Every time, before investing, you should always ask yourself the following questions:

1. What is the purpose of my investing? For instance: for pension accumulation, for purchase of a house or cottage, for payment of children’s education tuition or simply, to get a maximum return from investments, etc.
2. What is the time period during which you are investing? Usually the term of investment is characterized by the term – time horizon.
3. How clearly do you understand what you are investing in? The types of investments are described HERE.
4. Do you understand and how realistically do you approach the risk of loss, associated with your investments? What is more important for you – safety of capital and high liquidity with low risk of loss or potentially significant growth in your investments?

The following table  may help you decide with your choice of investment strategy. The process described in the table is fairly general. The market conditions are constantly changing, i.e. various investments work differently at differing time periods (bring losses or gains). For a more accurate analysis of your situation it is best to consult a professional.

After having answered the necessary questions or consulted a professional – it is time to make decisions.
So you arrived at a decision that you favour the conservative type of strategy:

Checking Account:

Pros – Instant access to your funds. It is practically the same as cash, except that it is kept in a bank account as opposed to a vault in your home.
Cons – virtually non-existent rate of return (from 0% to 0.5% per annum)

Saving Account:

Pros – in most cases, instant access to your funds.
Cons – sometimes contains limits on the minimum account balance (from $3,000 to $5,000), necessity to manage your account using the Internet (if Internet is not used than one may expect transaction fees), there is no guarantee on rate of return (may change at any moment in time)
Current rate of return is from 0% to 3.0%

Guaranteed Investment Certificate – GIC:

Pros – guaranteed rate of return, certain pre-determined period on your investment
Cons – there exist limits on withdrawal of funds before the end of the contract (ranges from total rejection to a certain percentage penalty fee), relatively small rate of return (from 1,95% to 3,5%).

Money Market Funds:

Pros – this instrument is primarily used by those who actively work with the fund market, investing in Mutual Funds. Works as an effective way of exiting higher-risk funds into a safer zone during negative market fluctuations. Funds available within any moment in time, with a transfer to a bank account during a 1-2 business day period.
Cons – relatively low rate of return (currently around 2% - 2.5% annually for different funds).

Among investment products, which we offer, certain ones have a variety of advantages compared to other market products. Foremost, the rate of return:

For instance:

Saving Account at Dundee Bank of Canada.  
Its main advantages:

• Rate of return on Canadian Dollars – 3.00%* per annum; on USD – 2.05%*.
• Up to $100,000 are insured at the Canadian Deposit Insurance Corporation (CDIC). This government corporation, insures investments in Canadian Dollars in case of the bank’s bankruptcy or a financial institution.
• No account management fees.
• No minimum account balance.
• No limits on withdrawal of funds.
• Earnings are accrued daily and transferred to the account monthly.
• This account maybe used as an investment in your RRSP.
• In case of prosperous market conditions (steady growth in prices of Moderate and Aggressive Mutual Funds) funds from this account can be easily and quickly transferred entirely or partly into more profitable investment funds.

Short-term and Long-term Guaranteed Investment Certificates (GICs) Dundee Bank of Canada.
On certain periods guarantees rate of return on Canadian Dollars from 2.95%* to 4.60%*.
*All interest rates are per annum and are current to August 19, 2008. They may change without notice.

Closely to conservative investments are the low-risk instruments. These include: Bonds, Strip Bonds, Bond Mutual Funds, The Canada Savings Bond, Government, Provincial, Municipal Bonds, Corporate Bonds, Banker’s Acceptances.

Currently, investments related to Bond Mutual Funds, are not displaying good performance. Constant volatility in prices and a low rate of return may not compete with conservative investments. Perhaps the only instrument, which has a variety of advantages, and is worth looking at, is the Canada Saving Bonds.

 

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