Investment Q&A

Since rates are moving lower, any highly-safe investment is experience the same issues. GICs are, in fact, the highest-yielding safe investments right now. There are alternatives, but all incur some risks. Bond funds 'should' do better as rates fall, but many have been disappointed so far. XBB can be suggested as a general bond fund, with an indicated yield of 3.45%. One year total return is 3.33%. If an investor is willing to add equity risk, an ETF such as VBAL (60% equities) yields 2.30% and is up 12.31% in the past year. But this would be very different than a cash ETF. Other options are 'conservative' sectors such as utilities. ZUT is a utility ETF. Yield 3.39%, one year 24.74%. Obviously this beats inflation but of course nothing is guaranteed there. The ETF has declined in three of the past eight years, with an 11% decline in 2022 when inflation spiked. If one truly wants 'sleep at night' cash, we would be reluctant to reach for yields by adding risk. The cash may not keep up with inflation, but the rest of the portfolio hopefully will. We would be comfortable with less cash, but shifting from cash to risk often does not work, whether it is the market or psychologically.