Latest figures point to a growing wariness among investors navigating market volatility, geopolitical tensions and falling interest rates.St_Aurora72/iStockPhoto / Getty Images
Canadians have been moving more money into savings and chequing accounts this year, signalling a broader return to caution among investors after market turbulence, according to a report from McVay and Associates.
The report, released last week, found that demand deposits – money in savings and chequing accounts – grew 9 per cent year-over-year in May, and 7.1 per cent year-over-year in April. That marks a sharp reversal from between May, 2024, and the year prior, when strong market returns led to a 4.7 per cent decline in demand deposits.
The latest figures point to a growing wariness among investors navigating a messy mix of falling interest rates, geopolitical tension and market volatility.
“It is the reaction to the rates going up and down, but also the concern about the investment markets,” said consulting firm owner David McVay. “While they’ve been strong, there’s this belief out there that Trump is going to bring it crashing down any moment.”
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The report uses data collected from the Bank of Canada and individual bank results from the Office of the Superintendent of Financial Institutions.
While cash is making a comeback, interest in guaranteed investment certificates, long a favourite among risk-averse investors, is fading. Term deposit balances dropped 0.7 per cent in May, compared with a jump of 17.1 per cent the year earlier.
After the height of the pandemic, many Canadians sought the safety and reliability of GICs, securing attractive long-term rates as the Bank of Canada hiked interest rates. “People were still conservative, but they wanted to lock in the longer-term rates,” Mr. McVay said. But as rates have declined over the past year, so has GIC demand.
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This isn’t the first time investors have adapted like this, Mr. McVay said. During the 2008-09 financial crisis, when interest rates dropped, Canadians flooded demand deposits with cash while term products fell out of favour.
This shift is especially relevant to those near or in retirement, Mr. McVay said. As investors get closer to that stage, “you should be getting more conservative in your investments anyway, because you have fewer years to recover,” he said. “As you get older, there should be a bigger cash component.”
Still, not everyone is writing off GICs, nor should they, Mr. McVay said. “They are still a good alternative,” he said. A recent Sun Life survey found that Canadian investors divested from U.S. equity funds in the first quarter of 2025 at the highest rate since the start of the pandemic, moving their money into lower-risk options such as GICs and money market funds.
