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What’s Your Portfolio? 6 Financial Perks of GIC Investments

What’s Your Portfolio? 6 Financial Perks of GIC Investments

A Guaranteed Investment Certificate is by and large a pretty stable and secured way of investing your money. While there are many great ways to invest, not all of them are as relatively safe as using a GIC.

Not only are they quite safe, but they offer quite a few benefits that go along with the initial security. What are these benefits, you may be asking yourself. Well, in this little list, we will be exploring just what benefits are included in investing with a GIC.

1. Guaranteed Principle and Interest

A basic GIC that makes it to the end of term will come with a couple of guarantees. The first being the return of the initial investment. Whatever you put into the GIC will come back to you no matter what. The second is that the interest rate will not fluctuate at all. If you buy a one year GIC with a rate 1.5%, you will definitely earn 1.5% interest on that investment, no matter what. As far as investments go, I would be the most comfortable going with this option by a large margin due to the level of security that a GIC offers.

2. Deposit Insurance

Most large financial institutions that offer GICs belong to the CDIC, or the Canadian Deposit Insurance Corporation. Therefore, any investment that you commit to a GIC will be covered up to $100,000 in the unlikely event that your chosen financial institution falls. Of course, there are ways that you can get insurance on investments that are larger than $100,000, going up to $300,000, if you truly want to invest that much in a GIC. Of course, there are a few technicalities on those investments that anyone considering buying a GIC such as that should look into.

3. Steady Your Portfolio

As anyone who has examined the stock market can tell you, it can be a bit unexpected and unpredictable at times even to more seasoned investors. Therefore, anyone taking chances on the stock market should consider reducing the volatility of their portfolio by purchasing a GIC. This way, if your stock crashes for whatever reason, the sum that you placed into the GIC will still be safe and can be saved. You will still lose money, but not quite as much, at least. Think of it as a bit of a protective layer for any damage that your portfolio may take.

4. Several Options

One of the better aspects of buying a GIC is the variety of options that you can choose from. These options include term lengths that allow you to control how long the money you invest is held for. You can choose anywhere from sixty days to ten years, but you should know that the longer your investment is held, the more interest that you earn. It’s a bit hard to wait ten years, but you can imagine how sweet it would be to get all that interest back on an initial investment.

5. Flexibility in Your Portfolio

Also, you will have the option to purchase one of two or more GIC rates. The first being a Redeemable GIC, which allows you to cash out your investment at any time. Although you won’t get the full effect of your interest, you will receive your investment back, unless otherwise stated. The second would be a non-redeemable GIC, which locks your investment in permanently until the full term is finished. This is a good idea for those of us who tend to cash out prematurely due to an impulsive nature.

6. RRSP Eligible

GICs are eligible for both registered and non-registered accounts for your TFSA, RRSP, LIRA, RRIF, and RESP. GICs are pretty flexible and can be used for pretty much every savings goal.