GICs - Basic but Never Boring
Here comes the juicy stuff. For the next few weeks, I will be writing a mini-series of posts on Guaranteed Investment Certificates or GICs. GICs are relatively simple investments to purchase and comprehend and usually come with little risk. That’s not to say they are not useful – they are still widely used today and still represent a significant chunk of people’s portfolios.
During the coming weeks, I will be looking at these investments, the different types, benefits and drawbacks and how I would personally use these vehicles in my own portfolio.
At the root GICs are basic investments: There is your initial investment or the principal, the length of time your money stays is the investment term and finally the rate – which is the percent return per year on the investment.
- CDIC – CDIC is the Canadian Deposit Insurance Corporation, which will ensure eligible deposits at member institutions up to 100,000$ per category.
The GIC although a simple tool with several pros and cons can still be very useful in anybody’s portfolio. Even with the low yield on these investments the rate will still be higher then a lot of savings accounts out there. In the words of my father “You can rest easy at night, knowing your hard earned capital is safe and sound and earning a modest rate”.
Keep in mind the hallmark of GICs is the guaranteed aspect of it with your principal remaining intact with the length of the investment. In next week’s post, I will be looking at ways to buy riskier GIC’s that provide a greater return but do come with added risk.
Disclaimer: All of the above information is my own personal opinion. Please check with your bank or credit union for applicable GIC rates, terms, principal and eligibility criteria.
CDIC is a registered trademark of the Canadian Deposit Insurance Corporation.