We’re more than half way through the 2019 investing year, and it’s time to get rid of low-performing investments and move money into low-risk investments. The low-risk investments will be able to provide a modest return with little to no risk of losing your principal.
Aggressive investment portfolios should have some form of diversification with low-risk investments taking center stage,
The low-risk investment options are:
1. Savings Accounts
Savings accounts are starting to offer decent interest rates. Tangerine is offering over 1.15% interest rates and up to 2.75% for new accounts for six months. Citi is offering over 2% interest rates in July.
These are great rates for a savings account and allow you to earn some form of return on your savings.
You can use these accounts to offset the low interest rates that are currently being offered through CDs and similar products.
2. Guaranteed Investment Certificates
GIC’s in Canada are ideal for a person that is retired or looking for a secure place to keep their money over the short-term. The benefit of GICs is that you can access your money at any time, and if an emergency expense arises or you need to make a major purchase, GICs can help.
GICs can be as short as 30 days or as long as 5 years, so you can place some of your investments into a GIC over the short-term while trying to determine what other investment options you’re considering.
Short-term GICs have rates of 2.30% interest with long-term options offering up to 3.00% interest.
There will be a minimum deposit needed on these investments which is normally $1,000.
3. Invest in Being Debt-Free
One investment that every investor should be working on is becoming debt-free. The debt you accrue today will be taking away from your investment opportunities. Paying off high-interest debts can help you save more money every month and also open up other investment opportunities to you.
It’s best to pay off high-interest debts and then take the money that you’re saving to pay off the next highest debt.
Over time, you’ll be able to pay off debts freeing up a lot of money every month.
4. Invest in Bonds
Bonds have a lower interest rate than some of the other options listed, so they should be pursued with this understanding. Government bonds are one of the safest investments you can make, but you’ll not have access to your investment until the bond matures fully.
Canada’s 5-year bond rate for a government bond is just 1.525% – savings accounts can beat these rates.
But a good, diversified portfolio will have some bonds included.