Canada Savings Bonds: Long-Term Investments with a Guaranteed Return

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Canada Savings Bonds: Long-Term Investments with a Guaranteed Return

Canada savings bonds are issued by the Government of Canada each year from early October until April 1. These bonds are an affordable investment product, with as little as $100 required to invest.

What Are Canada Savings Bonds?

The Government of Canada first introduced savings bonds in 1939 as a method of raising funds during the Second World War. These coupon-style bonds were called War Savings Certificates or Victory Bonds.

In 1977, Canada replaced the coupon-style bonds with “R” (regular-interest) and “C” (compound-interest) bonds. The Government of Canada then introduced the Canada Premium Bond in 1998, offering a higher rate of interest with less cashing out flexibility.

Since its inception, the Canada savings bond has helped the government raise capital needed to run the country, while providing a safe investment vehicle for its citizens.

How a Guaranteed Investment Works Within a Balanced Portfolio

A balanced portfolio is one with a variety of investments tailored to the risk level, age, income and desired retirement income of the investor.

 

A guaranteed investment such as a Canada savings bond ensures that the investor’s principal is protected. It also provides a guaranteed return of interest income. This guaranteed return and principal protection works to create a more balanced portfolio, especially where the investor tries to earn higher returns on riskier investments such as forex trading or stocks.

How Canada Savings Bonds Work

The Government of Canada issues Canada savings bonds to raise capital. They pay investors a guaranteed return on these funds. Canada savings bonds are available with regular or compound interest.

The term for a Canada savings bond is ten years, although they can be cashed out at any time. Read the Terms and Conditions provided by the Government of Canada carefully to understand the circumstances required for early redemption and the associated interest penalties.

Where to Buy Canada Savings Bonds

Investors can purchase Canada savings bonds from a bank or investment professional, online, by phone, or through participating employer’s payroll savings programs. Citizens can also buy Canada savings bonds as gifts for friends or loved ones for as little as $100.

The Government of Canada sells Canada savings bonds online from their Direct Web Sales service. Those wishing to purchase by phone can call 1-888-773-9999 Monday to Friday, from 8:00am to 8:00pm EST.

More Information on Bonds and Other Long-Term Investments

Even beginner investors can confidently invest in bonds. To learn more about term bonds, serial bonds, secured bonds and more, read Types of Bonds: Understand Definitions to Confidently Invest in Bonds. Contact a qualified investment professional for assistance in creating a balanced portfolio.