What you’re saving for: Is it for retirement, a car, a first home, a vacation, fertility treatments, kids’ education? This will help you determine if you’re looking at a short-, mid-, or long-term investment, which may push you towards a TFSA or RRSP. Since withdrawals are typically easier with a TFSA, that account might be best for short- or mid-term investments. An RRSP would be better if you’re saving for a down payment on a house, particularly if it’s your first home since you could switch your funds to an FHSA. For kids’ education, an RESP is best since the government matches your savings.
How long you have to save: When do you want to reach your goal? “Four years would be considered short to medium term,” says Gray. For goals under five years, a TFSA with low-risk investments may be the best option, since you don’t have time to wait out any market volatility. Are you saving for retirement and have at least a decade or two to do so? An RRSP with high-risk investments may be your best option.
The best time to contribute: “It’s a bigger bang for your buck to make an RRSP when your income is high, over $100K or so, you get a higher deduction,” says Gray, “then take it out when you’re retired at a lower income, so you have lower taxes.” If you’re just starting your career or are on maternity leave and have a low income (under $40K or so) but expect it to be higher in a few years, it could be best to wait before contributing. That’s because you can save your contribution room for the time when your tax rate is higher, which will result in a bigger deduction.
If you have a pension: “Someone who has a large pension has little RRSP room, so they may not find it beneficial to put money into an RRSP,” says Gray. In that case, a TFSA may be best. If your contributions are maxed, a non-registered account may be the next best thing. But someone who doesn’t have a pension can put money into an RRSP and get a fair deduction.
How do I change my savings accounts into investment accounts?
Despite the word “saving” in the names, your registered accounts, like your RRSP and TFSA, can act as a mere savings account or as an investment account. To convert either into an investment account, visit an advisor at your local branch or use your financial institution’s online services. There, you’ll be able to open accounts, transfer funds and purchase new investments. You could also keep the savings accounts, too, and open new investing accounts, if you want to use it as an emergency fund.
To decide which investments to choose, “you have to do your research,” warns Gray, or talk to a financial advisor. They can recommend what’s right for you—whether that’s ETFs, GICs, mutual funds, etc.—based on your need for liquidity and your risk tolerance. When it comes to stocks, Gray says seeking help from an investment professional is even more important. “I’d rather have people pay someone to do it for them at a slightly higher fee than to have than to have someone [invest] poorly.” She says they might lose money from the investment because of bad timing. “That’s worth the 1% to 2% in fees they’d be charged for the service.” Here’s how to figure out your investment fees.
What are my investment options as a single woman in Canada?
You have an array of low-, medium- and high-risk investment options under these accounts. The best ones for you will be determined by your goals, how long you have to save and your psychological characteristics (which can signal if you can handle volatile markets well or not):
GICs are considered a low-risk investment. GIC rates are dependent on the Bank of Canada’s key interest rate. So when rates are high, GIC investors benefit, as they did from mid-2022 to late 2024. You may not always earn high interest rates with GICs, but you’ll be guaranteed to get your full deposited amount back. GICs are great for short-term savings goals since they can last anywhere from six months to a few years. Saving for a vacation, car, fertility treatments or something with up to a five-year horizon? Investing in a GIC, which is low-risk, in your TFSA could be a good option, says Natasha Knox, a financial planner and founder of Alaphia Financial Wellness in New Westminster, B.C. “You don’t want something that’s going to fluctuate, that exhibits a lot of volatility, if you have a tight time frame that you’re working within.”
Exchange-traded funds (ETFs) are collections of investments and trade on a stock exchange. That means it can invest in equities, fixed income or commodities. They typically boast a low cost and allow for diversification, compared to, say, mutual funds. They’re better for longer-term goals so you have time to wait out potential volatility. “You can buy some stocks and ETFs yourself,” says Gray. “You can just open an account and become your own broker.”
Mutual funds, like ETFs, are a collection of investments—but are managed by a professional, so the fees tend to be higher. Mutual funds are still very popular in Canada, even as ETF options grow quickly. For those who like professionally managed assets, these can be good options.
Equities (think: stocks and shares) are a direct investment in a business. If you’re not ready to pick and choose stocks (don’t worry, not many Canadians do), an investment advisor can help you choose which stocks to buy based on risk tolerance, goals and other factors. It’s best to invest in equity for your long-term goals, like your retirement, so you have time to wait out the highs and lows of the stock market. “A 10-year timeline is what we consider a long-term horizon,” says Knox. If you’re saving for retirement or a house down the line, “you could invest that money and have time for it to recover” from any market setbacks.
Bonds, offered by governments and businesses, are fixed-income securities, meaning you’re lending money for some time while being paid interest. They’re less volatile than stocks, and less risky, which makes them a fair option for short-term objectives. “If you’re going to buy a car in about four years, a bond or GIC could be a good option,” says Gray. “Because you know if you put in $30,000, in four years it’s going to be $31,000—it’s not a lot of gain, but it doesn’t have time to recuperate if it does go down.”
