Putting your money in safe investments with high returns is a smart way to maximize your returns and minimize your risk in Canada.
Unfortunately, it can be tricky to find those low-risk financial assets with high returns in Canada, considering the inconsistent performance of some investments.
While no investment is risk-free, there are investment options with less risk and decent returns.
Based on my experience and what I’ve seen work for others, I discuss safe investments with high returns in Canada.
Top Recommended Safe Investments with High Returns in Canada
Where to Invest
Peer to Peer Lending
Peer to Peer Lending
Earn Between 7.5% - 28% APR
Guaranteed Investment Certificates (GIC)
Stocks, Options, ETFs, Bonds
Passive dividend income stream
Real Estate Investments
Real Estate Investing
Overview of Low-Risk Investments in Canada
Investing your money helps you grow your wealth and can provide you with funds that will be useful in other areas of your life, like retirement, vacation, or paying off an emergency.
There are many options available for you to invest your money and get returns for later use. Many investors go for investments with high returns. But investment with high returns comes with a high level of risk because the higher the risk, the bigger the reward.
Not everyone can stomach high risks. Some investors don’t want to risk everything to hit it big. They only want to get returns while taking low risks.
Low-risk investments in Canada offer smaller returns. However, you are assured of a reliable return without risking your funds. During market volatility, low-risk investments sustain the growth of your investment, relieving your anxiety.
Additionally, low-risk or safe investments are essential to avoiding market surprises. They can serve as your emergency fund ahead of any unforeseen circumstance.
Overall, safe investments with high returns in Canada are ideal for investors looking to maximize their returns without sacrificing much.
12 Best Safe Investments in Canada
As mentioned previously, there is no risk-free investment vehicle worldwide. However, some investments are riskier than others.
Here are the top safe investments with high returns in Canada:
1. High-Interest Savings Account
A high-interest savings account (HISA) is one of the top safe investments with high returns in Canada. Unlike a traditional savings account or chequing account, a HISA rewards your savings with high-interest rates.
Since online banks have lower operating costs than brick and mortar banks, they are the leading providers of HISA in Canada. You can withdraw money from a HISA at any time without incurring a penalty. This makes HISA more liquid than other safe investments with high returns in Canada.
Furthermore, most high-interest savings accounts are insured by the CDIC up to $100,000 per category. To make the best out of a HISA, you should consider one of the best high-interest savings accounts in Canada.
- If you want to save up an emergency or vacation fund, which you will access only occasionally, HISA is best for such short-term savings.
- You can make only six transactions per month, helping you save better.
- More flexibility and higher interest rates.
- High-interest rates
- Provides a reliable income stream
- Higher liquidity compared to alternative interest-generating investments
- Exclusive to virtual banking only
- Some transaction types attract large fees
- Money in a savings account is less liquid than money in a chequing account.
2. Guaranteed Investment Certificates (GIC)
If you can commit to investing your money till a particular period, a guaranteed investment certificate (GIC) is another investment vehicle to consider.
You can invest in a GIC for 1 to 5 years and earn a higher return than you would on a HISA.
In addition, GIC is considered one of the lowest-risk investments due to the guarantee to your interest and funds.
Another advantage of GICs is their flexibility. Therefore, you can invest it in a TFSA, RRSP. RESP or RRIF accounts.
- GICs pay an interest rate upon maturity.
- Interest can be paid monthly, annually or compounded until maturity
- There are no purchasing fees for GICs
- Low-risk investment which guarantees your principal investment
- Deposits are insured through CDIC
- No fees for deposits or buying GIC
- They offer a decent return
- It can be easily managed
- Interests are subject to taxation
- You will pay a fee to cash out non-redeemable GICs.
3. Certificates of Deposit
Investing in a certificate of deposit (CD) involves the acceptance of a time horizon. The time horizon often ranges between one month to ten years.
Thus, withdrawing the funds before maturity will incur a penalty, making it less helpful in times of emergency.
However, you would receive a higher return rate in return for that lack of accessibility before maturity.
As a result, you need to have an emergency fund before investing in a CD. But if you’re comfortable with the rate of a HISA, you don’t have to invest in a CD.
