As a business owner, you’ve navigated a lot of uncharted territory this past year. Now, investment decisions may be somewhat difficult to make. With such low interest rates, you may feel compelled to fully invest in your business or seek riskier investment options in pursuit of higher potential returns.

An illustration for a blog post about smart investing in a low interest rate climate. From left to right: (Top left) a briefcase, (Bo-ttom left) a green GIC piggy bank. (Middle front) a stack of coins, (Right) a storefront with 2 payroll cheques representing Emergency Payroll Savings Accounts and on the top is a ribbon of a bar chart and an upward arrow representing Stock Market GICs.

Before you make any investment decisions, follow these three steps to make the most of the current low-rate climate.

1) Remember the golden rule of investing

Your personal and business goals should always guide your investment decisions.

Consider where you want to be in five or 10 years. This will help guide you towards the best decision for you and your business. For example, whether you plan to sell or expand your business in the next ten years will determine what your investment path should look like.

It’s important to also consider how the pandemic has impacted your business goals. If you haven’t yet looked at the effects specific to your goals, we have financial tips for navigating the unexpected, including key questions to answer as you think through this.

2) Have your financial planner on your side

Before making an investment decision, connect with your financial advisor and discuss your short-, mid- and long-term goals for yourself and your business.

Your advisor will help you determine the best option for your particular situation. They’ll also have access to investment solutions that have historically performed well during low interest rate periods. Together, you'll come up with a solution that aligns with your plan.

3) Find flexible investment options that balance risk and return

Stock Market GICs

Benefit: High return potential without the risk

Stock Market GICs balance risk by guaranteeing 100% of your principal investment. They balance reward with earning potential tied to specific markets.

If the market goes up, you’ll earn a return on your investment; if the market goes down, you retain your initial investment.

Another benefit is that these GICs can offer tax savings when set up as a registered product under your personal RRSP or TFSA accounts.

Servus Big Share: Stock Market GICs. Want the benefits of the stock market without the risk? Servus Big Share: Contribute to your RRSP and you could win $1 million*. On the left is a shield with an arrow above a bar chart representing the stock market.

Emergency Payroll Savings Accounts

Benefit: Safety net for future uncertainty

Setting aside funds each month that could be otherwise used to purchase inventory, build assets or pay bills may be a difficult decision for you to make. However, payroll savings accounts become invaluable in times of disruption, especially since payroll is often one of the largest expenses a business has.

Not to mention that keeping good employees focused on your business may give you the staying power needed to survive the down times and thrive on the upswing.

Short-term and/or redeemable GICs

Benefit: shorter investment timeframe with guaranteed rates

Short-term GICs are a way to invest without tying your money up with longer-term investment options. Some offer fully redeemable options so you can access your funds if needed while others offer partially redeemable options, generally with better earning potential.

Business High Yield Savings Accounts

Benefit: flexibility with immediate access to funds when needed

High yield savings plans for businesses can be a perfect complement to your daily banking plan. They typically offer tiered daily interest while still giving you easy access to your funds. These are a great solution for businesses with minimal daily transactions who need the highest level of flexibility in accessing funds.

Investing with low interest rates is tricky, but not impossible

It may not be as simple as when rates are high but finding the best investment option for you and your business is possible. Having a detailed financial plan will help you stay on track over the long-term through ups and downs in the market and economy.

Alberta-based businesses benefit with Alberta-based financial advice from experts who understand the local market. Contact your Servus business advisor today to discuss not only your business goals, but your personal ones as well, and together we’ll create an investment plan that considers your full financial picture.