Guaranteed Investment Certificates
In the simplest terms possible, a GIC is an I.O.U. from a bank, credit union, or insurance company. As the name suggests, they are guaranteed. You invest an amount of your choosing; the bank, credit union, or insurance company agrees to return your investment at a specific date and pay you a specified interest rate.
Typical periods of investment are 1, 2, 3, 4 and 5 year terms. For this reason, GICs are often referred to as “term deposits”. Most institutions also offer cashable term deposits. These “cashables” typically offer a lower interest rate, but give you the added flexibility of accessing your money earlier if you need to.
The rate of return on GICs is tied to the interest rates offered by banks to their borrowers. These days interest rates are fairly low, however in times of high interest rates GICs have paid considerably more. For this reason, many people that invest in GICs “ladder” their portfolio. Investors who have GICs maturing at various times can take advantage of changes in the interest rate.
As a broker, Valley Life Insurance Solutions Inc. has access to several different financial institutions and can place GICs with the company offering the best interest rate at the time. In this way a GIC investor can shop the market and get the best rate, but has the advantage of dealing with the same person every time. We recently entered into an agreement with GICdirect.com and are the only licensed advisor in the Cowichan Valley offering their products. Click the link below to compare rates.
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