- Best for money needed at a fixed date in the future
- Term lengths are one, three, or five years
- Great for growing money for a specific purpose within a predetermined time frame
- Requires a fee to get your money back earlier
- CDs are federally insured
- They offer better returns than savings deposits
- You can count on CDs to deliver a specific return at a particular time
- They offer a wide selection of terms and account options
- You cannot easily access your money if the need arises
- Your money might lose its purchasing power over time due to inflation
- The interests are taxable
4. Money Market Accounts
Money market accounts are highly liquid accounts that offer higher returns than traditional savings accounts.
The account allows for greater flexibility when used alongside a savings account because you can write checks or use a debit card.
Based on my personal experience, MMAs are perfect for investors that want to write monthly checks and make regular money deposits.
So while money market accounts are among the safe investments with high returns in Canada, you may want to consider CD or HISA over them.
- Higher interest rates than regular saving account
- The number of purchases and transfers is limited to six per month
- Allows debit card and cheque-writing privileges
- The FDIC insures deposits at banks and the NCUA at credit unions
- Better interest rates
- Safe space for large money as it is protected by FDIC or NCUA insurance
- Easy access to funds through debit card or cheque
- May require high minimum initial deposits
- Access to money through debit cards or cheques will encourage impulse spending.
5. Corporate Bonds
I list corporate bonds among the top safe investments with high returns in Canada because of their low-high risk profiles and high returns.
But when investing in corporate bonds, it’s essential to know the two major risks associated with therein: These are:
- Interest-rate risk: This refers to risk due to changes in a bond’s market value.
- Default risk: This refers to the failure of a company to offer principal payments and interest.
However, you can mitigate interest-rate risk by selecting bonds that mature soon. Bonds with longer maturity are more sensitive to changes in interest rates.
On the other hand, investing in diversified bond portfolios from large, reputable companies can limit default risk.
- It offers fixed-income security with potentially higher yields
- A large and stable company offers lower yields
- Failing companies likely to go out of business offers higher yields
- Corporate bonds provide regular cash payments
- Less risky and volatile than stocks
- Pays out more yields than government bonds
- The interest rate is fixed when the bond is issued
- Riskier than government bonds
- Not insured by the FDIC
Annuities are assets that provide a fixed income every year for a specified number of years, helping you sustain your savings.
When you buy an annuity premium for a certain amount, you will be receiving a fixed amount yearly (monthly or quarterly) while your savings are growing with interest.
Despite being low-risk investment vehicles, annuities are only purchasable by retirees.
As a result, it’s not available for young investors. If you are young, you could start saving for your annuity purchase ahead of your retirement.
- You receive regular payments from your insurance company
- Your contribution grows tax-deferred
- Fixed annuities offer guaranteed interest rates
- Variable annuities can be costly
- The returns you get from an annuity might not match investment returns
- It is difficult or impossible to get out of an annuity
7. Low-Volatility Fund
Investments in low-volatility funds offer you the advantage of less risky securities available on the stock market.
Even though a low-volatility fund is riskier than GIC and HISA, it is less risky than an average index fund.
As a result, you need to choose an ETF with low volatility to invest in a low-volatility fund.
You can easily find this through an online brokerage such as Wealthsimple or Questrade.
- Low-volatility funds offer insulation against market bumps
- They are often well diversified across stocks and sectors to provide direct exposure to lower-risk stocks
- It could be a trade-off for returns
- Not ideal for short-term trading
8. Dividend-Paying Stocks
Dividends are distributed regularly by companies from their corporate profits without considering the increase or decrease of a stock value.
Most investors rely on dividend income to finance their lifestyles during retirement by investing in long-term stocks with dividend yield.
However, dividend-paying stocks are riskier compared to the above safe investments with high returns in Canada. As a result, they should be your last option.
- Generally perceived to be less risky.
- Dividend-paying companies are stable and mature and offer dividends and stock-price appreciation.
- Passive dividend income stream
- Preferential tax treatment
- Solid total investment returns
- Hedge against inflation
- Dividend policy changes
- Tax inefficiency
- Limited growth
9. Dividend ETFs
Diversifying your portfolio across different assets, sectors, and industries can help you reduce risk. This is exactly what dividend ETFs help you achieve.
What is a dividend ETF? It is a type of exchange-traded fund that invests in high-paying assets while distributing monthly, quarterly or annual returns.
