Best possible $80,000 CAD risk-free investment?

**jIM_Ohio** · 03-06-2007, 09:58 AM

Risk free is an oxymoron.

A 4% CD guarantees principal repayment and is FDIC insured. But it does not take into account inflation risk- the fact that maybe the $80,000 today is worth only $72,000 when CD matures because prices went up 10%

A stock returning 11% accounts for the inflation risk but puts the principal at risk.

Investment is about "managing risks", not eliminating risks.

To better answer your question, I would suggest put 40k into money market accounts at two different banks (and tell each bank this). If either bank wants your whole business, tell them to guarantee a better rate.

**anonymous_saver** · 03-06-2007, 09:58 AM

Originally posted by gdnimrod View Post

Im trying to help my parents out since they had $80000CAD frozen for 3 years at a pathetic interest rate of 2.75%. Now that the term is over, they would like to re-invest the total amount for only 1 year, and absolutely risk free.
Where should i direct them to? I know banks are offering around 4% for that amount for a year, but im wondering if there's anything better?

Emigrant Direct has been steady at 5.05% interest for a long time now. Not a CD, but an online savings account instead. This would be where I would put the money.

HSBC and ING are also other high interest onlines savings accounts that might be useful. Plus if anything happened during this time and your parents needed this money they could get the money back within a few days with no penalty.

**sweeps** · 03-06-2007, 10:00 AM

No investment is risk-free. Not even stuffing cash in a mattress.

CAD = Canadian? How about federal government bonds, or if you're eligible to invest in U.S. banks, check out one of various online savings accounts, currently paying 5% and up.

**jIM_Ohio** · 03-06-2007, 10:08 AM

I thought OP had taken one of the CAD courses I taught 7 years ago... I assume they meant CD.

CAD- Computer Aided Design
CD Certificate of Deposit

**DebbieL** · 03-06-2007, 10:55 AM

In Canada, our interest rates aren't as good. I have my saving account with President's Choice Financial. It pays 4% for amounts over $1,000. I haven't (unfortunately) found any paying higher like the US banks are doing. ING Direct for Canadians is only at 3.5% I think.

**Scanner** · 03-06-2007, 11:13 AM

If you want your principal insured, you can look into municipal bonds, ones that are insured against the prinicipal.

I am not sure of Canadian law but in the US, the interest is tax-free and the principal is insured. You lose about 1% return for gaining the insurance on the principal.

**Ima saver** · 03-06-2007, 01:46 PM

What is CAD??

**scfr** · 03-06-2007, 05:27 PM

Looks like a 1-year Canadian Treasury Bill is paying around 4.23%. Maybe nothing to do handstands over, but T-Bills are about as safe as they come, and it sure beats 2.75%.

I don't know how the system works in Canada, but here in the US we can open an account directly with the US Treasury Department so that we do not have to pay any sort of commissions. Since the rates do fluctuate, if it were my decision I'd probably buy eight $10,000 T-Bills, one per week for 8 weeks.

**LuxLiving** · 03-07-2007, 05:36 AM

I also would break it up into smaller chunks somehow and spaced out as scfr is recommending - tying it up in one chunk in one single time frame doesn't seem like sound fiscal policy. I'd consider some bonds, t-bills or laddered CDs.

**gdnimrod** · 03-07-2007, 11:16 AM

Originally posted by jIM_Ohio View Post

To better answer your question, I would suggest put 40k into money market accounts at two different banks (and tell each bank this). If either bank wants your whole business, tell them to guarantee a better rate.

Thats a good idea as a few people other mentioned it, splitting up the cash in a few 'risk free' places.

To those asking, CAD = Canadian Dollars.

And no, ING direct doesnt offer as high a % as other banks, and as for putting the money into a US account that does offer a significantly nicer rate - the money needs to be in USD and not CAD.

Thanks for the replies guys, ill no doubt tell em to get the best of 4% (for 1 yr) at 2 seperate banks.

Best possible $80,000 CAD risk-free investment?