Living Out Of Debt

In Canada there is a type of investment that is known as the guaranteed investment certificate or GIC for short. What this investment offers you as an investor is a certain rate of return that is guaranteed over a certain period of time. The GIC rates for your account are determined at the time you set it up.

The main advantage to the GIC is that it is a rate of return that is guaranteed, just like fixed mortgage rates offered by lending institutions. There are a large amount of investors that look at this as an excellent way to invest their money because they know that they will receive a good return unlike stocks or bonds.

So how do these investment certificates work? Just the same as most other investments, with a GIC, you will choose a rate and then determine the amount of money over what period of time that you want to invest.

When it comes to the terms of the GIC rates that are used, the overall percentage is generally dependent upon the type of certificate and also the length of time that you have invested it for. The length of time that you can invest your certificate can be anywhere from 6 months to ten years. It all depends on your personal choice and particular needs.

Another thing to be aware of with these types of certificates is that you will need to invest a minimum amount of money, usually in the neighborhood of at least $500. Once your investment has reached maturity you will receive the interest that has accrued over the time period of the investment. Consequently, the less time that you invest your money for, the less interest you will ultimately receive on the back end.

Also beware that if you decide to withdraw your money before the end of its maturity term you may be charged a penalty or early withdrawal fee. You also run the risk of not receiving any interest at all on your investment. However, there are some certificates that will allow you a certain portion of the interest accrued to be paid each year. But this is only if your term is set at a certain number of years.

GICs are generally known to offer some great interest rates. Of course, the biggest benefit that a GIC offers is security. The amount of initial cash that you invest is safe. With a fixed rate you will also be guaranteed growth and an easy way for you to project the value at the time of maturity. But, ultimately, it is nice to have the flexibility in terms of the various plans offered.

But if you are looking for a great investment with a low risk you should really consider trying these GIC certificates. These are great investments to add to just about any investor’s portfolio and will offer a good return on your overall initial investment. And of course the best part is that they are a lot safer because the rates are guaranteed, unlike the investments you would make in stocks and bonds. Ultimately, before investing in any program, though, you should really make sure that you understand all of the terms and conditions of the plan. You should have a talk with your investment broker about GIC investments to find out more detailed information and see if it’s the right choice for your financial goals.

Before shopping for a home, compare the different mortgage rates that are being offered. It would be wise to move your funds into safe investments in the meantime, as guaranteed GIC rates can give you peace of mind.