The Financial Divide: Why immigrants miss out on the stock market
It took me nearly eight years after landing in Canada to finally decode the intricacies of investing. Along the way, I reflected on the opportunities I had missed and, more importantly, why they slipped through my grasp. As I dug into research papers and pondered on experience growing up in Pakistan, I began to see a pattern. Even among relatives who migrated to Canada decades ago, many continued to follow financial habits rooted in their home countries—favoring speculative stock market trading over long-term investing. These strategies, unfortunately, are well-documented paths to financial setbacks. Why does this trend persist, even when evidence repeatedly proves its flaws? It’s a topic that warranted deeper exploration and deserves its own spotlight.
The Luggage We Can’t See: Financial Mindsets
A significant portion of Canada’s immigrant population originates from developing economies (Distribution of new immigrants arriving in Canada in 2024, by country of origin). And for many of us, those early preferences don’t disappear just because we cross a border.
When I immigrated to Canada, I brought with me the same mindset I had grown up with in Pakistan - where investing in real estate or starting a small business was seen as the primary route to financial success. The idea of investing in the stock market, especially through long-term vehicles like index funds, felt far less tangible. Among relatives and friends, I noticed similar patterns: many continued to favor speculative trading, short-term stock picks, or avoided equities entirely. Instead, the focus remained on accumulating properties - even if it meant carrying heavy debt.
The irony is, Canada offers access to one of the most stable and transparent investment environments in the world. But when cultural preferences are deeply rooted, even the best financial tools can go unused. The habits developed in countries with less reliable systems continue to influence how immigrants engage with financial markets here.
In recent years, mutual funds have become more accessible in places like Pakistan, but many still operate with outdated models. For example, the HBL Growth Fund - one of the country’s top-performing funds—comes with layers of complex fees and fine print that echo the early days of fund investing in developed countries. Front-end loads, back-end fees, and high management charges make it difficult for everyday investors to see real returns. The offering documents are so dense that even financially literate readers struggle to decipher them.
Through my own research in Pakistan, I’ve come to believe that these issues are not unique. Many developing countries face similar challenges: high barriers to entry, a lack of transparency, and a culture of financial exclusion. And when immigrants arrive in countries like Canada, they often carry these barriers with them—internally. That mindset shift, I’ve realized, is just as important as learning how the stock market works.
The Homeownership Mindset
Homeownership remains a dominant aspiration for many immigrants and is often perceived as the safest and most respectable path to financial independence. In communities like the one I grew up in, owning property wasn’t just encouraged - it was expected. Real estate was seen as the ultimate symbol of financial success, a stable investment that “can never go wrong.”
And that belief still holds strong, even when it involves taking on significant debt. Many are willing to stretch themselves thin with mortgages because of a long-held conviction that “real estate only goes up.” It’s a mindset passed down across generations and borders—and one that feels familiar and reassuring in a new country.
What’s often overlooked is that similar debt-fueled strategies exist for the stock market too—like using margin accounts—but these are viewed as risky, complex, and speculative. Unlike mortgage debt, which is normalized and even celebrated, stock market leverage carries social and psychological stigma, especially in immigrant communities. It's ironic, because both tools carry risk, yet one is widely embraced while the other is feared.
A study by RBC Wealth Management comparing Canadian stock market returns with real estate trends found that although the Canadian stock market typically lags behind the U.S., it has kept pace with Canadian real estate growth over time. The key difference lies in accessibility: real estate requires substantial upfront capital, ongoing maintenance, and long-term debt obligations. In contrast, the stock market offers flexibility, lower barriers to entry, and liquidity—traits especially beneficial for new immigrants trying to build wealth from scratch.
Breaking the Cycle
Achieving financial inclusion for immigrants goes beyond simply providing access to financial tools — it requires a transformative shift in mindset. Cultural habits don’t change overnight, especially when they’re reinforced by systems that lack transparency or accessibility. But in countries like Canada, where financial infrastructure is strong, the opportunity to reset those habits is real.
I still remember the turning point for me. I stumbled across a talk on YouTube—The Simple Path to Wealth by JL Collins at Google—and something clicked. That one video led me down a rabbit hole of Jack Bogle interviews and the Bogleheads wiki. It stripped away the noise and made long-term investing feel simple, even accessible.
I’m not saying the stock market is the only path to wealth. Real estate and business ventures have their place. But equities offer a real, efficient, and accessible alternative — especially for newcomers without the capital for more traditional investments. Building wealth in a new country starts with rethinking what’s possible—and being open to the tools that make it easier.
