Cash Equivalents

The asset class known as "cash equivalents" refers to investments that pay interest for the use of your money. You may select from a range of instruments that offer:

  • A fixed or variable interest rate
  • A fixed term or no term

Did You Know?

The cash equivalents asset class is actually a subset of fixed-income investments. Its unique features and short maturity dates sets it apart. Investors recognize the extra safety and liquidity that is provided by placing these investments in a separate asset class.

Description of Investments

Descriptions of the various types of cash equivalents investment instruments available are shown in the table below.

Types of Cash Equivalents Investments


Bank accounts, including high interest savings accounts

  • Insured by the Canada Deposit Insurance Corporation (up to $100,000)
  • Low or no interest, depending on the type
  • Usually fully accessible; any amount up to full value may be withdrawn at any time

Canada Savings Bonds

  • Fully guaranteed by the Government of Canada
  • Redeemable at any time, at face value with accrued interest
  • Typically pay a rate of interest that is competitive with short-term guaranteed investment certificates (GICs)

Treasury Bills (T-Bills)

  • Fully guaranteed by the Government of Canada
  • Reach maturity in a specific number of days (30, 60, 90, 180, or 364); interest is paid at maturity
  • Can be sold at market value anytime
  • Considered the safest Canadian investment you can hold with a term of less than one year

Term Certificates, Guaranteed Investment Certificates (GICs) (When the term to maturity is one year or less)


  • Fully guaranteed by the banks, credit unions and trust companies that issue them
  • Insured by the Canada Deposit Insurance Corporation (up to $100,000)
  • Competitive interest rate
  • May be redeemable or non-redeemable for the term

Mortgage-Backed Securities

  • Pool of CMHC-issued residential mortgages established as an investment fund
  • Pay a small portion of the capital every month, plus the interest earned
  • Guaranteed by the Government of Canada

Cash Is a Poor Long-Term Investment

Some people claim that "cash is king." However, over time, the value of cash tends to be outstripped by inflation. Contemplating a move to invest in cash equivalents? Let history be your guide. Take a look at the graph in the box below to see how cash performs in the long run.

All-Cash Equivalents

Click the button below to view the graph.