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How GICs fit into your investment strategy

January 31st, 2019

If you’re like many Canadians, you know that you should have an investment strategy, but you’re not sure how to develop a plan. You might have the basics of a plan, but you aren’t sure if the plan will cover your longer-term financial goals. You might have heard that you should diversify your investments, but with all of the savings and investment choices out there, how do you choose which ones are right for you and your goals?

Many Canadians are now opting for self-directed retirement plans, to maintain control of their investments and to save on the high fees often charged by financial institutions or financial advisors. The proliferation of investment information available online for individual investors makes it possible to plan and manage an individually-tailored strategy.

Strong self-directed plans might begin with a foundation of solid, low-risk investments, that have little to no volatility and may have guaranteed returns, such as GICs. GICs have a number of purposes within an investment portfolio, including: adding stability when markets are volatile, providing a short to medium term place to park funds that are earmarked for an upcoming expense or purchase (like a home purchase, or education costs), or providing guaranteed returns with no hidden fees.

GIC laddering is a strategy that can work to your advantage, while providing that solid foundation. With a five year GIC ladder, for example, you would split your funds into five equal portions and purchase a one year, a two year, a three year, a four year, and a five year GIC. As each GIC matures, you would then purchase a new five year GIC, thus creating a cycle of GICs that mature each year. It’s a solid way to help you maximize your returns (five year GICs typically provide the most return), while having access to cash each year at maturity, in case you need it.

EQ Bank GICs are a safe investment – they are eligible for CDIC coverage and have guaranteed rates – and they have provided greater returns than investors can achieve by buying Government of Canada Bonds. They are an ideal choice to form that solid foundation for your investment portfolio, whether you’re looking for guaranteed returns with no fees, or you need to balance out your investment portfolio. They are available in terms ranging from 3 months to five years, and you’ll enjoy a high rate that’s guaranteed for the entire term – which means that you’ll have the peace of mind knowing that your money is safe and growing, regardless of what might be happening with your other investments. You can easily purchase EQ Bank GICs, and set up a GIC ladder by yourself, using EQ Bank’s mobile app.

The views and opinions expressed in this article are those of the authors and do not necessarily reflect those of Equitable Bank. The material on this site may not be reproduced, distributed, transmitted, cached or otherwise used, except with the prior written permission of Equitable Bank.