FrontFundr Unlocks Investing in Private Companies through RRSP
In Canada, we have the benefit of investing in a Registered Retirement Savings Plan (RRSP) or Tax Free Savings Accounts (TFSA). Learn more about RRSPs and TFSAs – What they are and their benefits here.
An RRSP is typically associated with investments in fixed income investment products such as bonds, Guaranteed Investment Certificates (GICs) and Exchange-Traded Funds (ETFs).
There is no one-size-fits-all RRSP investment strategy and your RRSP investment strategy depends on your personal and financial circumstances. However, it is common to pursue an RRSP portfolio strategy, which includes both fixed income and equity investments in your RRSP.
What about diversifying your portfolio with Private Companies?
What is uncommon and often not possible is to invest in private companies through your RRSP. The established financial institutions and asset management service providers typically do not offer investment opportunities in private companies or funds. They consider financing needs for private companies to be too small to get them through their due diligence and compliance procedures. They are also hesitant to offer securities in private companies as these are typically illiquid - where there is no secondary market, a securities exchange where you can buy and sell securities in private companies.
FrontFundr cares about Private Companies and enables investors to invest in them
FrontFundr recognizes the importance for private companies to have access to the capital they need to grow. Also, the importance to the wider investor community, the public, to be able to access these investment opportunities. FrontFundr has been pioneering the democratization of funding by, and investing in, private companies in Canada. We established Canada's first online Exempt Market Dealer, and we operate our own fully digital investing platform. We enable everyone to easily invest in private companies. Many of these investment opportunities are eligible for investments through RRSP.
What do you mean by illiquid?
Investments in private companies and funds are typically illiquid. Liquidity is determined by the ability of an investor to sell their investment. With private companies, there is currently no active marketplace to sell shares of private companies and there are certain securities laws that dictate whom you can sell and transfer the shares to. Thus, there is the risk that you may never be able to sell your shares until there is a company wide exit. Investments in private companies may become liquid in the event that the company is acquired by another company or if the company decides to go public on an exchange. This may be 5, 10 or even more years in future. However, given that RRSPs are typically longer-term investments, this does not need to be a disadvantage. In fact, the long-term time attribute of investments in private companies may fit well with the typically long-term time horizon of RRSP investments.
FrontFundr enables you to invest in private companies that you believe in and take advantage of the tax benefits by placing these investments within your RRSP.
FrontFundr is Canada’s leading online investment crowdfunding platform. You can now invest in FrontFundr itself, through your RRSP. Learn More and Invest Now.
Not all securities are eligible for investment in a registered retirement savings plan (RRSP). You should consult your own professional advisers to obtain advice on the RRSP eligibility and risk of these securities.