Comparing short-term investments

10 common options

1. Chequing account

  • Pays lowest interest of any short-termTerm The period of time that a contract covers. Also, the period of time that an investment pays a set rate of interest.+ read full definition investmentInvestment An item of value you buy to get income or to grow in value.+ read full definition
  • Has low risk
  • Usually charges a service feeService fee The fee that you pay to hold a bank or investment account. It covers services that help you access and manage your money. You may pay for each service you use or a flat fee that will cover a package of services.+ read full definition
  • You can put in as much or as little money as you want
  • You can get your money out any time

2. Savings account

  • Pays slightly higher interest than chequing accountAccount An agreement you make with a financial institution to handle your money. You can set up an account for depositing and withdrawing, earning interest, borrowing, investing, etc.+ read full definition
  • Has low risk
  • May charge a service fee
  • You can put in as much or as little money as you want
  • You can get your money out any time

3. High-interest-rate savings account

  • Pays slightly higher interest than regular savings accountSavings account A bank account intended for depositing funds. Pays interest and lets you withdraw cash at any time.+ read full definition
  • Has low risk​
  • You may have to put in a minimum depositMinimum deposit The lowest number of dollars you have to put in a bank account or other investment.+ read full definition
  • You may have to let online banks know a day or 2 ahead to get your money out

4. Guaranteed Investment Certificate (GIC)

  • May pay higher interest than savings account, but not always
  • Has low risk
  • Most require you to investInvest To use money for the purpose of making more money by making an investment. Often involves risk.+ read full definition at least $500
  • You must invest for a certain amount of time (from 6 months to up to 10 years)
  • You may pay a penalty to get your money out early

5. Canada Savings Bond

  • Pays interest rateInterest rate A fee you pay to borrow money. Or, a fee you get to lend it. Often shown as an annual percentage rate, like 5%. Examples: If you get a loan, you pay interest. If you buy a GIC, the bank pays you interest. It uses your money until you need it back.+ read full definition similar to GIC
  • Has low risk
  • You have to invest at least $100
  • You must invest for a certain amount of time
  • You may pay a penalty to get your money out early

6. Treasury bill (T-Bill)Treasury bill (T-bill) An investment where you lend money to the federal or a provincial government for a set period of time. It does not pay interest, but rather you buy T-bills at a price below what the government will give you at the end of the term.+ read full definition

  • Has low risk
  • Pays a higher return than most savings accounts
  • May require you to invest at least $5,000
  • May charge a penalty if you take your money out early

7. Money market fund

  • Has low risk
  • Pays a similar return to T-bills
  • May require you to invest at least $500
  • May charge fees but no penalty when you withdraw money

8. Commercial paperCommercial paper A kind of unsecured loan you make to a corporation. You buy the investment at a discount and you get the full value back on the maturity date. The time period is usually nine months or less.+ read full definition

  • Risk varies depending on the type of commercial paper
  • Pays a slightly higher return than most T-bills
  • May require you to invest at least $5,000
  • May charge a penalty if you take your money out early

9. Government bond

  • Risk varies depending on the type of bondBond A kind of loan you make to the government or a company. They use the money to run their operations. In turn, you get back a set amount of interest once or twice a year. If you hold bonds until the maturity date, you will get all your money back as well. If you sell…+ read full definition
  • May require you to invest at least $5,000
  • Does not charge a penalty if you sell early (but you may have to sell at a lower price if interest rates have changed)
  • Does not guarantee you will make money

10. Corporate bond

  • Risk varies depending on the type of bond
  • May require you to invest at least $5,000
  • Does not charge a penalty if you sell early (but you may have to sell at a lower price if interest rates have changed)
  • Does not guarantee you will make money

Look for better returns

Keeping your money in a regular savings account can make sense if your financial goals are short term. But if you’re a couple of years away from reaching your goals, you could be earning a better return on your savings.

3 key points

Short-term investments:

  1. Are lower risk
  2. Tend to pay lower interest
  3. May charge fees and penalties

Take action

Use this calculator to see how even small amounts of money saved add up over time.

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