For the majority of the population, investing money, seems like an overwhelming task better left to the experts. Not only are there complicated terms, and conditions, but numerous banks that each offering different things
We understand that determining the best investment option for your hard- earned money can be hard. So, that’s why we’re here to educate you on ‘GIC’ rates. A ‘Guaranteed Investment Certificate’, or GIC, is a popular option for those just beginning to invest. So, we’ve taken out the confusion, and list the 4 things a new investor should do prior to deciding on a GIC.
1. Read Up
If a GIC is a term you’re unfamiliar with, begin, by educating yourself on what it means. Secondly, you will want to research different banks, as all don’t offer the same rates. It is essential to know what the terms and conditions are, that the bank is offering. Take your time to understand the concept, and research what different banks have to offer you, is the first step to investing. Keep in mind, that you don’t need to rush.
2. How Long?
A GIC typically pays a higher interest rate, than a savings account. However, you will not be able to withdraw the money from your GIC, for a specific period of time. This is known, as a ‘term’. Terms change depending on the account type, and bank, so know what it is you want from your investment prior to walking in. Terms can range anywhere from 30 days to five years. The profits of your 5 year GIC rates can be very lucrative, as long as you’re willing to wait that long!
If you are young, and wanting to watch your money grow, a longer- term may benefit you. However, if you see yourself needing the cash in the foreseeable future, it is best to stick with a low term GIC. That way, you have access to your funds without paying the price.
3. Ask Yourself: ‘Why?’
These accounts, are designed for people who have extra money, they do not need right away. They are also designed for beginners, who want the security of knowing they’ve invested it correctly. This is ideal for someone who is not the most stock-savvy, or an individual that wants to be confident they’ll get back their initial investment.
A GIC is a low risk profile compared to stocks, bonds, and mutual funds. So, if you are looking for a secure way to invest, a GIC account may be right for you
4. What about a Market Growth GIC?
A market growth GIC has its rates determined by the growth rate, of a specific stock market. So, if you are more stock savvy, and trust your judgement, a market growth GIC may be for you. It is important to know that a market growth GIC, is a riskier investment. This is because if the stock you link it to does poorly, so too will be the interest on your investment. If you do feel confident enough in your ability to predict stocks, this may be a lucrative option for you.