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Did you “stash the cash” during the pandemic? These funds offer more options

Published on: October 21st, 2021

Canadians amassed $212 billion in savings last year, versus $18 billion in 2019, according to Statistics Canada.1 So far, most of us have simply been sitting on the savings or paying down consumer debt. If you stashed your cash in a bank savings account, you’ll likely have been disappointed at how little you earned on those savings.

Depending on your goals for that money, it could be working much harder. Consider these mutual funds based on investing goals with a 3- to 5-year time horizon:

Mortgage funds. These funds hold Canadian residential and commercial mortgages and are designed to provide a steady stream of income. They’re considered close to money market funds in terms of security of capital.

Monthly income funds. A monthly income fund targets current income, usually on a monthly basis, as opposed to capital appreciation. Some are managed to achieve a fixed percentage payout. Monthly income funds usually hold a variety of government and corporate debt instruments, preferred stock, money market instruments, and dividend-paying stocks.

Bond funds. These funds focus on providing a steady stream of income, often along with some possibility of capital gains. Some of the best choices for stability and short-term investing include short-term bond funds and government bond funds.

Balanced funds. Because these funds invest in both stocks and fixed-income investments, holdings in one asset class can offset volatility in the other. The result can be steadier performance than that of funds holding just one type. Balanced income funds typically hold more fixed income than equities while balanced growth funds target a greater equity component. Individual balanced funds can differ greatly in their mandates and risk profiles so professional advice is useful here.

Your pandemic savings could also provide a once-in-a-lifetime boost towards key long-term financial goals, such as higher education, a recreational property or early retirement.

Talk to us if you’d like to explore the potential of investing those pandemic savings wisely, regardless of your investing objectives.

1 CBC. After a year of pandemic prudence, Canadians likely eager to spend the billions saved. June 21, 2021.

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