Which of the following is a better investment for long term investing and why?
- High interest savings account paying 2.3% interest, no account fees and the funds are protected by the Canada Deposit Insurance Corporation (CDIC) (which is federally backed) in case the institution defaults.
- Bond ETF fund such as ZFM - BMO Mid Federal Bond Index ETF which has an average annualized distribution yield of 2.02% (as of Sept 2017) and an MER of 0.22%.
Note that the interest rate on the high interest savings account is subject to change (but this is true for bonds as well). Based on the above figures, it would seem that the bank account is better but are there any other considerations to take into account to determine which is a better investment long-term?