How You Can Get the Best Interest Rate on Your GIC
Are you interested in getting a GIC? Here’s how you can get the best interest rate.
A guaranteed investment certificate is a financial instrument that allows you to invest your money without exposing you to the risks of losing value like with mutual funds or stocks. There are many financial institutions in Canada which offer GICs. One question that many individual investors have is how to get the best possible rate on a GIC.
It is important to understand that the interest rates that you can get with GICs will not be the same everywhere. Therefore, to get the best possible rate, there are a few things that you should be aware of before you invest:
-
Look around and compare GICs
You aren’t limited to buying a GIC from the bank where you normally have all your accounts. Therefore, it may be a good idea to compare rates offered by the various financial institutions in Canada. You may find that some banks have better rates than others.
-
Get professional advice
Speaking with a financial advisor can be useful if you want to learn more about guaranteed investment certificates, as well as to make sense of all the offerings on the market today. An advisor may recommend an investment that would be in line with your objectives.
-
Invest a higher amount in the GIC
You can find a guaranteed investment certificate that has a minimum investment of $500. However, you will probably notice that instruments which have higher minimum investment amounts pay better interest rates. Therefore, the higher the amount of capital that you’re willing to invest, the higher your returns will be. You may want to consider moving some of the funds that you have in other investments into the GIC that you want to purchase.
-
Take a GIC with a longer term
Unlike money market funds, GICs are meant to be used as a longer term financial instrument. You will find them in terms that range from 6 months to 10 years. The longer the term of the investment that you will purchase, the higher the interest rate will be. If you have long term investment goals, GICs could be a good way to make your money grow without risk.
-
Get a non-redeemable investment
The difference between a redeemable and non-redeemable GIC is that a redeemable one can be cashed in prior to its maturity rate, although in some cases you may have to pay a penalty. Non-redeemable instruments cannot be cashed in prior to their maturity date and tend to pay better interest rates. If you have capital available that you will want to invest in the long term without needing access to your funds before the maturity date of the investment you purchase, then a non-redeemable guaranteed investment certificate may be a good option for your needs.
