As John nears retirement, he is becoming concerned about covering his future living costs with income from only interest-bearing investments. Along with many other investors globally who have poured trillions of dollars into government bonds over the past decade, John wants to feel safe and have his money guaranteed. But the price of safety in a low interest rate world is higher than you may realize.

For example, the best five-year GIC rate in Canada is currently about 5.0%. The after-tax return is between 3.0% – 4.0%. But if we include current inflation figures the net return is almost zero.