15K investment for short term

[inassod]

What would be the best way to keep 15K CAD invested for a period of 3 years ? I do not wish to risk anything at this point as this money will serve as a downpayment for my future home. GIC is one option but was wondering would there be any better thing to do with this lot ?

How about buying USD in a hope that the rates will rise in about 3 years time ? any and all other ideas are appreciated. Thanks in advance.

[asdfvcx]

What would be the best way to keep 15K CAD invested for a period of 3 years ? I do not wish to risk anything at this point as this money will serve as a downpayment for my future home. GIC is one option but was wondering would there be any better thing to do with this lot ?

How about buying USD in a hope that the rates will rise in about 3 years time ? any and all other ideas are appreciated. Thanks in advance.
You do realize that buying USD has risk if you are going to need the money in CAD in 3 years.

Could you clarify what you risk tolerance really is?

[inassod]

You do realize that buying USD has risk if you are going to need the money in CAD in 3 years.

Could you clarify what you risk tolerance really is?

Honestly i would like to keep the risk minimum to none and (excuse my stupidity) I was trying to get a pulse on seeing wht general opinion is about US dollar getting stronger again in a period of 3 years, this was just an idea that flashed in my head but if the risks involved are huge - i would prefer not to go USD route.

[asdfvcx]

If you want to keep risks minimum to none your choses basically are GIC and high interest savings account. Neither of which is paying much, but they are better than nothing.

[peter_ross]

What would be the best way to keep 15K CAD invested for a period of 3 years ? I do not wish to risk anything at this point as this money will serve as a downpayment for my future home. GIC is one option but was wondering would there be any better thing to do with this lot ?


If you want no risk, but potential upside in TSX, then you can consider TD GIC Plus (http://www.tdcanadatrust.com/GICs/MktGrowth.jsp#plus) (3-year)

[pinkcandii]

what about with the same amount of money and similar timeline with moderate amount of risk? what would you suggest then?

[ilusa]

If u want 0risk, and potential gains, Id recomend gettng one of those GIC's that they dump into the market..

They lock in ur 15k, and u cant lose a dime of it, if the market goes up, u can earn a max of a certain %, and if the market goes down u get back your 15,000

With the market at these levels id think its a good idea.. As gic's ull get near 0% anyways

[CUVShopper]

If you want zero risk do not buy anything denominated in US$. Get something in CDN$; GIC or some other term investment. Once you buy an investment in foreign currency you are exposed to potential currency losses (or gains).

[thebanker]

GIC's are a safe bet but many of them are yielding rates extremely low.
Have a look at bond funds (i.e. PH&N Bond Fund), which should provide returns between GIC's & stocks. If you desire higher yields but don't want to invest in stocks alone...you could always diversify into a mix of GICs/Bonds/Blue Chip stocks.

[g9chan]

1- If you need the money in 3 years, you don't want it exposed to the stock market or to currency fluctuations.

*Though technically if you don't need to buy a house in 3 years, then it may not make sense to be ultra risk adverse. It might make more sense to take a reasonable amount of risk with the money to grow it so that you can take on less debt when you get the mortgage.

2- I'd stay away from currency speculation if you don't know what you're doing. Famous investors like Warren Buffett and Jim Rogers (co-founder of the Quantum Fund) are likely betting AGAINST the US dollar. They think it will go down.
Warren has written about the US trade deficit.
Jim Rogers thinks the US dollar will go down because the US government is printing an unprecedented amount of money.

I don't think taking the opposite side of their trades is a good idea.

3- One idea would be to invest around spinoffs...
http://www.littleguyinvesting.com/spinoffs/spinoffs.htm

That is the best way I know of to make money in the stock market. This hedge fund strategy still works and is accessible to individual investors. One way to do it is to get an Interactive Brokers account and stick 80% of your portfolio around spinoffs, buying before and selling after. The expected return should be positive, but it is not risk-free and it is speculative to some degree.

Id recomend gettng one of those GIC's that they dump into the market..
Those strike me as a ripoff. They calculate the returns in a weird way and you are likely better off with alternative investments. The bank is going to stack the risk/reward balance in their favour, not yours.

[charliebrown]

what about with the same amount of money and similar timeline with moderate amount of risk? what would you suggest then?

Find some preferred shares that have a maturity in 2011/2012; ideally, the ones that are trading at a discount to face value i.e. $15-$20 with a $25 face value (fewer & fewer nowadays).

The ones that are still below $15 are the ones that pay prime-based interest; so you're looking at about ~4% return

i.e. Prime = 2.25%
2.25% x 25 = $0.5625 in dividends per year
$0.5625 / $15 investment = 3.75% yield

Should mention that I don't expect the prime based preferreds to be redeemed...so it's just a fairly secure dividend stream

[BTron]

The bank is going to stack the risk/reward balance in their favour, not yours.

Agreed. If you're looking at one of those market return GIC's, you'd actually be better off to put $14500 into a GIC to recoup the initial $15000 in 3 years @ 1% interest, then put the remaining $500 into a Jan 2011 or 2012 call option on an overall market ETF. This way you are guaranteed your principal back, but say the stock market explodes upwards, you would profit from that too.

[Wing Nut]

The OP could look at a market-linked protected note. I use some of these and one of the banks has a new one out right now. It's based on 10 stocks. Worst case you get your money back in three years but you could do very well if the stocks do well. You won't get the stocks' full return but would have to buy the stocks to do that. PM me if you want the name of the note.

[DanielCarrera]

How about buying USD in a hope that the rates will rise in about 3 years time ?

That would be really stupid. The USD is as likely to go up as down. Nobody knows the future. If you can't accept risk, then you are stuck with GICs I'm afraid. But I would suggest that anyone can tolerate at least a little bit of risk. So why don't you consider a low-risk investment portfolio. For example, a portfolio of 30% GIC, 40% bonds, 10% Canadian stocks, 10% US stocks and 10% International stocks. That would be quite conservative, not risk free, and in exchange you can expect a higher return than a 100% GIC portfolio.

[Wing Nut]

Anyone who thinks that buying Greenbacks and it's no/low risk clearly doesn't understand currencies or risk. As others have rightly mentioned, that would be a bad move.