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The 5 Best Low-Risk Investments for Canadians

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Written by Amy Legate-Wolfe at The Motley Fool Canada

Canadians might have been just a touch too focused on growth stocks over the last few years. And what can come with growth stocks is far more risk. Now, every company and investment has risk involved. But true risk is the fear that the company’s share price is going to go down instead of up.

When it comes to low-risk investments then, Canadians want to find investments that will go up over time. Easy enough, right? But that also means they can’t drop down during periods of volatility. So, while the growth might be slower, the losses will be as well.

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Today, we’re going to look at five of the best low-risk investments for Canadians, including some stocks to consider as well.

GICs

Guaranteed Investment Certificates (GICs) are some of the best low-risk investments around. These are offered by both Canadian banks and financial institutions. A GIC will offer a fixed return on your investment over a specified period of term. This fixed amount is then guaranteed by a certain date, known as the maturity.

GICs are also protected by the Canadian Deposit Insurance Corporation up to a certain limit. Therefore, you can be quite sure your investment is safe. And given that investors can claim around a 5% fixed GIC, that’s a safe 5% increase in your portfolio year after year!

T-Bills

Treasury bills, also known as T-bills, are another strong, low-risk investment. These are short-term investments issued by the Government of Canada. As with GICs, they have a fixed maturity date and pay interest at a fixed rate.

What’s more, they aren’t backed up by just a bank, they’re backed up by the Government of Canada! This is why they’re considered one of the safest investment options around for Canadians to consider.

Bonds

Then there are bonds, and in this case, there are two types to consider. First, there are government bonds. As with T-bills, these are issued by a government body, either federal, provincial, or even municipal. They also have fixed interest and maturity dates, with full government backing. The bonds are then used to raise money for different purposes, such as financing a deficit.

Corporate bonds are another version, but are issued by individual companies. Again, these are used to raise money to be used to cover something such as debt. They also can pay higher interest compared to government bonds but can come with some higher risks.

Fixed annuities

If you’re looking for longer-term investments, fixed annuities can be another great low-risk investment. These are issued by insurance companies, providing fixed income for a specific period or for even for life! These tend to be an excellent option for retirees who want guaranteed income.

However, these require a long-term commitment, so you can’t exactly take it out at any period. Furthermore, the fees can be quite high.

Dividends stocks

Finally, dividend stocks can be low-risk investments, but only if you choose the right ones. After all, you’re investing in the stock market now. And the value of the stock can go up and down as with any stock.

However, dividends stocks can allow you to generate passive income while you invest in the stock market. Plus, companies offering stable, growing dividends are usually high quality and well established. One of the best can be a financial investment such as Royal Bank of Canada (TSX:RY).

RBC stock is the largest bank on the TSX by market cap and also just the largest stock on the TSX today. It offers a 4.15% dividend yield, with provisions for loan losses during periods of economic uncertainty. What’s more, it has stable revenue streams from its wealth and commercial management branch, which expanded through its acquisition of HSBC Canada. So, if there’s one dividend stock to consider, it should certainly be RBC stock.

The post The 5 Best Low-Risk Investments for Canadians appeared first on The Motley Fool Canada.

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Fool contributor Amy Legate-Wolfe has positions in Royal Bank Of Canada. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

2024