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Conservative investors: 4 strategies to consider

September 5, 2025

Written by Robb Engen

Illustration of a hand holding a magnifying glass over a series of charts and graphs.

Key takeaways

  • Conservative investing means investing with intention.
  • Prioritize capital preservation, minimize volatility, and align with your goals and time horizon.
  • Diversify across asset classes. Even conservative investors need some equity exposure to keep pace with inflation and support long-term growth.

Conservative investors: 4 strategies to consider

Every investment carries some level of risk. Stocks can soar—but they can also fall sharply. The returns of GICs and bonds may not match the returns of equities over time, but they offer stability and protection. This trade-off between risk and reward is at the heart of every investing decision.

Conservative investing leans toward safety, capital preservation and predictability. It doesn’t mean avoiding the market altogether; instead, it means taking a thoughtful approach that matches your risk tolerance and timeline.

Being conservative isn’t the same as being passive. A conservative investor is someone who:

Values capital preservation over maximum potential growth

  • Example: A retired teacher with a workplace pension and RSP savings wants to ensure their money lasts through a 30-year retirement. Their focus isn’t on doubling their Investment Portfolio—it’s on avoiding big losses that could derail their income plan.

Has a lower tolerance for volatility

  • Example: A couple in their 50s plans to retire in five years. After living through the 2008 crisis and the economic impact of the COVID-19 pandemic, they’d prefer a smoother ride—even if that means giving up some potential for higher returns.

Often has a shorter time horizon or a goal of safeguarding wealth

  • Example: A business owner who just sold their company wants to preserve the sale proceeds until they’re ready to buy a home five years from now.

You can think about investor profiles as existing across a spectrum. On the conservative end, your focus is on protecting what you have. Balanced investors aim to grow their assets and protect, while aggressive investors seek higher returns and accept more volatility.

1. Prioritize capital preservation

The first rule of conservative investing is simple: don’t lose money. That means choosing investments designed to protect your principal, even if they come with lower expected returns.

Here are a few examples of products that can help preserve capital:

GICs (Guaranteed Investments)

GICs offer a fixed return over a set period, making them a popular choice for conservative investors seeking predictability. They work well for goals with defined timelines, such as a home purchase in the next few years or funding retirement income.

Savings accounts

Savings accounts provide daily liquidity, making them ideal for short-term needs or an emergency fund. While returns may be modest, the focus is on safety and accessibility.

Money market funds

Money market funds invest in short-term, high-quality debt instruments. They aim to deliver slightly higher yields than savings accounts. They provide low volatility and high liquidity, which makes them useful for parking cash without taking on much risk.

Short-term bonds

Government and investment-grade corporate bonds can provide steady income with relatively low default risk. Shorter-term bonds are less sensitive to interest rate changes and may offer a smoother ride during uncertain markets.

All these options share a common goal: capital preservation. Conservative investors often use them to reduce portfolio volatility, meet short-term goals, or create predictable income during retirement.

2. Focus on high-quality bonds & fixed income

Fixed income plays a key role in a conservative investor’s portfolio. These investments help generate steady income, cushion against market volatility, and aim to preserve capital over time. But they can be tricky to understand.

Let’s start with a common question: Why do bond prices fall when interest rates rise?

When interest rates go up, newly issued bonds offer higher yields. This makes existing bonds with lower yields less attractive, driving down their market value. This relationship caused many bond prices to drop in 2022, leading to their worst annual performance in decades. According to Morningstar, Canadian bond funds lost more than 10% on average that year.

But here’s the good news: higher rates today mean better long-term income opportunities.

If you’re buying bonds now or renewing GICs, you’re locking in much more attractive yields than you would have a few years ago. That makes fixed income more compelling than it’s been in a long time.

Investing is not just about returns. Bonds, GICs, and money market funds each serve different purposes in a conservative portfolio, and together they help to provide stability, diversification, and a reliable income stream.

Examples of fixed income investments

Government bonds

Issued by federal or provincial governments, these bonds offer strong credit quality and lower risk of default. They're a core building block of most fixed income portfolios.

Investment-grade corporate bonds

These are bonds issued by financially stable companies. They offer higher yields than government bonds with modest additional risk.

Bond ETFs and mutual funds

These pooled investment vehicles hold a mix of government and corporate bonds. They provide instant diversification, professional oversight, and easier access than buying individual bonds.

Money market funds

Designed for short-term needs, money market funds invest in low-risk, highly liquid securities. They’re a good option for parking cash while still earning a modest return.

What about bond duration?

Bond duration simply refers to a bond’s sensitivity to interest rate changes.

  • Short-term bonds tend to be more stable. Their prices are less affected when interest rates rise or fall, which makes them appealing during volatile times.
  • Long-term bonds offer higher yields but are more sensitive to rate changes. Their value can fluctuate more in the short term, though they still deliver their promised return if held to maturity.

