Top 5 Ways to Get a Better Return from Your GIC.
Currently, the yield curve for GICs is flat. The big bank rates are effectively matching the inflation rate. It’s a frustrating situation. If you are a conservative investor who prefers GICs, the following 5 tips will help you maximize your strategy.
1. Skip the big banks
GICs add predictability to investment portfolios, but big banks aren’t the right place to get them. To thrive in this arena, you need much more than their low rates. Look into the opportunities offered through alternative banks, trust companies and credit unions.
2. Do your own rate comparisons
Two websites that would be smart to bookmark are Cannex and Highinterestsavings.ca. Use these, and other rate comparison sites, to cross reference and ensure you’re getting a good deal.
3. Work with a deposit broker
A Registered Deposit Broker knows the market and can find the very best rates while ensuring your investment is protected. They will know which GIC issuer has a temporary rate promotion or a favorable credit union that you haven’t come across. Their inside knowledge can make a big difference for you in this market.
4. Alternative banks are stable
Alternative banks issuing GICs are usually members of Canada Deposit Insurance Corporation. Just like the big banks, this means up to $100,000 in combined principal and interest is covered in eligible deposits. Other online lenders, through credit unions in Manitoba, offer deposit insurance through a provincial plan. Be sure to do your due diligence to ensure the investment you’re considering is covered.
5. Play the short game
Most often, you will get a better rate if you lock down money over a longer period. But that isn’t the case while the yield curve is so flat. A good tactic is to buy GICs at terms of a year or less and roll over the investment when it matures. This is especially good for conservative investors such as condominiums and other associations holding prudent reserves, and seniors who have been accumulating a lot of wealth and want it to keep making money until they need it.
If you are interested in a more conservative GIC, we will help you get the best rate possible; between 1 to 5 points above what the big banks are offering. We can offer you a robust option and secure your GIC in minutes—one of the many advantages of working with a Carte financial advisor.