ETFs and gics
Consider GICs (guaranteed investment certificates) as an alternative to fixed income ETFs. They require slightly more effort because you have to set up a separate account / buy GICs / keep up with them - possibly having to deal with another financial institution. GICs often make more money than fixed income ETFs of comparable risk.
There are several other benefits.
- GICs are simpler, more predictable, and less expensive than fixed income ETFs.
- ETF distributions are not known in advance. GICs pay stated interest - you know exactly how much you'll earn.
- GICs have no MER fees.
- When you sell ETFs, you don't know how much you'll get. It depends on the price other investors are willing to buy at. GICs work differently - you'll know exactly how much you'll get.
- GICs are insured by the federal or provincial government - up to $100,000 per GIC.
Are you cashing out / changing providers? Learn to close investment accounts.
Once you have a plan, open an online broker account.
- While you're opening an account, your provider may ask you to complete a questionnaire to determine your level of investing expertise - it's part of getting to know you as a client.
Don't stop saving. Follow your budget - when you've saved some money, transfer it to your investment accounts and buy additional shares of your ETFs / additional GICs, in proportions that maintain your asset mix.
Check your account once a year.
- Are your ETFs performing well?
- What fees are you paying?
- Is this approach still right for you?
Own your investments, step-by-step.
What is it?
ETFs (exchange-traded funds) are baskets filled with equity and / or fixed income securities. Instead of buying fixed income ETFs, you can buy GICs (guaranteed investment certificates) - they're simple and highly predictable investments.
Some ETFs are called index ETFs. 'Index' means the ETF represents the entire market for a particular fixed income / equity security (like all Canadian bonds or US equities).
- You can't buy an index - it's just a list of securities.
Buying individual securities is risky. Buying a basket of them through ETFs reduces investment risk. Index ETFs reduce risk even more because they hold every security in their market. This is diversification.
You'll build your portfolio with 1-3 ETFs, matching your asset mix.
Choose your ETFs and GICs. Use our research tables.
Build your portfolio by selecting ETFs/GICs in proportions that match your asset mix.
Once the account is open, you'll buy shares of the ETFs you've selected (selling is done the same way).
Buy GICs directly from banks that issue (create) them - it's the least expensive and easiest way (no transaction cost).
What's an asset mix?
Research and choose an online broker - you'll use it to buy your ETFs.
Use our research tables to choose a broker.
What's it like to invest
You're a do-it-yourself investor - you'll have to choose your own asset mix. Are you a conservative or an aggressive investor?