The one inflation tool you need for your finances + MORE Feb 6th

For retirees and near retirees, it can sometimes seem like there’s no such thing as a “safe” investment—especially now. Even bonds and bond funds, typically considered the safest of investments—suffered losses in 2022, as central banks hiked interest rates. Meanwhile, stocks look determined to retreat from the all-time highs they reached in the year following the short-lived initial COVID bear market. 

It’s true short-term bank savings accounts and guaranteed investment certificates (GICs) seem relatively safe from both stock meltdowns and precipitous rises in interest rates, but now there’s the added scourge of rising inflation. Even if you can earn 5% annually on a GIC, if inflation is running at 6%, you’re actually losing 1% a year.

Are ETFs a good investment for an all-weather portfolio? 

It’s tempting to throw your hands up and retreat to those much-praised asset allocation exchange traded funds (ETFs). You can use these types of investments to simulate the classic pension mix of 60% stocks to 40% bonds through Vanguard Canada’s VBAL or similar ETFs from rivals, including iShares’ XBAL and BMO’s ZBAL…

If you don’t have a high-interest savings account (HISA), now is a good time to consider opening one. Why? HISAs pay more interest than regular savings accounts, and rates are particularly high right now. The amount you can earn on your deposited money may help offset rising inflation. And, last but not least, you could take advantage of sweet welcome offers for opening an account. 

But first, let’s back up a bit. In December, the year-over-year rate of inflation in Canada was 6.3%, and prices for everyday expenses like groceries and gas continue to climb. Inflation decreases the value of a dollar over time (because as prices rise, you can buy less with the same amount of money). The Bank of Canada (BoC) has raised interest rates many times in the past year in an effort to tame inflation. That means it costs more to borrow money, but here’s the good news: You can also earn higher interest on your savings. 

You may want to take advantage of the especially high rates on high-interest savings accounts…