If you’ve been following the economy or the stock market for the last year or so, you may have noticed that it’s been a bit of a rollercoaster ride. It can be challenging to figure out where to invest your money when you see headlines about soaring inflation and a possible recession. We’ve outlined some investment strategies for Canadians who aren’t exactly sure how to invest right now.
So how can you invest to maximize your returns while minimizing risks?
Look for Promotional High-Interest Savings Account Offers
One positive from the Bank of Canada constantly raising interest rates is that you can earn more interest on your money. Rate hikes have led to higher interest rates on savings accounts, which means more money for you.
If you’re not ready to start investing in the stock market or want easy access to your funds, a savings account is an effective place to store your money. Some banks offer temporary promotional rates for you, even up to 5.25%. The goal is to shop around until you find the best rate available—that way, your money can start working for you.
Take Advantage of Your TFSA Contribution Limit
Did you know that you can invest money tax-free in Canada? With a Tax-Free Savings Account (TFSA), you can save money not subject to income taxes. With your TFSA, you can earn money from interest, dividends, or capital gains from your investments without worrying about paying taxes on it.
The 2023 contribution limit for a TFSA is $6,5000. If you’ve never opened a TFSA before, the good news is that your unused contribution limit from previous years rolls over. To calculate your contribution limit, you can find the details by logging into your CRA account.
Invest in an RRSP
You’ll want to set up a Registered Retirement Savings Plan (RRSP) to begin stashing money away for your golden years. While retirement may seem far away, you can get a tax deduction for funds invested into your RRSP. You could also grow your money in an RRSP account without worrying about paying taxes until retirement, as the account is tax-deferred until you withdraw funds.
Pay Down Your Debt
If you have any credit card debt or student loans, you may want to start tackling this debt since interest rates are rising. While this isn’t technically an investment, you can save on future interest. You’ll probably want to go after your highest-interest debt first to help save the most money.
Consider Going Back to College
If you’re looking for a safe investment, consider going to community college or earning a certificate for a skill. Education that upgrades your skills can lead to better opportunities and higher income in the future. Investing in yourself is one of the wisest financial moves you can make.
The Final Word on Investing Right Now
While figuring out where to stash your funds during times of high inflation can be confusing, remember that there are still safe investments out there. And if you ever struggle between paydays, you can always use Payactiv’s Earned Wage Access (EWA) to receive your earned wages in advance*. That way, you won’t need to rely on credit cards or tap into your emergency fund.
