Skip to main content
investor newsletter

Strategizing about whether to put money in bonds, GICs or high interest savings accounts is a very 2020s phenomenon.

Before rates surged in the past few years, these three assets were very similar in producing such minimal interest there was little benefit to distinguishing between them. Today, making the right pick can help you take an already substantial yield and maximize it.

To help investors make smart choices, strategist Craig Basinger of Purpose Investments recently put together a guide that looks at three possible outcomes for inflation and rates. Each suggests a different emphasis when choosing between bonds, guaranteed investment certificates and HISAs, which investors can buy in an exchange-traded fund or mutual fund format. Yields for all three assets were in the 4 to 5 per cent range when the report was written.

Outcome #1: Inflation persists

In this case, the Purpose report says HISAs win. If rates go higher, then the return on these products would do likewise. GICs are an OK pick because they lock in returns and won’t fall in price, while bonds are the least favourable pick because they will fall in price if rates rise.

Outcome #2: A “goldilocks” situation where inflation eases, the economy holds its own and central banks can modestly cut rates

GICs are the winner here because they lock in rates. HISAs do OK – their returns would fall, but not by much. Bonds would do OK as well, the rationale being that modest cuts in rates would push up bond prices a little.

Outcome #3: Slow growth or recession

Expect aggressive cuts in rates by central banks in this situation. Bonds would be the winner because of the potential for significant capital appreciation. You’d get the interest rate on your bonds or bond fund, plus increase in bond prices. GICs do OK because they lock in a yield, but you don’t get the benefit of capital gains.HISAs lag because cuts in rates by central banks erode their returns.

One additional outcome to consider is a stock market correction. The Purpose report says bonds tend to do well when stocks plunge, but the events of 2022 remind us there are exceptions.

-- Rob Carrick, personal finance columnist

This is the Globe Investor newsletter, published three times each week. If someone has forwarded this e-mail newsletter to you or you’re reading this on the web, you can sign up for the newsletter and others on our newsletter signup page.

Stocks to ponder

Capstone Copper Corp. (CS-T) In the TSX mining sector, this Canadian copper producer is hard to ignore. It hit a record high this week after gaining 30 per cent last year, and it still has a unanimous buy recommendation from 11 analysts. To uncover what’s behind the stock’s price action and to help determine if the positive momentum can continue, Jennifer Dowty speaks with chief executive officer John MacKenzie.

The Rundown

Three reasons I’ve never recommended a GIC – and I’m not starting now

Today’s rates for guaranteed investment certificates – which range from 4 per cent to 5 per cent, depending on the term – are prompting many to desire the simplicity and safety of GICs to escape the ups and downs of stocks and bonds. This is especially so after the rough two years for bond markets. But longtime investment adviser Dan Hallett thinks putting money into GICs is probably a mistake, and provides these three reasons.

U.K. equity ‘dark age’ reflects alarming desertion

In his budget speech this week, U.K. finance minister Jeremy Hunt unveiled a new Individual Savings Account that allows individuals to invest 5,000 pounds (US$6,403) tax-free in U.K. equities annually, in addition to the 20,000 pounds allowed under existing tax-free ISA schemes. As Mike Dolan of Reuters tells us, it spotlights just how increasingly unwanted British stocks are even among Britons - who, unlike Americans for example, appear to be abandoning any sense of ‘home bias’ as they drift away from actively managed UK funds to cheaper and more globally-spread index trackers.

Others (for subscribers)

The highest-yielding stocks on the TSX, plus risk data

Number Cruncher: U.S. equities in the spotlight for price trend enthusiasts

Friday’s analyst upgrades and downgrades

Thursday’s analyst upgrades and downgrades

Monika Rizk: Bullish on on Descartes Systems Group

Ted Dixon: Michael Wekerle and Scott Paterson buying at WonderFi

Globe Advisor

Why this money manager is buying Scotiabank and selling Shopify

Are you a financial advisor? Register for Globe Advisor ( for free daily and weekly newsletters, in-depth industry coverage and analysis.

Ask Globe Investor

Question: My son will be turning 18 soon and he is eager to begin investing in equities with money saved from his part-time job. Assuming that his total annual income (including RESP withdrawals) remains below the personal exemption income tax threshold, are there any advantages to him by investing within a registered account rather than a non-registered account? I presume that a non-registered account would be faster and easier to open up. - Richard M.

Answer: I suggest he consider a Tax-Free Savings Account. Since he is interested in equities, it means he is hoping to generate capital gains. Why not protect those hoped-for profits from tax? He is eligible to open an account when he turns 18 and can contribute up to $7,000 this year. He can use a discount broker to set up the plan. I suggest he start with a one or two equity ETFs, since the amount of cash he’ll have to start with is minimal. As the value of the plan increases over the years, he can move to individual stocks.

--Gordon Pape (Send questions to and write Globe Question in the subject line.)

What’s up in the days ahead

Gold hit record highs this past week, but producers of the metal have not. David Berman will explore why. Meanwhile, John Heinzl will give us his take on whether BCE is still worth holding.

Another bout of bitcoin fever and other world market themes for the week ahead

Click here to see the Globe Investor earnings and economic news calendar.

More Globe Investor coverage

For more Globe Investor stories, follow us on Twitter @globeinvestor

Compiled by Globe Investor Staff

Follow related authors and topics

Authors and topics you follow will be added to your personal news feed in Following.

Interact with The Globe