Shares and bonds are not quite the same thing as the guaranteed investment though all of them are really not volatile. GIC rates are a much better alternative though for those who do not really into volatility. The rates very though from bank to bank as well as from time to time. A majority of people have been able to cash in from the best GIC rates but that is not the only benefit that they can offer. Here are 5 unexpected ways GIC rates can make your life better.
1. They give you guaranteed principal as well as interest
There are some guarantees that you will get as long as you hold the guaranteed investment certificate from purchase to the end of the term. For one, the principal is guaranteed. This means that whatever amount of money you invest, you will be able to get it back. You can not have guarantee of the same in the stock market as there is a chance that you will get less or more. You can have peace in the fact that you will always get your money back and that the interest rate is not fluctuating.
2. Insurance on deposit
A lot of big financial institutions that give guaranteed investment certificates happen to be members of the deposit insurance corporation in Canada. Due to this fact, in case the financial institution you invested in falls, the principal and interest are guaranteed but up to a certain amount. You happen to have deposit insurance if you made a deposit with a credit union.
3. They reduce the volatility of your profile
Stocks happen to be very volatile. If every investment in your portfolio is a stock then you can not have peace because the value changes every single day. It is important that you purchase guaranteed investment certificates because they are fixed income investments and this. This largely reduces volatility of your portfolio.
4. They make you eligible for RSSP
You may want to buy a GIC for whatever reason but you are worried about the account that you have. Do not panic because guaranteed investment certificates are eligible for both the accounts that are registered and those that are not. They are very flexible and whatever it is that your goal was, guaranteed investment certificates will certainly help.
We live in a world that is full of uncertainties. Due to this factor, most people like to save money for unforeseen circumstances. The discipline required is immense though and most people do not have it. Guaranteed investment certificates can help you achieve your goal of saving money and it becomes even better because it earns you interest.