Investment portfolios require a certain level of diversity in order to be considered healthy. There are many financial products that investors can use to grow portfolio diversity, but none of them will be a one-size-fits-all case. Your investment choices should be catered to your long-term needs and goals.
Three of the most versatile diversification options that every investor should consider include Term Deposits, Index Linked Term Deposits, and mutual funds.
Term Deposits
Term Deposits are an excellent way to start investing (if you’re new to the game). For more seasoned players, Term Deposits will always be a solid strategy to support your long-term goals. In fact, they provide better interest rate security than a typical savings account!
Here are the primary benefits of investing in a term deposit:
- They’re low maintenance
Term deposits don’t require a lot of management. - They’re low risk
For many of the term deposit options, you’re guaranteed a return of initial investment. - They’re safe from market slowdowns
The fixed rate of a term deposit means that even if the market rates fall, your savings will keep earning the same level of interest. - There are no service or startup fees
If you don’t withdraw early (and you’ve invested in a non-redeemable term deposit), it’s completely free!
Which Term Deposits can I invest in at Interior Savings?
Based on your current and future financial goals, you can invest in various term lengths, choose whether you want redeemable or non-redeemable options, or opt to ladder your deposits.
Where can I hold my term deposits?
As an Interior Savings member, you can hold a term deposit in registered plans like RRSP, TFSA, or RESP, which can help your investments grow faster while saving on or deferring taxes.
Index linked Term Deposits
An Index Linked Term Deposit (ILTD) is a fixed Term Deposit that protects your initial investment but also offers returns linked to stock market performance. Interior Savings offers a number of well-diversified ILTD options but here are two of our most popular choices:
- Canadian ILTDs
Canadian ILTDs are linked to 20 Canadian corporations and are offered in 2 to 5-year terms. These have high potential returns but have no minimum guarantee. - Global ILTDs
Global ILTDs are linked to the performance of 20 large international corporations in sectors that span IT, energy, telecommunications, consumer staples and other industries. They are also available in 2 to 5-year terms and have a higher potential for return but no guaranteed minimum return.
Three major advantages of ILTDs include:
- Having guaranteed principle
No matter what happens to the stock market, your initial investment is safe and guaranteed. - Getting bigger payoffs
Since ILTDs are tied to the growth potential of major corporations, they offer higher potential returns. - The initial investment is low
You can open an ILTD for a low minimum investment ($1,000)—with no commission or management fees.
Keep in mind that the returns are considered income and will be subject to tax. If that’s a concern, you can always opt to hold your ILTD in a tax-sheltered option like a TFSA or RRSP for a more tax-advantageous investment strategy.
Mutual Funds
A mutual fund is a professionally managed investment fund that pools money from many investors to purchase securities and is a smart and cost-effective way to invest. These funds may be retail or institutional in nature (diversifying industries reduces the risk to your assets in the case of a poor quarter) and are often more liquid because of lower volatility.
Here are the primary benefits of opting to invest in mutual funds:
- They are professionally managed
As a mutual fund investor, you have the benefit of having a professional manager who reviews the fund’s portfolio on an ongoing basis and has access to analysts and research. - They’re convenient
All mutual funds allow you to buy or sell your fund shares before the market closes each day. You can also automatically reinvest your returns from dividends and capital gain distributions or add in additional investments at any time. - You can get more for less
For many stock funds, the required minimum initial investment is substantially less than what it would take to build a similarly diversified portfolio with individual stocks.
Term Deposits, ILTDs and Mutual Funds: At a Glance
| Term Deposits | ILTDs | Mutual Funds |
| · Cashable or non-cashable options | · No fees or commission | · Choose between different levels of potential risk |
| · Can be held within your registered accounts (RRSPs and TFSAs) | · Can be held within your registered accounts (RRSPs and TFSAs) | · Can be held within your registered accounts (RRSPs and TFSAs) |
| · Deposits are 100% guaranteed by CIDIC | · Higher potential returns while initial investment is 100% guaranteed | · Professional investment advice |
Celebrate with us!
To celebrate Interior Savings’ 80th birthday, we’re giving an extra-special rate of 2.30%* on our 800-day term deposit! Contact your local Interior Savings branch or call us at 1-855-220-2580 to speak to one of our financial experts and find out more. We will happily sit down with you to find the best investment options for your unique goals and dreams!
*Limited time offer. Special term deposit rate is subject to change at any time.
Deposits are 100% guaranteed. Protection provided by the Credit Union Deposit Insurance Corporation of British Columbia.