{"id":27427,"date":"2022-08-10T08:30:11","date_gmt":"2022-08-10T12:30:11","guid":{"rendered":"https:\/\/www.moneysense.ca\/?p=265278"},"modified":"2022-08-10T08:30:11","modified_gmt":"2022-08-10T12:30:11","slug":"why-gics-might-be-a-better-investment-than-stocks-and-bonds","status":"publish","type":"post","link":"https:\/\/www.moneysense.ca\/save\/investing\/gic\/why-gics-might-be-a-better-investment-than-stocks-and-bonds\/","title":{"rendered":"Why GICs might be a better investment than stocks and bonds"},"content":{"rendered":"<div><img decoding=\"async\" src=\"https:\/\/www.moneysense.ca\/wp-content\/uploads\/2022\/08\/EQ-Bank-why-GICs-might-be-better-than-stocks-and-bonds-scaled.jpg\" class=\"ff-og-image-inserted\"><\/div>\n<p>Why would an investor consider a GIC as part of their investment portfolio? Here are six reasons.<\/p>\n<h2>1. GICs have a guaranteed return<\/h2>\n<p>A GIC is a safe investment with minimal risk. For the first time in about 15 years, GIC rates have breached 5%; meanwhile, the Canada Pension Plan (CPP) is currently estimating a future 6.6% long-run return for Canadian stocks. This suggests that for most investors paying 1% to 2% in fees, their net returns may be comparable to today\u2019s GIC rates. And, unlike with stocks or crypto, you don\u2019t have to worry about volatility reducing your return when you buy a GIC.<\/p>\n<p>Most GICs pay a fixed interest rate, so investors know how much income they\u2019ll get on the certificate\u2019s maturity date (end of its term). Some GICs have a variable interest rate, which is influenced by market fluctuations\u2014their rate of return is not guaranteed, but their principal is guaranteed.<\/p>\n<p>Some investors include GICs as part of the fixed income portion of a diversified portfolio. Others buy GICs to hedge against market volatility, and many people use GICs to safely grow their money while saving towards a large purchase.<\/p>\n<h2>2. Investors can choose from different GIC terms<\/h2>\n<p>GICs offer terms ranging from three months to 10 years, with a corresponding guaranteed rate of return\u2014generally, the longer the term, the higher the interest. That means you can choose the term that works best for your needs.<\/p>\n<p>If you know you\u2019re going to need your money soon\u2014say, for buying a car, going on vacation or making a <a href=\"https:\/\/www.moneysense.ca\/spend\/real-estate\/the-complete-guide-for-first-time-home-buyers\/\" target=\"_blank\" rel=\"noreferrer noopener\">down payment<\/a> on a home\u2014then a three-, six- or nine-month GIC might be the right option for you. If you don\u2019t need access to your money for a while, then a term of one year or more might be the better option.<\/p>\n<p>GICs are great for investors who want to \u201cset it and forget it,\u201d knowing that they\u2019ll receive their original capital plus interest on a specified date\u2014you can\u2019t say the same about investing in stocks.<\/p>\n<h2>3. GICs are eligible for CDIC protection<\/h2>\n<p>Unlike stocks, mutual funds and bonds, GICs are eligible for Canada Deposit Insurance Corporation (CDIC) <a href=\"https:\/\/www.moneysense.ca\/save\/banking\/cdic-coverage-canada-deposit-insurance-corporation\/\" target=\"_blank\" rel=\"noreferrer noopener\">deposit insurance<\/a>, which adds another layer of security\u2014at no charge to you. The CDIC protects deposits up to $100,000 per eligible deposit category at each of its member institutions.<\/p>\n<p> <a href=\"https:\/\/www.moneysense.ca\/save\/investing\/gic\/why-gics-might-be-a-better-investment-than-stocks-and-bonds\/\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Why would an investor consider a GIC as part of their investment portfolio? Here are six reasons. 1. GICs have a guaranteed return A GIC is a safe investment with minimal risk. For the&#46;&#46;&#46;<\/p>\n","protected":false},"author":1,"featured_media":27429,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"rop_custom_images_group":[],"rop_custom_messages_group":[],"rop_publish_now":"initial","rop_publish_now_accounts":[],"rop_publish_now_history":[],"rop_publish_now_status":"pending","footnotes":""},"categories":[5,7,10],"tags":[],"_links":{"self":[{"href":"https:\/\/blog.andrewwbradley.ca\/index.php\/wp-json\/wp\/v2\/posts\/27427"}],"collection":[{"href":"https:\/\/blog.andrewwbradley.ca\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.andrewwbradley.ca\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.andrewwbradley.ca\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.andrewwbradley.ca\/index.php\/wp-json\/wp\/v2\/comments?post=27427"}],"version-history":[{"count":0,"href":"https:\/\/blog.andrewwbradley.ca\/index.php\/wp-json\/wp\/v2\/posts\/27427\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/blog.andrewwbradley.ca\/index.php\/wp-json\/"}],"wp:attachment":[{"href":"https:\/\/blog.andrewwbradley.ca\/index.php\/wp-json\/wp\/v2\/media?parent=27427"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.andrewwbradley.ca\/index.php\/wp-json\/wp\/v2\/categories?post=27427"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.andrewwbradley.ca\/index.php\/wp-json\/wp\/v2\/tags?post=27427"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}