Fixed Income Securities
Looking for safe and reliable investment options in Canada?
Fixed-income investments like GICs, government bonds, and bond ETFs offer Canadians a secure way to earn steady returns while preserving capital. Whether you’re planning for retirement, seeking passive income, or diversifying your portfolio, fixed-income assets provide a stable foundation. In this guide, we explore the best fixed-income options available to individuals in Canada—comparing returns, risk levels, liquidity, and tax advantages to help you make informed decisions in 2025.
| Investment Type | Risk Level | Typical Return (2024) | Liquidity | Term Range | Tax Treatment | Notes |
|---|---|---|---|---|---|---|
| Government of Canada Bonds | Very Low | 3.5% – 4.0% | Medium (via broker) | 2 to 30 years | Interest fully taxable (unless in TFSA/RRSP) | Best for safety; backed by federal gov. |
| Provincial Bonds | Low | 4.0% – 4.5% | Medium | 1 to 30 years | Taxable | Slightly higher yield than federal bonds |
| Corporate Bonds | Medium | 4.5% – 6.5% | Medium to Low | 1 to 10+ years | Taxable | Varies by company rating; higher yield = higher risk |
| GICs (Fixed-Rate) | Very Low | 4.5% – 5.5% | Low (locked in) | 1 to 5 years | Taxable (unless TFSA/RRSP) | Principal guaranteed; CDIC insured up to $100K |
| Cashable GICs | Very Low | 3.0% – 4.0% | Medium | 1 to 3 years | Taxable | Flexibility to redeem early, with lower interest |
| Market-Linked GICs | Low | 0% – 8% (variable) | Low | 3 to 5 years | Taxable | Returns tied to stock markets; principal protected |
| Bond ETFs (e.g., XBB, ZAG) | Low to Medium | 3.5% – 5.0% | High (daily trade) | N/A (open-ended) | Tax-efficient if held in TFSA/RRSP | Diversified; price may fluctuate |
| Fixed-Income Mutual Funds | Low to Medium | 3.0% – 5.0% | Medium to High | Open-ended | Taxable (interest & capital gains) | Managed professionally; higher fees than ETFs |
| Preferred Shares | Medium to High | 5.0% – 6.5% (dividends) | High | No fixed maturity | Eligible for dividend tax credit | Equity-like; sensitive to interest rate changes |
| High-Interest Savings A/C | Very Low | 4.0% – 4.5% | Very High | None | Taxable | Best for short-term parking of cash |
| Annuities | Very Low | Depends on age/term | None (illiquid) | Life or set years | Partially tax-deferred (prescribed annuity) | Good for retirement income security |
| Strip Bonds | Low | 4.5% – 6.0% (imputed) | Low | 1 to 30 years | Taxable annually (even if no cash flow) | Bought at discount; paid full face value at maturity |