That said, the dividend yield you receive after distribution can either be reinvested or used as cash.
Dividend ETF holds dividend-paying stocks and distributes regular income to its shareholders. It issues dividends to investors either monthly, quarterly, or annually.
- Great for generating a steady income
- It helps you diversify investments across different sectors
- It is easier to buy dividend ETFs than individual stocks
- Dividends are taxed more favorably compared to a savings account
- Dividend ETF charge a yearly fee
- Dividends are not guaranteed
- Some dividend ETFs may not offer you enough diversification.
RECOMMENDED: Best Dividend ETFs in Canada
10. Segregated Funds
Segregated funds are a type of insurance plan used to manage single and multiple annuities.
In segregated funds, individual and group funds are pooled and invested in a particular portfolio while risk and benefits are shared.
In addition to providing life insurance benefits, segregated funds also offer investment capital growth.
Canadian insurance companies use segregated funds to manage individual or variable annuity insurance products.
A segregated fund offers life insurance benefits and investment capital appreciation.
- Principal investment is 100% guaranteed
- You can lock in your capital gains
- They have a built-in death benefit feature
- Usually lower returns
- High fees and MERs
- You can’t get your money before the maturity date
11. Fractional Shares
A fractional share is a part of a company’s full share. Buying a fractional share allows you to trade within a reasonable budget, limiting your risk.
With as little as $1, you can buy from different companies’ shares, earning varying returns.
Fractional shares help you diversify your portfolio across high-paying different sectors and companies without risking much.
When you buy a share of a particular company, you earn a fractional part of the company.
For example, if a publicly listed company has about 1 million shares and you buy 100 shares, you automatically own 0.01% of that company.
Fractional shares help to diversify your portfolio and lower overall risk.
- Make it easy to invest in any company with very little money
- It makes it easy to invest a precise amount in a company
- Easily build a diversified portfolio
- Not available everywhere
- New investors can be reckless with their money
- Brokers may keep the dividends of a tiny fraction of a share.
RECOMMENDED: How to Buy Fractional Shares on Wealthsimple Trade
12. Index Funds
Index funds track low-cost market index return passively. With index funds, bonds or stocks are not actively selected for purchase or sale.
Instead, all the securities are tracked based on how they are weighted in the index.
As a result, investing in index funds helps you diversify your portfolio across different companies.
The underlying securities of an index fund help you prevent significant losses if the stock price falls suddenly.
Index funds are pretty popular among passive investors focused on a market’s long-term growth. Index funds give you access to all the stocks in a single market, thereby building diversification.
- Index funds merely track stock indexes
- No active management
- Low fees
- Lack of flexibility
- Inability to duplicate the most successful fund manager’s approach
RECOMMENDED: Best Index Funds in Canada
Other Places to Invest Money in Canada 2022?
If you’re still contemplating where to invest in Canada in 2022, I have other investment options for you.
As mentioned earlier, higher risk amounts to higher returns in investment. That’s the golden rule!
Thus, you may want to compare safe investments with high returns in Canada with risky investments with higher risks in Canada.
Here I present three major long-term investment vehicles in Canada that are highly risky but offer high returns.
Investment in stocks is a common practice in many countries across the world. Aside from allowing you to own a piece of the world’s most recognized companies, investing in stocks provides you with a lot of exposure and high returns.
However, as with other high-return investment vehicles, stocks have a high-risk profile.
In light of this fact, most financial experts suggest investing in exchange-traded funds (EFTs) against stocks.
2. Exchange-Traded Funds (ETFs)
This type of investing is ideal for those who want to invest in stocks, commodities and bonds all in one place.
That said, the best ETFs serve as low-cost investment vehicles containing various financial assets without investing in each.
Because your portfolio is diversified with an ETF, you don’t have to worry about the collapse of a single asset, decreasing your risk.
However, investing in the best ETF broker, such as Wealthsimple or Questrade, is necessary to get the most from your investment.
3. Real Estate
Due to the growing demand for homes, Canada’s housing market seems bright. As a result, realtors and real estate investors are in for high returns.
Although the Canadian real estate market has remained stable throughout the years, you should be aware of the risks involved.
In the event of a downturn in the economy and low liquidity, sales may be reduced. Thus, to engage in the Canadian real estate market, you must have a high-risk tolerance.
