Given the OP's examples, a more appropriate subject might have been "The best way to invest".
First I'd like to point out that any of the first 3 examples (savings accounts, stocks, and bonds) can be held within a tax-free savings account. And if you are going to choose any of these 3, and have contribution room in a TFSA, then you should definately use it to save yourself the tax on any income that you earn.
Most investers prefer to have some personalized mixture of low-risk and higher-risk investments. How each person decides on the mix is usually based on their goals and their personality. Another factor is how long you plan to invest for. Saving up to buy a new car in 3 years, a house in 10 years, or retirement in 20 years? Different types of investments are better suited for different terms. I'm not much of an expert, so I'm not going to go into much detail, but there are plenty of great resources on the web to help you decide what's best for you. Financial advisors can also help, but they will be biased towards investments that they get paid for (like mutual funds).
Another alternative for those who already have a mortgage is to "invest in equity" by contributing savings toward paying down the mortgage faster. Mortgage rates are almost always going to be higher than GICs or high-interest savings accounts, which also require that you pay taxes on the interest or use up RRSP or TFSA contribution room. For example, my mortgage rate is 3.5%, and a high-interest TFSA account might get you 1.2% (the 3% offerred by ING right now is only temporary). Lets say I have $10,000 to invest, and all of my 2009 and 2010 TFSA contribution room available. In the TFSA at 1.2%, it would make $618 over 5 years. But if I instead use it as a lump-sum prepayment on my mortgage, it would reduce the interest that I pay over the next 5 years by $1911 (and if my mortgage rate was 5%, it would save me $2840). But this isn't really investing, because once you throw your money at the mortgage it's gone for good, right? That's what most people think, but it's really not that hard to withdraw from these mortgage savings. For instant access to your "savings" at any time, you can setup a Home Equity Line Of Credit (HELOC) on top of your mortgage provided you more than 20% equity in your home. If not, you can set one up later after you've contributed enough mortgage prepayments to free up that equity. All banks offer HELOCs, but you should inquire to find out what fees they charge for setup & closure as well as any balance requirements. These are always variable-rate loans even if your current mortgage is fixed. Another option is to wait until the mortgage is up for renewal, and then withdraw the savings by renewing with a higher amount. If timing your withdrawl with the renewal isn't convenient, you can also get an equity take-out at anytime, but there may be fees. One drawback to this investing strategy is that by setting up a HELOC or using equity take-outs, you might get tempted to withdraw more than the "extra" amount that you contributed, thus incurring additional debt. If you want to use your mortgage to get guaranteed tax-free savings, then you should carefully keep track of your contributions and never withdraw more than you put in - unless it's an emergency. Having the HELOC setup is a great way of having emergency funds available without having to set aside a bunch of funds in an account earning a piddly 1.2% interest.
