The savvy investor: where are you parking your money in these uncertain times?

In this column, which appears every two weeks, we give you specific suggestions on how you can invest your money in the stock market.

My first column, The Smart Investor, which came out at the end of January, was entitled It’s always time to invest in the stock market. I’m not denying what I’ve written, quite the contrary, but I do recognize that many investors these days prefer to stay on the sidelines for a bit.

Recession fears are very real, some banks’ volatility is worrying, but the labor market remains resilient. Given all of this, the stock markets don’t really know which foot to dance on. So there’s a strong temptation to hold on to cash while waiting to see things more clearly.

Luckily, safe financial products offer returns we haven’t seen in more than 10 years.

accounts with high interest rates

These are accounts that look a lot like regular bank accounts, except they pay decent interest, unlike them. They are usually used in addition to a checking account, which can be used to pay bills and withdraw money. Funds are transferred from one account to another via wire transfer, which typically takes two business days. Interest is paid once a month.

Here are the currently cheapest high yield accounts:

• Savings Placements Quebec
• (Flexi Plus): 3.75%
• CI direct investment: 3.75%
• Digital BLC: 3%
• Manulife: 2.85%

High Yield Funds

Brokerage platforms typically pay very little interest on the money you hold in your investment accounts, whether it’s a TFSA, RRSP, RESP, or an unregistered account.

Never mind, you can turn your nose up at your broker by investing your money in exchange-traded funds (ETFs) or high-yield mutual funds.

Investors have flocked to these funds in recent months as markets have fallen and interest rates have risen. In 2022, Canadians invested over $9 billion in high yield ETFs and over $4 billion in high yield mutual funds.

These funds are considered very safe as they invest in high-yield accounts with major Canadian banks.

Unfortunately, the RBC, BMO and TD brokerage platforms are blocking these funds. An alternative are money market funds, which are also very safe and currently offer returns close to high-yield funds (e.g. ETF “ZMMK” from BMO).

The table below shows the most important high-yield ETFs.

Guaranteed Investment Certificates (GICs)

GICs, forgotten for years, came back from the dead last year, fueled by rapidly rising interest rates. The major disadvantage of these banking products is that the funds invested in them are “frozen” for the duration of the selected term. Their big advantage is that they ensure that you get the promised return throughout this period.

Admittedly, GICs are less beneficial than they were a few months ago. For maturities longer than one year, interest rates of 5% or more have all but disappeared. But the prices are still attractive.

Here are the currently most generous GICs:

• BLC Digital (1 year): 5%
• People’s Trust (1 or 2 years): 5%
• Mandarin (18 months): 4.85%
• Alterna Bank (1 year): 4.75%
• Bank EQ (1 year): 4.75%

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High Yield ETFs

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