Cash has stopped looking useless. With the Bank of Canada’s policy rate sitting at 2.25%, savings accounts and guaranteed investment certificates (GICs) can once again offer a visible return without requiring investors to watch their portfolio fall before for their eyes.
That safety is valuable for money needed soon. Yet cash carries another risk that doesn’t appear on a statement: the cost of everything the money could have earned elsewhere.
Consider $25,000 left earning an illustrative 2.25% annually for 20 years. It would grow to approximately $39,000. Invested at an average annual return of 8%, the same amount could reach nearly $116,500.
That’s a difference of more than $77,000. The higher return isn’t guaranteed, of course. Neither is avoiding the consequences of leaving long-term money in cash. Still, it’s certainly a strong consideration.
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Safe from what?
Cash does three jobs extremely well. It provides money for emergencies, protects a near-term purchase, and prevents investors from selling stocks during a downturn to pay an unavoidable bill. The problem begins when every dollar is given the same job.
Meanwhile, a five-year GIC locks in a return temporarily. It doesn’t promise the same rate when the investment matures. Investors may discover that the attractive yield they were waiting to renew has disappeared.
Market volatility feels more dangerous because it’s visible, certainly. A stock can fall 10% in a month, while cash remains calmly displayed at its original dollar value. Opportunity cost works quietly. There’s no red number showing the growth that didn’t happen. Investors only see the result years later, when rebuilding that missing growth requires larger contributions or a later retirement.
That doesn’t mean moving an emergency fund into shares. I’d separate money by time horizon. Cash needed within roughly three years can remain protected. Long-term money can be gradually moved into diversified investments, including Canadian dividend stocks capable of increasing earnings and distributions over time. One company I’d consider for that long-term portion is Canadian National Railway (TSX: CNR).
CNR
CNR stock operates a roughly 20,000-mile rail network connecting three coasts across Canada and the United States. The company also transports a diversified collection of goods, including grain, fertilizer, petroleum, forest products, metals, automobiles, and intermodal freight. Demand can weaken during a recession, but the railway remains essential to the movement of North American trade.
CNR stock’s second-quarter results showed what productive capital can accomplish. Revenue increased 11% year over year to $4.75 billion, while adjusted diluted earnings per share (EPS) climbed 11% to $2.08. Revenue ton miles, measuring the volume and distance of freight moved, increased 5%.
Management raised its 2026 outlook and now expects mid-to-high-single-digit adjusted earnings-per-share growth. Free cash flow reached $1.84 billion during the first half, up 19%. That cash funded investment in the railway, dividends, and share repurchases. CNR stock bought back approximately three million shares for $454 million during the second quarter alone. Fewer outstanding shares can allow each remaining share to claim a larger portion of future earnings.
Comes at a price
At a recent price of $169.31, CNR stock traded around 21.8 times trailing earnings and yielded approximately 2.2%. That isn’t an obvious bargain, and the starting income is considerably less than investors can find among higher-yielding stocks.
CNR stock also carries economic and trade exposure. Lower freight volumes could pressure revenue, while labour disruptions, severe weather, fuel costs, and tariffs can interfere with operations. Its adjusted debt-to-adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) ratio stood at 2.61 times at the end of the second quarter, so leverage still deserves attention.
I wouldn’t move an entire cash balance into one railway stock. I’d use dollar-cost averaging to build a diversified portfolio over time, particularly if fear of buying before a correction is keeping the money idle.
Bottom line
Cash isn’t the enemy. It becomes expensive when money meant for a distant goal remains parked there indefinitely.
An emergency reserve should feel boring and dependable. Retirement money has a different assignment: to outgrow inflation for decades. CNR stock offers a durable network, rising earnings, free cash flow, and a growing dividend to help accomplish that job.
