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Why You Should Invest in a GIC?

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A GIC is a Guaranteed Investment Certificate. GICs are funds you lend banks, trust companies, and credit unions money for a defined time frame and get a certain interest rate in return.  GIC’s are considered no-risk investments because they guarantee that you will receive your original investment in its entirety.  The interest rate of a GIC is based on the length of time you agree to lend the money and what the current interest rates are like at that time. So why is it wise to invest in a GIC? We will provide you with advantages of pursuing a no-risk/low-risk investment.

What is GIC?

Because a GIC represents no risk, it means that you won’t lose any money in the long run. When you pull your investment or it is returned to you, you are guaranteed to have at least the amount of money that you started with, if not more than that. When you invest your money in a GIC, you are guaranteeing that you will lose nothing and you have the potential to gain quite a lot of money over time.

Why is GIC a Wise Investment?

GIC offers no risk and promises a considerable return in many cases. One Canadian company saw a growth of 30% over the course of three years. This means that if you had purchased a GIC for one thousand dollars and maintained your investment for those three years, you would withdraw a three hundred dollar increase (approximately, before taxation and other fees).

In the above example, there may be applicable fees and notices that you should be aware of. If the previously mentioned GIC example had a limitation on the maximum return, you may not see that thirty percent growth. If the GIC had a maximum return limitation of 25%, then only two hundred and fifty dollars would be pulled rather than three hundred dollars (before taxes). It is a good idea to thoroughly read limitations regarding the return of your investment before investing in a GIC.

GIC is an excellent way to obtain minimal growth with virtually no risk. By investing in a GIC, you are guaranteeing that you will be receiving at least your original investment in addition to potentially significant growth. In spite of the fact that there is no risk, however, you should still be cautious when you put your money into a GIC. There are various limitations that could apply to your investment, so you should identify your maximum return and determine for yourself whether or not the investment is worth the time and money that it will require.