How to Find the Investment is Right for You?
So far, I have discussed the top safe investments in Canada with high returns and the top risky investments in Canada with high returns. Which should you choose?
It may be tricky to narrow your selection considering the low returns of less risky investments and the high returns of risky investments.
That said, when determining which investment you choose, consider your:
1. Financial Condition
The first step in picking the ideal investment vehicle is to examine your financial condition.
My advice is always to avoid investing if you have a large amount of debt. As long as you have a lot of debt, it makes no sense to invest.
Follow these methods to pay off your debts quickly before you start investing if you’re struggling with a lot of debt.
That said, you should consider the amount and the duration you can invest when examining your financial condition.
By doing so, you will better understand how much you need to invest and for how long.
2. Risk Tolerance
As soon as you’ve analyzed your financial condition, the next step is to assess your risk tolerance.
Due to the varying risk profiles of different investment vehicles, it’s crucial to know your risk tolerance.
Although, the golden rule of investing is the higher the risk the, higher the returns.
But certain high-risk investments don’t offer higher returns.
Because of this, you need to assess your risk tolerance to choose an investment vehicle that suits your needs.
That said, use an online risk survey such as Vanguard’s Investor Questionnaire or consult a financial advisor to determine your risk tolerance.
3. Investment Goal
Last but not least, you need to identify your investing goals to make the best investment decision.
Because of this, you must question yourself, “why am I investing?” Is it for your retirement planning or children’s education?
Regardless of your investment goal, you will find an investment vehicle that will help you achieve that.
High-Risk Investment Vs Low-Risk Investment
High-risk investments are investments options with a large percentage of devastating loss, loss of capital or under-performance. Whereas, low-risk investments are investments with less at stake in terms of amount invested and the significance of the investment to your portfolio.
With low-risk investment, there is less to gain, in terms of potential returns. However, high-risk investments have the potential for bigger losses but an opportunity for larger gains.
Both high-risk investment and low-risk investments bring you closer to your financial goals.
Rules of Investing in Canada
Knowing the top safe investments with high returns in Canada is not enough to start investing. It’s also important to know the rules attached to investing in them.
To make the best of your investment in Canada, follow these rules:
1. Diversify Your Investment
This means you shouldn’t put all your eggs in one basket. If you do so, you will increase risk and limit your exposure.
As opposed to concentrating on a single stock, you should diversify your investments. That way, you will not lose much if any assets underperform.
Based on your risk tolerance, you should invest across different sectors, geography, and investment securities such as ETFs, stocks, bonds and cash equivalent, etc.
2. Build an Emergency Fund
Build an emergency fund in case of unexpected expenses when investing in a long-term investment portfolio such as ETFs, stocks or bonds, etc.
Long-term investment vehicles (stocks, bonds, CD etc.) have early withdrawals penalty. As a result, you can’t rely on them in case of an emergency.
That said if you’ve not built your emergency fund already, read this comprehensive guide to get started.
3. Rebalance Your Portfolio
In order to get the most out of your investment, rebalancing is critical.
Your portfolio needs rebalancing from time to time to reflect the market fluctuations.
That said, using a Robo-advisor is the best way to get your portfolio rebalanced automatically without stress.
You have learnt about low-risk or safe investments in Canada vs. high-risk investments in Canada.
As mentioned previously, no investment is risk-free globally. However, there are investments with low-risk with decent returns.
But if you’re looking for a high-yield investment portfolio, you must have a high-risk profile to withstand any outcome.
So the ball is now on your court to choose the investment vehicle that suits your financial condition, investment goals and risk tolerance.
If you have any concerns or questions about the above safe investments with high returns in Canada, let me know in the comment section.
All the best!
Hi, I'm Adeola Adegoke. I am a licensed Insurance Broker in Manitoba, and I hold a master’s degree in Mathematical Sciences (with a major in Financial Modeling) from the African Institute for Mathematical Sciences (AIMS), Tanzania.
Also, I have a second master's degree in Statistics from the University of Regina, and I am currently pursuing my Ph.D. in Statistics at the University of Manitoba.
The primary purpose of Money Reverie is to help everyday Canadians make better financial decisions by providing up-to-date financial news and information, reports, product reviews, and government programs.