock in a company, you own a part of the company. Sometimes people use the terms ‘stock’ and ‘share’ interchangeably, but they aren’t the same thing. Think of stock as the pie and shares as the slices.

An initial public offering is the launch of shares in a company on a stock exchange. The company pays an investment bank to calculate the value of the company, the number of shares in the company and the cost of an individual share.

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Ask an expert: I’m young. Should I take a lot of risk with my investment?

We’re told it’s good to take risks early in life, but does this advice hold up when it comes to investing? There’s no short answer except: It depends. The truth is that it comes down to who you are and what you want. I’ll explain.

In the investing world, risk is the probability that you will experience financial losses. The benefit of taking risk, however, is that it can come hand in hand with higher returns, or profit on your investments, in the long run. If you’re trying to figure out how much risk to take, first consider these two questions:

1. What is your financial situation?

It is crucial to determine your risk tolerance before you start investing. How much risk you should take depends on both your 1) willingness and 2) ability to accept risk.

Your willingness to tolerate risk is your subjective attitude toward risk taking.  In other words: What qualitative emotions do you have around investing? At Moka for example, we ask questions like  “Imagine your stocks are down. How would you react?” Your answer gives us a good sense of how willing you are to take risk, and this knowledge helps us invest your money accordingly.

Your ability to take risk is equally important. Before deciding how much risk to take, you should also look at quantitative factors like your income and your net worth. If you have a high income and net worth, you can afford to ride out short term losses and emerge with healthy finances in the long run. Someone with a lower income or net worth simply can’t afford to lose so much.

2. What are your financial goals?

Identifying a goal before you start investing is important. Your goal helps determine how much risk you should take because it points to your investment time horizon, or the length of time you want to invest before reaching your goal.

Historically, stock markets have seen the best returns on investments over time when compared to investing in bonds or leaving your money in savings. However, the road to profit can be long and bumpy. Over a short time period, it’s possible that your investments may not perform well and you could even see a loss. Fluctuations in the market mean that you’re better off taking less risk if you have a short-term goal. However, if you’re saving for a long-term goal like retirement, you can afford to take more risk because you have time to recover from a hiccup in market performance. You’ll still see profit if your investments have a general upward trend over the long run.

For many millennials, saving for short-term goals is a bigger priority than long-term savings. If you’re looking to achieve a goal soon, taking a lot of risk may leave you disappointed. Imagine you’re trying to save a down payment so you can buy a house in the next few years. If you invest in a high risk portfolio and the stock market takes a major downturn, you could see your down payment shrink and end up further away from your goal. The same principle applies to other short-term goals, like buying a car, taking a vacation or repaying debt.

Bottom line: Consider your financial situation and your current goals before you make a risky decision, or enlist the help of a professional portfolio manager who can design a portfolio that works for you.