A weaker loonie could cost you thousands — here are 3 ways to protect your money right now

The good news is that there are asset classes that have historically performed well when cash and traditional savings products become less attractive. Three worth considering are equities (particularly dividend-paying stocks), gold and gold exchange-traded funds (ETFs), and cryptocurrency.

Keep in mind that none of these options is risk-free, and none is right for every investor. But they can help Canadians diversify beyond cash and potentially protect their purchasing power when interest rates fall, and the loonie weakens.

Why conventional savings fall short in a rate-cut cycle

The Bank of Canada's benchmark interest rate directly influences the returns offered on high-interest savings accounts (HISAs) and GICs. When the Bank cuts rates — as it did repeatedly through 2024 and 2025 — deposit rates follow. A savings account that yielded 5% in 2023 may now offer 2.5% to 3%, depending on the institution and product.

At the same time, the Canadian dollar has faced pressure against the U.S. dollar, as investors weigh factors such as lower Canadian interest rates, trade uncertainty, and the outlook for Canada's resource-driven economy.

The result is a double hit for savers. Not only are you earning less on your deposits, but those deposits may also buy less if the Canadian dollar continues to lose value. That’s why many investors start looking beyond cash when rates begin to fall.

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Dividend: Earning income that may outpace inflation

One of the easiest ways to protect against inflation and currency weakness is through stocks, particularly shares of established companies that pay dividends.

Unlike cash sitting in a savings account, companies can often increase prices when costs rise. Over time, that can lead to higher revenues, stronger earnings, and potentially higher stock prices.

Dividend growth is particularly beneficial for income-focused investors. Canadian banks, utilities, and consumer staples companies have long histories of paying and increasing dividends, even during difficult economic periods.

Those dividends can also be reinvested, creating a compounding effect that helps your portfolio grow over time.

Canadian investors can hold dividend-paying stocks inside registered accounts such as a TFSA or RRSP. However, it’s worth noting that U.S.-listed stocks held in a TFSA are generally subject to a 15% U.S. withholding tax on dividends. In some cases, holding those same investments in an RRSP can eliminate the withholding tax, making account selection an important part of your investment strategy. Either way, always consult a qualified tax professional if you're unsure which account is best for your situation.

Gold: the original inflation hedge

Gold has been viewed as a store of value for centuries, and many investors still turn to it when they're worried about inflation, currency weakness, or economic uncertainty. Unlike government-issued currencies, gold can't simply be created at the push of a button. Its supply grows slowly, and its value is driven by global demand rather than central bank policy.

That's one key reason gold has often performed well during periods of market stress or geopolitical uncertainty. When investors get nervous, many seek out assets they believe will hold their value.

Over the past five years, gold has broadly outperformed the S&P/TSX Composite Index on an annualized basis. For most Canadians, the easiest way to invest in gold is through a gold ETF rather than buying physical bullion.

You can purchase a gold ETF through a brokerage account, held inside a TFSA or RRSP, eliminating the challenges that come with storing and insuring physical gold.

That said, gold isn't a perfect investment, and it should never be the core holding in a long-term portfolio. It doesn't pay dividends or generate income. Your return depends entirely on whether the price rises. And always remember that past performance is not an indicator of future returns. If you're considering a gold ETF, compare management fees carefully, as those costs can vary from fund to fund.

Cryptocurrency: higher risk, lower correlation

Cryptocurrency occupies a very different place in an investment portfolio than stocks or gold. Assets such as bitcoin and ether are far more volatile than traditional investments, which is why many investors view them as speculative holdings.

At the same time, cryptocurrency doesn't always move in lockstep with stocks or bonds. Its performance is often driven by factors such as adoption rates, technological developments, regulation, and investor sentiment.

That lower correlation is one reason some investors use crypto as a portfolio diversifier.