In this period of instability, caused by the repercussions of the pandemic and European geopolitical problems, Canadian households are certainly looking to secure their savings and assets.
This is what the Laurentian Bank advisor at the Terrebonne branch, Zineb Tanine, suggests: bet on security! If you want to invest a sum of money, she recommends a safe investment avenue: guaranteed investment certificates (GICs).
The concept is simple: you invest a sum of money securely in an investment that guarantees your starting capital, an interest rate and therefore a return at maturity, ranging from 90 days to 10 years.
Interest rates may vary depending on the type of term chosen. The product is secure, guaranteed by your financial institution and by the Canada Deposit Insurance Corporation (CDIC) within prescribed limits.
The GIC has no management fees and is eligible for non-registered plans and those registered with the federal government, such as TFSA, RRSP or RRIF.
In addition, the returns earned on your registered GICs are, like TFSAs and RRSPs, recovered tax-free. Non-registered plans have no tax advantages, but do not have an annual contribution limit. It's up to you to choose the plan that best suits your savings profile!
Its return is always guaranteed and insured, protected from market fluctuations1. Thus, at maturity, you will receive your capital in addition to the interest on your investment. For example, if you invest $5,000, this amount is secured until maturity, as well as the return on this sum.
It is an interesting investment for people who have a project or objective in the short or medium term, such as building a down payment for the purchase of a property, renovations or even a trip.
The GIC may also be suitable for people in a pre-retirement situation who want to secure the amount of their RRSPs or quite simply, for a person who does not want to take any risk in their investments.
Just like stocks or mutual funds, GICs can fit perfectly into your strategy for diversifying your portfolio of investments such as your RRSP and your TFSA.
You can therefore use it as fixed income according to a percentage determined with your financial advisor, who will take into account your risk tolerance and your personal objectives in the short and medium term.
For example, if you invest $10,000 in a GIC for two years at an annual rate of 4.30%2 with compound interest, the value of your investment at maturity will be $10,878.49.
The GIC is therefore an ideal way to stabilize your portfolio. On the current market, it is also one of the most attractive fixed incomes in terms of interest.
The Laurentian Bank advisor recommends diversifying the maturities of your investments. “What I advise my clients is to diversify the investment maturities by investing in terms of one, two, three years. This will allow them to have a maturity each year and depending on the needs of the moment, they will be able to cash in or reinvest their investment,” she explains.
In this context of inflation and market instability, the duration of which is unfortunately unknown, one of the safest investment avenues with competitive returns is the GIC.
Invest securely with guaranteed investment certificates (GICs) from Laurentian Bank, which offer some of the most competitive rates on the market1. Contact one of our advisors now for more information.
TM Trademark of Laurentian Bank of Canada.
1. Certain terms and conditions apply to Laurentian Bank GICs. The promotional rates posted from time to time by Laurentian Bank may be modified or withdrawn at any time without notice. Promotional rate offers cannot be combined with any other offer or promotion or any other benefit for the same type (product) of investment. GICs are non-redeemable. Simple interest for terms of less than two years and simple or compound interest at the client's choice for terms of two years and more. Simple interest is calculated and paid annually. Compound interest is calculated and compounded annually, and paid on the due date. Persons residing outside of Quebec who do not have a Laurentian Bank of Canada product are not eligible for promotional rate offers for GICs. Product eligible for registered and non-registered plans. Product insurable by the Canada Deposit Insurance Corporation (CDIC) up to maximum CDIC coverage limits and subject to applicable conditions. Additional information is available at 1 844 494-0076, or from your advisor.
Existing investment accounts are offered by Laurentian Bank or BLC Financial Services Inc. (BLCSF). LBCSF is a subsidiary of Laurentian Bank and a separate legal entity from Laurentian Bank, B2B Trustco and any other deposit product issuer or mutual fund company whose products it distributes. Any new investment account must be opened with LBCSF. The Laurentian Bank advisor is also a registered mutual fund representative of LBCSF. Thus, the liability of BLCSF is limited to the actions of the representatives within the framework of their functions for BLCSF.
2. In this fictitious example, annual interest is compounded, and is therefore calculated and compounded annually, then paid at maturity.