5 GIC Guidelines for Investment Beginners

5 GIC Guidelines for Investment Beginners

It has been said many times that using a Guaranteed Invest Certificate is one of the overall safest ways to invest your hard earned money. The act of buying a GIC is an agreement to loan a financial institution or bank a sum of money for a predetermined amount of months or years.

At the end of this term in which your money has been invested, you are assured to receive the total amount deposited, plus the GIC may offer interest on your investment. It sounds like a pretty great deal, right? You may want to know more, which is why this guide will look at five facts about GIC rates that every new coming investor should know.

1. There is a Minimum That you can Invest

You may have already considered this, but it is something that should be confirmed. You can’t just invest about $25 and await your interest to come in. At the very least, the minimum amount that you can invest is typically about $500. Luckily, there are no hidden fees when buying a GIC. The amount you invest is the complete total of what you will be paying, and you are assured to receive that amount back.

2. The Longer the Term, The Higher the Interest

If your GIC does, in fact, offer interest rates upon your investment, then this entry is a very good thing. If you aim for the longer term investment, you will gain significantly more interest than that of a shorter term investment. It may take much longer, such as years instead of months, but the overall payoff of your 2 year GIC will be much sweeter. Everybody loves a higher return on an investment, right?

3. There are Two Distinct GIC Types

Things happen. It is the way of the world in all of it’s unexpected, unforeseeable beauty. So, say that you have a significant amount invested in a GIC that you suddenly need back before your term is up. There is a way to receive that money back as soon as possible, but it may be costly. Some GICs have fees in place in regards to premature investment withdrawals. However, there are other GICs that do not have this feature, allowing you to withdraw any time you need it. This is a factor that is very much worth looking into before investing.

4. Your Investment is Protected by CDIC

This is a very reassuring entry on the list. If you had any reservations about how much your investment is actually assured to be paid back to you, then you should know that the Canada Deposit Insurance Corporation has you covered. However, this does not apply to investments with terms that extend to over five years. Even so, that’s a great deal, in my humble opinion.

5. Interest Payout Dates may Vary

This depends on where you invest your money, and your preference on interest payouts. Some institutions may pay you interest every few months, while others may set you to be paid once a year. Then there are those that pay you a big lump sum at the end of your investment term. This is also something to ask about before buying a GIC, as you may want periodical payment or to simply get it all at once when your term ends.

All in all, if you are looking to invest some money in a safe and efficient manner, then a guaranteed investment certificate is something that you should be seriously considering. There are few investments that are as safe or simple as a good GIC. Just make sure that you know exactly what you’re agreeing to beforehand!

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