GIC Basics – Taking Control of Your Personal Finance


GIC Basic sit is important to save money whenever possible. In Canada, investing in a GIC account is an easy and effective way to grow your money without taking a lot of risk. If you are interested in using a GIC as a means of protecting and growing your wealth, what should you know about them? The Minimum Investment Is $500The vast majority of GICs require that you make an initial investment of $500.

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If you don’t have that much money on you when you open your account, you may be able to have the money deducted from a savings account, checking account or your paycheck until you have reached the required investment amount. Maturity Dates Vary You can choose to have your GIC mature in six months, three years or a decade from the date that you open your account. Investors who are looking for a short-term method of protecting their capital should opt for the six month GIC. Anyone who is looking to accrue interest over the long-term should opt for a GIC that matures in three years or more.

How Badly Do You Need Your Money? A traditional GIC comes with a penalty if you withdraw your money before the maturation date. If you want to avoid a penalty for early withdrawal, you should get a cashable or redeemable GIC. It should be noted that taking your money out early reduces the amount of interest that it can accrue even if you aren’t charged a penalty for doing so.

Long-Term GICs Come With Higher Interest Rates Investors who are looking for a higher interest rate on their GIC should keep their money in their account for as long as possible. Banks will pay higher interest rates on these long-term accounts because you are taking a larger risk by not being able to access your money for a period of several years. Another option that investors have is to buy a GIC that has a variable interest rate. During good economic times, it may be possible to get a premium rate for your money.

Your Money Is Protected by the Cliché Canadian Deposit Insurance Corporation (CDIC) will insure your money is safe up to the maximum limit imposed by law. However, this protection is not granted to any account that will be active for longer than five years or any U.S. dollar GIC. To be safe, it is a good idea to talk to a financial planner or the bank where you are going to get your GIC before you make any investment decision.

Putting your money in a GIC is a great way to save for your future without incurring too much risk. Your money will be protected by the CDIC and requires only a small amount of money to start an account.

This means that you can protect your capital while gaining interest on any money that you have tied up in a GIC. For investors thinking far into the future or who are against volatility in their portfolio, a GIC is the way to go.


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