I have a chunk of money, around $20,000. I don't want to touch it until I am ready to buy a house, which could be anytime within the next 2-5 years.

What would be the smartest way to make some money on that without risking it at all?


A CDIC-insured high-interest savings bank account is both safe and liquid (i.e. you can withdraw your money at any time.) At present time, you could earn interest of ~1.35% per year, if you shop around.

If you are willing to truly lock in for 2 years minimum, rates go up slightly, but perhaps not enough to warrant loss of liquidity. Look at GIC rates to get an idea.

Any other investments – such as mutual funds, stocks, index funds, ETFs, etc. – are generally not consistent with your stated risk objective and time frame.

Better returns are generally only possible if you accept the risk of loss of capital, or lock in for longer time periods.

  • +1 - This is absolutely correct. A big part of investing wisely is to know when you aren't investing but saving. Understanding the goals of the money is critical. – MrChrister Aug 9 '12 at 15:43
  • For reference, if you ARE willing to lock in your money for a couple years, and you're comfortable with a little bit of risk to your savings (mostly if you need to take it out early) you can look at short-term to intermediate-term investment-grade bonds. I'm not familiar with the Canadian bond market, though, so I can't provide detailed advice. – fennec Aug 15 '12 at 17:58

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