INVESTING IN A GIC
Monday, May 15, 2023
Invest with no risk! A Guaranteed Investment Certificate (GIC) is a great option for every type of investor. Available in short and long terms, your original investment is 100% protected from the fluctuations of the market – so you have nothing to lose and everything to gain.
HOW DOES A GIC WORK?
Think of it like a savings account - the money you hold in your account earns interest over time. The difference between a savings account and a GIC is that you need to leave your money in a GIC account for a specified period of time. When you purchase a GIC, you are agreeing to lend the financial institution your money for a specified term, ranging anywhere from 30 days up to 5 years, in exchange for earned interest. Typically with GICs, the longer the term, the better your rate of return, and the more interest you earn. At the end of the term, you can choose to either cashout your investment with the interest earned, or reinvest into a new GIC.
WHEN IS A GIC A GOOD FIT?
Since GICs have a fixed rate and are not influenced by the stock market, they are considered one of the safest investment options for Canadians. Here's when investing in a GIC may be beneficial for you:
- You're new to investing or feel uneasy about investing in a volatile market.
- You're saving for a specific short-term goal and want to earn a bit of interest until you're ready to use your savings.
- You're retired or nearing retirement and will need access to your money soon.
- You struggle with meeting your financial goals and want to remove the temptation to dip into your savings.
- Your child will be pursuing post-secondary education soon and you're looking for a low-risk investment option.
- You're beginning to teach your children about investing and looking to show them savings growth over time without the risk.
HERE’S WHAT YOU NEED TO KNOW
- Most GICs pay a fixed rate of interest for a set term (6 months, 1 year, 2 years or up to 5 years).
- Interest on your GIC can be paid monthly, once a year or on the maturity date, depending on the product.
- You can hold your GICs in registered investment accounts (RRSPs, RRIFs and TFSAs).
- Unlike other investment products, GICs have no direct fees associated with them. Times where you may face a fee would be if you withdraw your investment from a non-redeemable GIC prior to the maturity date or if you transfer a GIC from a registered account (TFSA, RSP, RIF) to another financial institution.
- Redeemable GICs give you the option to withdraw your money prior to the maturity date, but typically pay a lower interest rate than originally offered if you choose to do so.
- Cashable GICs are similar to redeemable GICs in that you can withdraw your money prior to the maturity date, but only once a predetermined “locked-in” period (30 days to 90 days) has passed.
- Your deposits are insured through the Financial Services Regulatory Authority (FSRA).
Ready to be proactive about your financial future?
Grow your investments, without the risk. Whether you’re saving for your dream vacation, planning for retirement, or just looking to diversify your portfolio, YNCU is ready to help you grow your money with a variety of terms and products to suit your unique investment goals.
Choose a GIC with YNCU to benefit from our:
- Competitive Rates - Higher rates than redeemable investments and savings account options.
- Tax Benefits - Take advantage of tax benefits when you invest a GIC into your TSFA, RSP, or RIF account.
Our Neighbourhood Builder GIC is an excellent option that earns you a great rate of return, while simultaneously supporting an important social cause. For every $1,000 invested in this product, YNCU will donate $2.00 directly to local Habitat for Humanity chapters.
Build more than wealth with our Neighbourhood Builder GIC.
For all your general financial inquiries and how you can plan out your financial goals, come talk with someone at your YNCU branch!
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