Canadian investors are holding 13% of their money in GICs and a full 11% don’t know what they are invested in, shows an Edward Jones poll.
Among Canadians who have investments, including those with RRSPs and TFSAs, the majority own mutual funds (41%), followed by stocks (14%), and closely followed by GICs (13%).
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“Holding as much in cash and GICs as growth investments, such as stocks, means your portfolio may not be properly balanced, which can cause you to miss out on opportunities to grow your investments,” says Craig Fehr, Canadian market strategist for Edward Jones,. “Cash is providing little to no return in today’s environment. It’s important that your investments are aligned with your long-term financial goals, not short-term emotions.”
The survey also reveals that half of Canadians plan to make some kind of investment this year and 25% plan to buy GICs, further adding to their cash and short-term holdings.
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“Given the market’s performance, with stocks doing well but the potential for rising interest rates going forward, we recommend investors review their portfolios,” adds Fehr. “Rebalancing their mix of stocks and bonds and adding quality investments that are poised to perform well today and over the long term.”
Investors should be wary of being over weighted in long-term bonds as the threat of rising interest rates is likely to impact future returns, he cautions.
The poll notes Quebec as the province with the highest amount of investors holding bonds (10%) and Manitoba/Saskatchewan was the lowest at 1% while the overall average of bond holdings was 4%.