If you live in Canada you might be aware of something called a guaranteed investment certificate. It means that as an investor, you can be sure that you are going to get a certain level of return within a specific time period. An example of this would be that you could look forward to getting 25% return on your investment within 5 years. As a result of GIC rates, the current state of the economy and the levels of uncertainty, you will see that there are more and more people that are investing in this type of thing.
The main draw card of the guaranteed investment certificates or GICs is that the rate of return is guaranteed. A lot of people look at this as a great way to invest their money in something they are sure will give them a good return as opposed to stocks or bonds which while able to give a large rate of return can also yield a low rate of return because of the volatile markets which they are set in. Because of the nature of guaranteed investment certificates they are seen as a low risk investment unlike the stocks and bonds which are seen as a high investment.
The type of rate that is used is very much dependent on the certificate that you choose and then of course, also the amount of time that the investment will be made for. The secret here is that the longer you invest the more money you are going to get out. So if you want to maximise your investment, it is definitely better to think in terms of long term goals for your money. This being said, the GIC is flexible and you can invest anywhere from six months to ten years. You are the one who determines which is going to be best and this means the best result for you.
Another contributing factor that helps to determine the interest rate of the guaranteed investment certificate is the interest rate that has been specified by the Bank of Canada. These rates cannot be altered and will have a heavy influence on the rate of interest earned for each certificate.
But there is another option, if you decide to go with the stock indexed GIC or the market growth equivalent, you will find that the rate of return is going to be determined by the level of growth that a certain market experiences. This means that you will also have a low risk investment but that you could have great growth and there is of course a chance that the market might not grow, so there is a higher level of risk here than with other GIC investment.
If the stock makes big gains then the likelihood of having a great amount of interest is certain. However should the stock not make any gains or even make losses for a certain period, you can have a zero percentage balance of interest. Another drawback is that you can only have a maximum of 25% return over a period of three years.
But all the time it is important to remember that you are never going to lose money.
You can put a good future in motion for yourself by taking advantage of the GIC rates and the certainty that they offer you. This is a great type of investment that will mean that your money is secure and you can look forward to a good term of investment. What more could you want in this type of investment.
When you’re deciding to buy a house, some of the factors that you have to take into account are mortgage rates. As mortgage rates are important for home-buyers, GIC rates are important for investors. If you’re interested in a customized financial plan, remember to visit us.
No comments yet.