How to Make Money Thanks to Your Savings?
By investing it! No one can afford to leave his or her money in an ordinary savings account. Since the cost of living is increasing, that money loses its value. For example, since food prices are increasing, you cannot buy the same quantity with $200 this year as you will in two years. This is what we call inflation.
Therefore, you must compensate for the gap by investing your money so that you can earn more than the increase in the cost of living. An investment that would yield 5%, when inflation is at 3%, would compensate for the gap and even allow you to increase your purchasing power.
Lower-risk investments
Let us take a look at the choices offered to you by starting with the safest ones.
High interest savings account and Québec savings bonds
You could use the high-interest savings account or Québec savings bonds to invest money you can withdraw at any time, if necessary, for example, for your emergency fund. It is a bit like investing your money in an ordinary savings account but, at least, you will earn more interest.
Given that interest rates are lower than those of other options, once you have set up your emergency fund, invest your money elsewhere after that. It will be more profitable.
Guaranteed investment certificate
You do not want to take any risks, but would still like to earn more from your investment? You can choose the guaranteed investment certificate.
As its name suggests, everything is guaranteed. You invest your money for a pre-determined period, at a known interest rate, and get it all back in the end, including interest. In general, the longer the term of your investment, the higher the interest.
The only downside is that you will not be able to access your money before the end of the period. If you want to invest over the long term, for example, for your retirement, it is worth looking into other types of investment that will offer you a better return.
High-risk investments
Now let's take a look at two options that could allow you to earn more money with your savings, but that involve some risks. High-risk investments may be included in your investments, such as stocks, when you invest your money over the long term for your retirement.
Before choosing that type of investment, you must know your investor profile to find out if it suits you. The profile is determined with a list of questions from your financial advisor. You can also
answer it online on the
Autorité de marchés financiers' website 
. Your profile must be updated regularly to ensure that your investments still suit you.
Mutual funds
Mutual funds are amounts of money gathered by investors like you and managed by a fund manager. They are invested in different types of investments, such as company stocks or bonds:
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A company stock is a share in the company that you buy in the hope that its value will increase or that the company will pay you a portion of its profits.
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Buying a bond is when you lend money to a company or government and then you earn interest on it.
The profit you can make with mutual funds, known as returns, is variable. It is not known in advance, because it depends on the evolution of the stock market and the decisions made by the people who manage the fund. If you are aiming for a long-term return, this is an option to consider. The value of your investment will increase and decrease frequently over the years, but after several years, it is often worth it.
When you invest money in a mutual fund, you pay management fees, and managers are required to disclose them. Find out how much these fees are going to cost you, because they can have a significant long-term impact on the return of your investments.
Exchange-traded funds
When you invest in an exchange-traded fund (ETF), you are buying a share in a group of securities that are traded on the stock market. That is a way to diversify your investments by buying several stocks in a single transaction. Therefore, you are not putting all your eggs in one basket.
As with mutual funds, returns are not guaranteed. There will be variations over time but, in the long term, the return is generally higher than the increase in the cost of living. It is also important to respect your investor profile.
There are several types of exchange-traded funds, some of which are asset allocation. Asset allocation ETFs can be a good way to get started because in a single purchase, you obtain a diversified portfolio, which includes stocks and bonds. The portfolio rebalances itself to maintain the desired allocation.
The advantage of ETFs over mutual funds is that, in general, their management fees are lower. Consult the pages of the
Autorité des marchés financiers (AMF) to find out more:
Being well-informed and understanding
We have just seen how you can invest the money you managed to save. Before you start investing, find out more and do not hesitate to obtain advice. Also take the time to read carefully the investment statements you will receive. They will show you the value of your investments each year. It is important to understand them well, and it is normal to ask questions.
Good to know
You can carry out various scenarios by using our
SimulR simulation tool.
Who can help you manage your investments?
If you need help, you can meet a financial advisor at your
caisse, your bank or at a specialized firm.
If you want a long-term plan to help you reach your savings goals, you can consult a financial planner. A financial planner is a person who has a diploma from the Institut de planification financière and a licence from the
Autorité des marchés financiers (AMF). It is a protected title, which means that it requires training to be able to use it.
In any case, find out about the costs to pay to consult them. If there are none, they may be paid by the institution selling the investments.
If your investment needs are fairly simple and you have time to spend managing your investments, you could do it yourself.