How to choose the best investment options for your savings
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For many people, investing is complicated. Terms, numbers, and fluctuating markets can make your head spin, but investing doesn’t have to be intimidating. In fact, with the current resources and technology available to you, anyone can invest. The key thing is understanding what the best investment options for your needs are.

Figure out your goals

As a general rule, you should never dive into investing until you figure out what your goals are. Once you know your short and long-term goals, you can choose investment products that will help you reach those goals.

Short-term savings goals

When it comes to short-term savings goals, you’re looking at anything in the next five years, such as:

  • Building an emergency fund
  • Paying down debt
  • Saving for a wedding
  • Purchasing a home
  • Taking a vacation

With short-term goals, you’re going to need your money soon. As a result, you’ll want to ensure that your money is only invested in products that aren’t risky. The idea is that keeping your money safe is more important than any potential gains.

Long-term savings goals

With long-term goals, your time frame is five or more years, such as:

  • Retirement savings
  • Saving for your child’s future education
  • Buying an investment property

Long-term goals give you more flexibility since it’s assumed you may not need the money for some time. That allows you to consider riskier investment products. As long as you don’t sell when your investments are performing poorly, you can wait things out while your investments recover.

It’s okay to have multiple goals

Generally speaking, students and young adults usually only have short-term savings goals. Eventually, you’ll likely have both types of goals, so you’ll need to manage your investments wisely. That said, if you have limited income or savings, you’ll need to prioritize your goals. Essentially, you want to put yourself in the best position possible with the resources you have available.

Investment options available

There are many different investment products available. Some are more suitable for those with short-term savings goals, while others are better for the long term. Remember that you don’t need to choose just one investment product - you can mix and match things based on your goals and risk tolerance. As long as you understand how the products work, you can make an informed decision when building your portfolio.

High-interest savings account

High-interest savings accounts (HISAs) are ideal for people who have short-term savings goals. While all financial institutions offer HISAs, not all of them have competitive interest rates. Generally speaking, digital banks that only operate online have the best rates.

Guaranteed investment certificates

Guaranteed investment certificates (GICs) are one of the safest investments available since your principal investment is always guaranteed. Not only will your financial institution guarantee the principal amount, but so will Canada Deposit Insurance Corporation (CDIC).

Since GICs are a relatively risk-free investment, the returns are typically lower than other products available. That said, GIC rates are tied to a financial institution's prime rate. As interest rates rise, so do the yields offered by GICs. Keep in mind that GICs typically have a fixed term ranging from 30 days to five years. While some GICs are cashable, the ones that are locked in will usually have higher interest rates.


Bonds are another relatively safe investment product. Bonds are issued by governments and corporations as a way to raise money. You’re lending them money in return for your money back later, plus interest. There are different grades of bonds available. Higher-grade bonds have lower yields, but you’re almost guaranteed not to lose any money.


Individual stocks allow investors to purchase parts of a company. When that company performs well, the stock value will go up. On the flip side of things, if the company misses expectations, the value of the stock will usually drop. Stocks are one of the better ways to grow wealth, but you’ll need to diversify because not every company will always go up in value. When investing in stocks, you need to understand that any potential gain could also be a potential loss.

Mutual funds

Instead of purchasing individual stocks, you can buy a mutual fund that holds dozens of stocks and bonds within a single product. Mutual funds are managed by a fund manager, so you don’t need to make any major investment decisions. Since there are mutual funds available for every type of investor, you just need to choose a fund that best suits your goals.

Exchange-traded funds

Exchange-traded funds (ETFs) are like mutual funds, but there’s no fund manager. Instead, ETFs track an index such as the S&P/TSX Composite Index, which represents about 250 companies on the Toronto Stock Exchange. ETFs take a passive approach, so when markets are performing well, so would your ETF. What attracts many people to ETFs over mutual funds are the lower fees.

Invest regularly to meet your goals

Generally speaking, HISAs, GICs, and bonds are great for people with short-term savings goals. For those with a longer time frame, consider stocks, mutual funds, and ETFs. Regardless of your goals, the best investment strategy is to invest early and regularly.

If you can invest a small amount every month, your money will grow over time. There’s no way to quickly reach your goals. Slow and steady wins the race.

Barry Choi is a Toronto-based personal finance and travel expert who frequently makes media appearances. His blog Money We Have is one of Canada’s most trusted sources when it comes to money and travel. As a completely self-taught, do-it-yourself investor with no formal training, he makes money easy to understand for all Canadians. His specialties include personal finance, budget travel, millennial money, credit cards, and trending destinations.

Barry Choi is a paid spokesperson of Sonnet Insurance.
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