Hi Cake, :)
I completely understand your worry that your investments will plummet it value if you don't keep them in something low-risk. I worry about this, too. There are a couple things I tell myself:
1) no course of action is without risk. Keeping your money in ultra-safe savings accounts and GICs risks that your money will lose value over time, so that your $3 today that buys a loaf of bread will only be $3.50 in ten years, when bread is $4.
2) investing strategies can be tailored to your comfort level with regards to risk. My ING savings account is giving me 1.3% right now, but it's guaranteed. How about investing in something that's
almost guaranteed, like a government or investment-grade corporate bond? As an illustration (might not be the right security for you), Province of Ontario fixed-rate 10 year bonds are yielding 2.80%. Still not spectacular, but my point is that there are still very-safe options out there that will yield a bit more than a savings account, so you get better returns without chasing an aggressive strategy that's not your comfort level. (If the government of Ontario goes broke we'll have more pressing problems than low yields!)
Bear in mind that while bond prices fluctuate based on interest rates, if you buy and hold an individual bond until its maturity, this doesn't affect you and you know exactly what your return will be: the interest payments, and the return of your principal at the end. It can sound scarier than it is, but it can also be this simple.
3) equities can be much more volatile, and yes, in 2008 pretty much everything took a crazy nose-dive. You must accept that there is an element of risk to this, if you want to pursue the potential reward. I tell myself that buying the entire stock index is about as diversified as you can get (sure, there are other investments not traded on an exchange, but for ease of use I think the index gives you great coverage.) You don't know which stocks will be winners and which stocks will be losers, but it's okay because you bought all of them! You definitely own whichever stocks will go up (as well as which stocks will go down.) If you have optimism and belief that business as we know it will continue (people will continue to buy stuff, companies will continue to make stuff, and will also find better ways to make those things and invent new, better things that improve or replace the current stuff that we buy), you are investing in the idea that in the overall future the economy will grow, profits will increase, and the winners will win more than the losers lose. It can be a bumpy ride, but if you know that going in, it makes it easier to stick to your plan.
I do recommend learning more about investing to increase your comfort level (I am only 1/10 of a mini-step ahead of you on this path, but the more I educate myself the more confident I feel), and to find a fee-based adviser to help you get started. While the adviser will cost money, with all of your assets in GICs and savings accounts I suspect there are dramatic improvements in yield an adviser can help you make, right away, so what you pay in fees you could make back by better returns (instead of waiting to learn enough to do it completely by yourself, and your money making low returns in the meantime.)
Two MMM posts that I re-read for guidance:
http://www.mrmoneymustache.com/2011/05/18/how-to-make-money-in-the-stock-market/http://www.mrmoneymustache.com/2012/05/09/houses-and-stocks-are-going-up-who-cares/Best wishes! Let us know how you make out.
