Which investment vehicles are best for building wealth, whether short- or long-term? Discover what’s best for your clients in this article.

Investment vehicles are the primary tools that you can use to help your clients grow their wealth, preserve capital, generate income, and/or meet long-term financial goals. These vehicles differ in many factors like structure, risk, and accessibility. Understanding each type is vital when making personalized investment strategies that align with your clients' risk tolerance and overall financial profile.
In this article, Wealth Professional Canada will outline the most common types of investment vehicles. We’ll also talk about how they work and when they are typically suitable for clients. It is intended to support financial advisors in building and managing diversified portfolios while making the right choices.
Introduction to investment vehicles
If you’re an aspiring financial advisor or a new one, you might have come across the term “investment vehicle” but don’t fully understand what it entails. An investment vehicle is a product or structure used to invest money and earn returns. These vehicles channel funds into different asset classes such as:
- equities
- securities
- cash equivalents
- alternative assets
What is the most suitable investment vehicle for an investor?
The most suitable investment vehicle is the one that can best help your clients reach their financial objectives with a balance of risk and return. However, it can also depend on a lot of considerations such as their financial situation and risk appetite. For example, a client nearing retirement may favour more conservative investments while keeping some long-term options such as mutual funds for growth.
On the other hand, a younger investor with a higher tolerance for risk might choose stocks or exchange-traded funds (ETFs) for growth potential. For conservative investors, fixed-income options like bonds or guaranteed investment certificates (GICs) might be a better choice.
Your clients can also go for passive investments that offer dividends. Watch this clip to learn about five investment vehicles that you can recommend:
But in the end, there’s no one-size-fits-all option and it depends on the investor’s needs and preference.
What investment vehicle has the highest return?
Historically, stocks have offered the highest long-term returns compared to other investment vehicles. Equity investments, especially in individual stocks or stock-focused mutual funds, can also deliver strong gains over time. However, they also carry higher risk and volatility.
Alternative assets like real estate, private equity, or cryptocurrencies can also offer high returns, but they might require more expertise and carry greater uncertainty. While high-return investment vehicles can grow wealth faster, they are not guaranteed and might result in losses.
If your clients are seeking higher returns, long-term investing might be best. However, advise them to be prepared for market ups and downs.
Which investment vehicle is the most safe?
The safest investment vehicles are those with low risk and guaranteed returns. These include:
- government bonds
- high-interest savings accounts
- GICs
These options are best for preserving capital and earning modest interest without exposing money to market swings. While they offer lower returns compared to stocks or mutual funds, they provide stability and peace of mind.
Investment vehicles that are deemed safe are often used for short-term goals or by risk-averse investors. Choosing safe investments depends on your clients’ financial situation, but in general, vehicles backed by the government or insured institutions are the most secure.
Types of investment vehicles
We've grouped a number of investment vehicles into three main types:
- individual securities
- pooled investment vehicles
- registered investment vehicles
Let’s discuss them one by one:
1. Individual securities
Individual securities are direct investments in specific assets such as:
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Stocks: These investment vehicles represent ownership in a company. They offer potential for capital appreciation and dividends. Volatility can be high, and returns are market-driven.
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Bonds: These are debt instruments issued by governments, corporations, or other entities. Investors receive fixed interest payments and principal at maturity. Bonds can be less volatile than stocks but are still subject to interest rate and credit risk.
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GICs: These provide guaranteed returns over a fixed period. GICs are suitable for conservative investors who are seeking capital protection.
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Treasury bills: Also known as T-Bills, these are short-term government securities with maturities under one year. They are low-risk and often used for liquidity management.
2. Pooled investment vehicles
Pooled vehicles allow multiple investors to combine resources and invest in a diversified portfolio managed by professionals. Here are some examples:
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Mutual funds: These investment vehicles are actively or passively managed portfolios of stocks, bonds, or other securities. Mutual funds offer diversification and professional management but often include management fees and potential for capital gains distributions.
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Exchange-traded funds (ETFs): These trade like stocks on the Toronto Stock Exchange (TSX). ETFs usually follow an index and have lower fees than mutual funds.
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Segregated funds: These are insurance-based pooled investments that offer maturity and death benefit guarantees. Segregated funds are regulated under insurance legislation and might provide creditor protection.
