7 Best Safe Investments for Seniors

  • Michael Grant
  • March 15, 2020

At retirement, you are really not looking to make some big investments and may be looking just to increase your savings for a rainy day or create a comfortable pension income. Investments are not completely safe, but there are a few that can offer a guaranteed return without risk to the principal amount you invested.

Before you invest or when planning to invest, you need to learn about all the safe investments available and the associated risk. At a minimum, you may want to invest your money for 3 to 6 months that can earn a decent interest. Of course, if the investment is too safe, you may not earn a lot in a short period of time.

The best safe investments for seniors will have right balance of investment risk and returns. Try to recognize and avoid the bad investments where you think you can earn a substantial amount, but over time the risk is too high, and your principal investment is at risk. Many seniors have made the mistake of opting for a non-guaranteed investment in hopes of receiving better returns, but have lost their principal amounts.

Try to build a retirement portfolio with a mix of low-risk investments that will increase your investments over time. You may want to consider seven of the best safe investments for seniors:

1. Guaranteed Investment Certificate (GIC)

A Guaranteed Investment Certificate (GIC) is one of the best safe investments for seniors. A GIC offers you a guaranteed rate of return over some time. It is safe and secure because your principal amount is not affected. There are financial institutions offering GICs from 1 year to 5 years with a rate of return from 2.60% to 3%. So, why invest in stocks or the fluctuating markets when you can earn a guaranteed amount?

With GICs, you never have to worry about losing value on your principal amount. The benefit here is if you want quick access to your money, then you can opt for a 1 or 2-year GIC plan. If not in a hurry, you can choose the 5-year GIC plan.

2. Registered Retirement Savings Plan (RRSP)

An RRSP is another good and safe investment for seniors, especially since it is exempt from tax as long as the funds remain in the plan. This allows for quick and even tax-sheltered investment growth, meaning your total value grows more quickly without deductions. RRSPs are known to be one of the safe investments for seniors.

3. Tax Free Savings Account (TFSA)

While RRSPs are usually recommended, the TFSA is another simple investment for seniors. A benefit with this investment is that when you take the money out, it is not counted as income. Due to this, many retirees have turned to this type of investment knowing that they can withdraw at any time and all withdrawals are tax-free.

4. Canada Pension Plan (CPP)

Known to be a deferred income retirement plan, the CPP can provide a retiree with about $700 or more in monthly income. There is a new raised rate for contributions that will make these investments more lucrative.

However, to be eligible, you have to complete an application form, and the amount you receive will be based on the amount you contributed towards your working years. The standard age to start receiving the pension is at age 65.

5. Bonds

Bonds are less likely to lose money than stocks. When you invest in a bond, you loan money to a company, municipality or the government. The borrower agrees to pay a set interest for a period of time until the bond matures. At this point, your principal investment will be returned to you.

The money you earn as interest is a steady source of retirement income. There are short-term, mid-term and long-term bonds. Regardless of the term, ensure that you invest in a high-yield bond for the best interest rate.

6. Annuities

If you are looking for an income for life, then annuities would be a better option. This can be taken with an insurance company. The life annuity provides a guaranteed income payment as long as you live. This way, you do not have to worry about outliving your retirement income.

It is best to speak to a financial advisor to help you determine if an annuity will be a good option for your retirement investment. You will initially be paying the annuity premium for a definite period until it stops, and the annuity starts paying you. The income stream is based on your life expectancy.

7. Savings account

Saving accounts are the safest investment, but the interest rate will not be appealing. If you prefer to keep your money safe, accessible and earning some interest, then this would be a good option. Check all banks or financial institutions to determine the best interest rate for your savings account before you consider this option.

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Hello, my name is Michael and I'm a cancer survivor. I'm also a home entrepreneur and stay-at-home grandfather. In the past thirty years, I've dabbled in the the financial sector, the technology industry, as well as a little business consulting. I guess you can call me a jack of all trades!


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