Here are a few mistakes that just about everyone makes when comparing GIC rates, along with a recommended fix that will help you get better returns, regardless of how big or small your initial investment will be.
The best GIC rates in Manitoba aren’t found in the large banks, but rather from credit unions. Many people want to be loyal to their lender, and so they don’t shop around, but although your lender might offer the best loan rates, it doesn’t necessarily follow that they offer the best GIC rates in Manitoba. It’s always wise to shop around, especially when rates are generally low. Commercial banks’ interest rates sometimes stagnate and fall behind the offerings of credit unions and online banks.
For example, Equitable Bank offers 1.10 percent for a three-month GIC, which is significantly less than the 1.80 percent offered by Oaken Financial. GIC interest rates vary according to the amount of the investment and the term. You can purchase a GIC for as little as $100 all the way up to $50,000.
As a savvy investor, you should be aware that there are different types of GICs. For example, banks offer registered and non-registered GICs. If your financial institution offers registered GICs, it means that your investment and your lender are registered with the government for taxation purposes. Financial institutions offer three types of registered GICs:
Only the capital gains on non-registered GICs are taxed, usually at half your highest marginal tax rate. There are two types of non-registered GICs: commercial and personal.
If you’re looking to invest, you should base your decision on whether to buy redeemable or non-redeemable on the benefits offered by each plan, and on your personal preference. Redeemable GICs offer the following:
The chief benefit of non-redeemable GICs, on the other hand, is the higher rate of return. If you plan on investing in non-redeemable GICs, you should first ensure that you have enough cash on hand to cover emergencies, because you won’t be able to withdraw funds if anything unexpected comes up.
Whether you choose to invest in registered or non-registered, redeemable or non-redeemable GICs, the returns are guaranteed. You also have the guarantee that the principal will be returned to you. The terms for both redeemable and non-redeemable GICs are renewable and varied. Non-redeemable GICs offer higher returns.
There are some cons, for example, GICs offer lower returns than investments with higher risks. They can also tie up your funds for extended periods, which can be a problem if an emergency comes up.
Look carefully at the different types of GIC offered, and use CompareMyRates.ca to shop around and find the best rates available. GICs are a great investment vehicle, enabling you to grow your investment portfolio with very little risk. Log on to www.CompareMyRates.ca today, to find the guaranteed investment certificate that’s best for you.