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Hedge funds: These are privately managed pools that use advanced strategies. While hedge funds are deemed risky and usually limited to accredited investors, they offer exposure to alternative assets and absolute return strategies.
3. Registered investment vehicles
These investment vehicles are tax-advantaged accounts that are designed to encourage saving for specific purposes:
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Registered Retirement Savings Plans (RRSPs): These allow tax-deferred growth of investments until withdrawal, usually at retirement. Contributions are tax-deductible up to annual limits.
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Tax-Free Savings Accounts (TFSAs): Like RRSPs, this investment vehicle allows tax-free withdrawals. However, contributions are not tax-deductible.
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Registered Education Savings Plans (RESPs): These encourage saving for a child’s education. Like TFSAs, contributions are also not tax-deductible, and investment income is sheltered from tax while in the account.
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Registered Disability Savings Plans (RDSPs): These are long-term savings plans designed to support individuals with disabilities. Your clients’ contributions can grow without immediate tax and might qualify for government grants and bonds.
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Registered Retirement Income Funds (RRIFs): These are used to convert RRSP savings into retirement income. Investments continue to grow on a tax-sheltered basis, but minimum annual withdrawals are required.
Watch this video to know more about these registered investment vehicles:
Incorporating alternative investment vehicles
Beyond traditional stocks, bonds, and pooled funds, financial advisors can also consider alternative investment vehicles to enhance portfolio diversification and potential returns.
Here are some common alternative investment vehicles:
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Real Estate Investment Trusts (REITs): These offer exposure to real estate without direct ownership. While REITs can provide income and growth, they can also be sensitive to interest rates.
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Infrastructure funds: With these, your clients can invest in physical assets like toll roads, airports, or utilities. They offer stable cash flows but might involve regulatory or political risks.
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Cryptocurrencies: Although speculative, some might express interest in cryptocurrencies. Be sure to discuss their expectations and risk tolerance before recommending this option.
Alternative investment vehicles should be a small portion of your clients’ portfolios. They must be used to complement and not replace core investments.
Fees, reviews, and liquidity
All investment vehicles come with costs. Some are transparent and upfront, while others are embedded in fund structures or insurance contracts. Investors can misunderstand or underestimate these expenses. As such, you need to know these fees and disclose them to your clients.
Check out these examples of common fees in investment vehicles:
- management expense ratios (MERs) for mutual funds
- trading commissions for stocks or ETFs
- load or sales charges on fund purchases
- advisory fees for discretionary portfolio management
- early withdrawal penalties on GICs or deferred sales charges
Regular portfolio reviews to assess investment vehicles
Even the most well-structured portfolio will become misaligned over time. Market fluctuations, life changes, and tax law updates can affect suitability. Financial advisors should schedule routine reviews to assess whether investment vehicles continue to meet clients’ needs.
Here are some review points when evaluating your clients’ investment vehicles:
- performance relative to goals
- asset allocation and risk level
- fee structure and available lower-cost alternatives
- changes in income, expenses, or timeline
- tax efficiency across accounts
Proactive reviews help build trust and ensure clients remain on track, especially during market volatility or economic uncertainty.
How liquidity affects investment vehicle selection
Liquidity is the ability to turn an investment into cash quickly without losing much of its value. This can be a deciding factor for investors when choosing the right investment vehicle.
If your clients want easy access to their money, such as for an emergency or a large upcoming expense, advise them to choose investment vehicles that are easy to sell. For instance, you can try recommending high-interest savings accounts. These can even support free e-transfers and inter-account transfers.
On the contrary, less liquid investment vehicles might take longer to sell and could lose value if sold under pressure. Choosing the right investment vehicle means understanding how quickly it can be converted to cash without affecting its value. Always keep your clients’ timing and flexibility needs in mind when reviewing liquidity.
How investment vehicle knowledge can elevate your career
Investment vehicles are the backbone of any investment strategy. For financial advisors, having a strong grasp of the different types and how they work is of utmost importance. You can’t properly advise investors, even those who are beginners, if you aren’t knowledgeable about investment vehicles. You must also be able to provide insights on when to use them and why, if you want to be as successful as our 5-Star Advisors of 2025 awardees.
Whether you’re recommending a simple RRSP with mutual funds or structuring a diversified portfolio with multiple vehicles, the goal of a good financial advisor is the same. You must strive to help your clients meet their financial objectives with the most ideal investment vehicle for them.
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