Short-term investments to start the new year in the green

As the new year begins, many Canadians are looking for smart ways to grow their money without locking it in for years. Whether you’re saving for a trip, planning a home renovation, or simply trying to get ahead, short-term investments can help you reach your financial goals—fast and with less risk.

In this guide, we’ll dive deep into the best short-term investments in Canada for 2025, showing you where to park your money for the best return while still keeping it accessible. We’ll break down the pros and cons, show you how each option works, and give you a step-by-step plan to get started.

What is considered a short-term investment?

A short-term investment is typically one that you plan to hold for less than three years. Some people look at even shorter time frames—like 3, 6, or 12 months—especially if they’re working toward a specific goal.

These types of investments are ideal when:

• You need access to your money soon

• You’re risk-averse and want to preserve capital

• You want to earn more than what a standard savings account offers

✅ Tip: Short-term doesn’t mean low-return. With the right strategy, you can still see solid growth.

Best short-term investment options in Canada (2025)

Here’s a breakdown of the top-performing short-term investments available to Canadians right now:

1. High-interest savings accounts (HISAs)

Best for: Safety and flexibility

Expected returns: 4.00% to 5.50% annually

High-interest savings accounts are a classic option. They’re virtually risk-free, and your money is insured up to $100,000 per financial institution through CDIC.

Top banks offering high rates in 2025:

🧠 Insight: Digital banks tend to offer better rates than traditional banks because of lower overhead costs.

2. Guaranteed Investment Certificates (GICs)

Best for: Predictable returns

Expected returns: 5.00% to 5.75% for 1-year GICs

GICs offer guaranteed interest over a fixed term. They’re an excellent option if you don’t need immediate access to your cash.

Types of GICs to consider:

• Non-redeemable GICs: Higher rates, but funds are locked in.

• Cashable GICs: Lower rates, but offer early access.

• Market-linked GICs: Returns tied to the stock market, with principal guaranteed.

1-Year GIC Rate Comparison (Sept 2025):

⚠️ Note: Always check if the GIC is CDIC insured. This protects your investment if the bank fails.

3. Money market ETFs

Best for: Higher returns with liquidity

Expected returns: 5.00% to 6.00%

Money market exchange-traded funds (ETFs) are a great blend of return and accessibility. They invest in ultra-short-term debt instruments and are considered low risk.

Top short-term ETFs in Canada (2025):

You can buy these through platforms like Wealthsimple Trade, Questrade, or TD Direct Investing.

4. Short-term bond funds

Best for: Low volatility with slightly higher risk

Expected returns: 3.50% to 4.50%

Short-term bond funds focus on government and corporate bonds that mature in 1–3 years. They’re a bit more volatile than GICs or HISAs but offer better yield potential, especially in a falling interest rate environment.

Popular picks:

• Vanguard Canadian Short-Term Bond Index ETF (VSB)

• iShares Core Canadian Short-Term Bond ETF (XSB)

5. Treasury bills (T-bills)

Best for: Government-backed safety

Expected returns: 4.75% to 5.25%

T-bills are issued by the Government of Canada and sold at a discount. At maturity, you receive the full face value. They’re great for ultra-safe, short-term holding.

You can buy them through brokers or directly through a discount brokerage account.

Case study: How Lisa turned $10,000 into $10,525 in 12 months

Lisa, a 32-year-old from Edmonton, wanted to save for her wedding in 2026. She had $10,000 to invest but didn’t want to take risks with the stock market.

Here’s what she did:

1. She opened a Simplii High-Interest Savings Account and earned 5.30% for 5 months = $221.00

2. Then, she transferred the balance to a 1-Year GIC with EQ Bank at 5.65% = $304.50

3. Total return over 12 months: $525.50

This short-term strategy gave her more than $500 in passive income, risk-free.

💡 Lesson: With just a bit of planning, short-term investments can deliver solid returns—even in under a year.

Step-by-step guide to start investing short-term

If you’re new to investing or just want a refresher, here’s a simple process to follow:

Step 1: Define your goal

Ask yourself:

• When will I need the money?

• Can I afford to lock it in?

• What’s my risk tolerance?

Step 2: Choose the right product

• Need flexibility? → Go with a HISA or Money Market ETF

• Want guaranteed returns? → Choose a GIC or T-bill

• Comfortable with slight fluctuations? → Try short-term bond ETFs

Step 3: Open an account

Options include:

• Online banks (EQ Bank, Tangerine, Simplii)

• Brokerage platforms (Wealthsimple, Questrade)

Make sure the platform is CDIC insured or regulated by IIROC.

Step 4: Fund your investment

Transfer money from your regular chequing account. Set up auto-deposits if you want to invest regularly.

Step 5: Monitor and adjust

Check in every few months. If rates change or your goals shift, reallocate accordingly.

When not to choose short-term investments

While short-term strategies are smart in many cases, they’re not ideal when:

• You’re saving for long-term goals like retirement

• You’re trying to build significant wealth through compound growth

• You’re comfortable with more volatility and can leave your money untouched for 5+ years

In those cases, you may be better off with long-term investments like index funds or RRSPs.

Start the new year strong with smart investing

Short-term investments aren’t just for cautious savers—they’re powerful tools that help Canadians make their money work in the near future. Whether you’re saving for a down payment, planning a big trip, or simply looking to grow your cash safely, there’s an option that fits your needs.

The key is to choose the right combination based on your goals, timeline, and risk comfort. Don’t let your money sit idle in a low-interest savings account. Use one (or more) of the strategies above to start the year in the green—and stay there.