GIC (Guaranteed Investment Certificate) is an investment return offered at a fixed for an agreed term in Canada. Normally those who are targeted by the investments are the banks and the trust companies. Compared to the other investment tools like mutual funds, bonds and stocks, the GIC have a lesser yield even though it’s highly guaranteed. The best GIC rates provide investors with a low-risk profile. When buying a GIC, you agree to lend money to the concerned financial institution for a given period of time. The financial institution is supposed to offer you a guarantee that at the end of the agreed time you will get your money back and with a fixed interest that was initially agreed on. This makes GIC one of the safest investments in Canada.
The following tips can help you make the most out of your GIC investment.
- Where do you plan to buy a GIC Investment from?
In Canada, the “Big 5” banks occasionally advertise the GIC rates, which have fallen short, compared to what is offered by the smaller institutions. The Credit Unions are known to offer the best GIC rates in Canada, better than even the big banks. The other place to shop for a GIC investment is in the bank (Direct and Online Banks offer very high-interest rates). The rates are normally determined by looking at the amount being invested and the time of the investment. In Canada, the minimum GIC investment is $100 and the maximum is $50000. It’s good to shop around for the best GIC investment before making a decision.
- Comparing the different GICs before buying
Many of us will be tempted to rush to the Credit Unions since they have a higher interest rate, but then this general rule of interest rate might not be worthwhile if you have very little information about the GIC investment plans. You are required to carry out a very extensive research before picking the best GIC investment option for you. The benefits of picking an ideal GIC investment include: safeguarding your capital, predictable revenue, stable revenues and the chance to diversify your investment portfolio. In order to avoid the hustle of visiting several financial institutions, you can look at online reviews of the best GIC investment providers in Canada and then compare what is being offered.
- Picking the Perfect GIC Term
There are different GIC terms available for those seeking GIC investment options. The one-year terms come with flexibility and very competitive interest rates. When picking the GIC terms, it’s good to consider your investment needs. Longer terms come with higher interest rates. You can compare the different GIC terms offered by the different financial institutions.
- What are the types of GIC investment offered in Canada?
The GIC investments available in Canada are either registered or non-registered. Buyers have the option of picking redeemable GIC investment or the non-redeemable. The following are examples of registered GIC investments:
- Retirement Saving GIC investment Plan
- Tax-free Savings GIC investment Account
- Retirement Income GIC investment Plans
The capital gains got on a non-registered GIC investment is taxed by the government. You can read more about the available types of GIV investment plans and pick which is the best one for you.
- GIC Investment and Mutual Funds
These two investment options are the most commonly preferred investment options available in Canada. Mutual funds, unlike the GIC investment, are financial resources collected by a team of investors and the funds are then invested in securities like bonds and stocks. They offer an easy way for small investors to participate in the market as a team. Increase in market value means more profits to the investors. But when looking at the GIC investment, it’s good to consider the inflation rates and taxes since all earning got from the GIC investment is taxed. The dividends and capital gains got from Mutual funds tend to have tax rates that are more favorable. GIC is more valued since it has a higher stability, which is comforting compared to the instability that affects the market-driven equity investment.