It is true most Canadian GICs are classified by Canadian dollars, but , you will also find some institutions that provide GICs in other foreign currencies, with the most popular being U.S. currency. Here are a couple of reasons why you should consider purchasing GIC products.
By investing in foreign currency GICs, you can acquire the currency of the country associated with it. This provides you the opportunity to make future investments more profitable. For instance, if you decide to take a trip outside Canada in 6 to 12 months and suspect the value of the currency in Canada might drop before you decide to leave the currency, buying foreign currency GIC is a great way to take advantage of the current situation before packing your bags.
However, this may not be a wise option for travelers as many investors rely on both U.S. and Canadian dollars, so you ought to stick to both these currencies. Purchasing U.S. GIC is a profitable move. By investing in GIC of foreign countries, you can retain your buying power and diversify your investment portfolio.
U.S. GICs are the most popular in Canada. This is because U.S. is Canada’s largest trading partner. However, some financial institutions offer GICs in several profitable currencies including the Japanese Yen, Pound and Euro.
The following are a few disadvantages of GICS in foreign currency:
GICs can be held and purchased in both registered and non-registered accounts. Registered accounts constitute of special tax sheltered saving plans that are government approved. On the other hand, non-registered accounts are similar to regular bank accounts. Take a look at how RRSPs work and how you can use it for your benefit.
RRSPs are accounts that have been designed to help Canadians save money after retirement. These plans enable you to contribute a specified amount of money every year till you hit 71, and deduct this contribution from your taxable income. The maximum contribution can range up to 18% of your income.
Additionally, RRSPs can be accessed through most financial institutions. You are also allowed to hold a wide diversity of investments including bonds, GICs, stocks, investments, etc.
Here are some key benefits of holding GICs in RRSPs:
Most first-time investors are not aware of the fact that they can purchase GICs in both registered and non-registered accounts. Some tax-sheltered government accounts include TFSAs, RDSPs, RRSPs, and (RESPs), registered education savings plans. Take a look at how you can use RESPs to save money for your child’s education.
RESPs are saving accounts that have been approved by the government for post-secondary education. Most parents typically open this account in anticipation of their child’s future. There is no annual limit to RESPs opened since 2007; however, there is a lifetime contribution limit of $50,000. While the federal government along with some provincial governments offer grants to enhance RESP contributions, these do not include the limit, making it a safer option if you want to send your kid off to college.
RESPs can remain open for maximum 35 years.
Some major benefits include:
TFSA is a tax-free saving account that is registered by the government. Take a look at how TFSA-eligible GICs works and how you can use it to your benefit:
TFSAs were introduced by the Federal government in 2009 to help Canadians withdraw and grow their savings tax-free. At first, citizens could only contribute to $5,000 per year however; the annual contribution has now been increased to $5,500 per year in 2013.
Like GICs in RRSPs, contributions are non-tax-deductible. Here are a few major benefits of holding GICs in TFSAs:
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