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There are so many reasons to be risk-averse as an investor in early 2023.

Stocks had a great January after sinking in 2022, but they’ve lost momentum lately. Bonds have likewise sagged after a strong start, in part because inflation remains stubbornly entrenched. Inflation has brought us high interest rates, which threaten to put the country into recession.

Prefer to wait until conditions are better to put money in your registered retirement savings plan or tax-free savings account? OK, but you might regret it. Even in these uncertain times, there are opportunities to put money to work and build wealth over the long term. Here are some ideas:

High interest savings account funds

Earn between 3.8 and 4.9 per cent in mutual funds and exchange-traded funds that hold their money in bank savings accounts. The concern in using these products is that you’ll make the pivot into stocks and bonds too late, after sitting things out as a spectator while the next big rally takes shape. But if you need time to collect your thoughts and want to earn a decent rate of return with a high level of safety, these funds are worth a look.

Guaranteed investment certificates

An interest rate of 5 per cent is still available over terms of one through five years, but from fewer and fewer alternative banks. WealthOne, a member of Canada Deposit Insurance Corp., recently offered rates just above 5 per cent for non-registered accounts, as well as RRSPs and TFSAs. If you’re sold on GICs, consider having a deposit broker navigate the market for you to find the best rates and deposit insurance for every dollar of principal and interest. A GIC return in the area of 5 per cent won’t match up to the best of the stock market, and it’s below today’s inflation rate. But if you consider the lack of risk in GICs, their returns appear to be quite reasonable on balance.

An asset allocation ETF

These funds bundle stocks and bonds together into a fully diversified portfolio that costs very little to own. Figure on management expenses ratios of 0.25 per cent or lower, which is a great value for the simplicity and utility you get. Among the choices are balanced funds, with 60 per cent of their assets in stocks and 40 per cent in bonds, and growth funds with an 80-20 mix. Balanced funds were hammered last year because their heavy bond weightings did poorly while stocks also fell; now, there’s rebound potential for bonds and stocks after a wretched 2022.

Utility stocks

Rising interest rates weigh heavily on utility stocks, which explains why they’re down in price over the past year. But falling prices mean higher yields – the two move in opposite directions. Dividend-growth stalwarts in the utility sector include Fortis Inc. (FTS-T), with a yield around 4 per cent, and Emera Inc. (EMA-T), at around 5 per cent. Globe Investor says both have produced average dividend increases in the 5-per-cent range over the past five years. Utility stocks aren’t “safe,” a point driven home by the recent dividend cut by Algonquin Power and Utilities Corp. (AQN-T). The company’s shares are down about 45 per cent in the past 12 months.

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