The key is balance. A diversified mix of short- and intermediate-term bonds may provide a smoother ride, with better income potential than cash alone, without taking on too much risk.

3. Diversify across asset classes

Diversification isn’t just about maximizing returns. For conservative investors, it’s about managing risk more effectively by spreading your money across different types of investments. That way, when one part of your portfolio dips, others may hold steady, or even rise.

Think of it as not putting all your eggs in one basket. Holding only cash or only bonds can leave you exposed to other types of risk, like inflation eating away your purchasing power or missing out on potential growth. A diversified mix can help you strike a balance between stability, income, and long-term preservation of wealth.

Here’s how that might look in a conservative portfolio:

  • Equities: Provide growth potential and help protect against inflation over the long term.
  • Fixed income: Aims to offer stability and steady income.
  • Cash or cash equivalents: Seeks to provide liquidity for short-term needs and spending.

A sample conservative asset mix could include:

  • 30% global equities
  • 60% fixed income (bonds, bond ETFs or mutual funds)
  • 10% cash or money market funds

This blend gives you exposure to growth while keeping your overall risk profile in check.

Tip: Consider using all-in-one mutual funds or ETFs to simplify your investing. Sometimes called asset-allocation funds, these offer built-in global diversification, automatic rebalancing, and a mix of equities and fixed income assets tailored to your risk level. For conservative investors, a fund that offers 70% fixed income to 30% equities, or even 60% fixed to 40% equity, can be a solid “set it and stay the course” option.

Grow your savings safely with our GICs 

Save money knowing your investment is guaranteed at a great rate for whatever term you choose.

4. Consider a laddered approach

Laddering is an investing strategy that helps you manage risk, keep money accessible, and potentially capture better interest rates over time. It involves spreading your investments across different maturity dates so you don't lock in all your money at once.

For conservative investors, GIC laddering is a smart and straightforward way to put this strategy into action. Instead of investing a lump sum in a single GIC, you divide it into equal parts and invest across terms, for example, from one to five years. That way, one GIC matures each year, giving you regular access to cash and the opportunity to reinvest at current rates.

Here’s how it works:

Let’s say you have $100,000 to invest. You could build a simple 5-year ladder like this:

  • $20,000 in a 1-year GIC
  • $20,000 in a 2-year GIC
  • $20,000 in a 3-year GIC
  • $20,000 in a 4-year GIC
  • $20,000 in a 5-year GIC

When the 1-year GIC matures, you use that money for your needs—or reinvest it into a new 5-year GIC. Each year, another GIC matures, keeping your ladder going and helping you take advantage of changing interest rates over time.

Why it works:

  • Provides predictable income
  • Keeps part of your money accessible each year
  • Reduces the risk of locking in at a single low rate
  • Offers peace of mind, with principal protection

GIC laddering is especially useful for retirees and conservative investors who value stability, access to cash, and a steady income stream. 

Putting it all together: A sample conservative investor plan

Goal

Strategy

Tangerine tie-in

Protect capital

GIC ladder

Tangerine Guaranteed Investments

Steady income

Bond ETFs

Tangerine Balanced Income Portfolios (includes up to 70% Canadian bonds)

Long-term growth

Global equity ETF (30%)

Tangerine Global ETF Portfolios

Liquidity

Money market fund or cash savings

Tangerine Savings Account or Money Market Fund

 

What conservative investors should keep in mind

You don’t have to build a conservative investment plan on your own. Tangerine offers easy-to-understand, professionally managed solutions tailored to your goals and comfort level.

If your priority is protecting your money while still earning steady returns, we can help you:

  • Match your investments to your time horizon and risk tolerance
  • Focus on capital preservation and reliable income
  • Maintain some growth potential to stay ahead of inflation
  • Keep things simple with diversified, low-cost1 investment solutions
  • Avoid the stress of day-to-day decision-making

Whether you prefer GICs, savings accounts, money market funds, or globally diversified portfolios, Tangerine can help you find the right mix based on your investor profile. You’ll get a plan that fits, not just a product.

Explore Tangerine Investment Solutions to find the right option for your conservative investing needs.

Ready to start investing?

We’ve got simple options that keep your money working for you in the short and long term. 

1A fund's expenses are made up of the management fee (including the trailing commission), operating expenses, trading costs, and fixed administration fee. The annual management fee is 0.80% of each Tangerine Core Portfolio, 0.50% of each Tangerine Global ETF Portfolio, and 0.55% of each Tangerine Socially Responsible Global Portfolio. The fixed administration fee is the same for all Tangerine Investment Funds and is 0.15% of each Portfolio’s value.

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