They’re cost-free and they’re convenient and they’re safe. You’ll know exactly what your return will be up front, which means there’s no guessing or speculation. Further, any principal and interest are insured by the government for up to $100,000 with each trust company and bank.
When you purchase a GIC, there is no cost to you whatsoever. We are paid a finder’s fee from the financial institution with which your investment is placed. There should never be a need to pay someone a fee to invest in the fixed interest market.
We have partnered with more than 30 financial institutions. This means we can offer you an entire range of the top rates and best terms available.
You may wish to compound the interest from your GICs. (Albert Einstein called compound interest “the most powerful force in the universe”.) Or you may choose to have your interest paid out for income.
We also recommend laddering your GICs. Here’s an example of what that means. By dividing your initial investment over different terms, say five separate terms ranging from 1 year to 5 years, you’ll create a constantly rolling maturity cycle. After each GIC matures, (starting one year from now) you’ll reinvest that portion for 5 years. Annual re-investment reduces interest rate risk. If rates fall, only a portion of your investment is affected. If they rise, you’ll capture the rise upon re-investment. (Not to mention that with some of your investments maturing every year, you’ll have access to your money without penalty.) This is a popular strategy because it’s a wise one. It’s not tricky or complicated; just good investing.