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Three quick ways to boost GIC returns




One of the great aspects of investing in GICs (guaranteed investment certificates), aside from being low-risk, is that they can yield returns for the future while having minimal impact on your current financial goals. Whether it’s becoming debt free, saving for a home, or tucking away money for a much-needed vacation, GICs offer the option of a low minimum deposit allowing you to grow interest-earning savings with a guaranteed rate of return - at a pace you’re comfortable with.

Being the savvy investor that you are, you may already know this. GICs are a popular option for both short and long-term saving and have been available to investors for a number of years. 

The only thing is, we’re living in the future. Don’t you think your investment options should as well? 
We think so too.

Although GICs can be called the “old-reliable” of investing, there are innovative and easy ways to boost your GIC returns without sacrificing their low-risk reliability.

How can I get more out of my GICs?

1. Laddering. A GIC Laddering Strategy takes your initial principal investment and equally distributes it across the 1 to 5 Year GIC terms. Each year a portion of the investment matures and is reinvested in a new 5-year GIC term that grows on the principal plus interest already earned. 

Repeat these steps through to year 5 on your initial investments and accelerate overall returns over 10 years by benefitting from increasing GIC rates while offsetting the impact of changing rates at the same time.

2. Go Index-linked. Take advantage of the upside potential of stock markets with Index-Linked GICs. Index-linked GICs function similar to traditional GICs; they’re secure and guarantee your principal, but the cool part is that returns are tied to stock performance. As markets improve, so does your GIC growth potential. 

3. Take the escalator. Escalator GICs give you the benefit of competitive GICs rates that increase year-after-year while offering convenient flexibility to access to your funds annually. With a guaranteed principal and guaranteed earnings, Escalator GICs are a safe, secure option for a balanced portfolio. 

Plus, the longer you hold onto the investment, the more you’ll earn.

A 3-Year Escalator GIC is a great medium-term investment option if you’re looking to build up savings for a down payment or other goals, while a 5-Year Escalator GIC is ideal as part of your RRSP, RRIF, or TFSA because it provides the flexibility to transfer to a 1-Year term or longer on each anniversary date, or 30 days thereafter.  And scheduled interest rate increases allow you to understand the rate of return at the time of investment. 

Escalators are a smart choice for those who want to boost their GIC returns. 

Find the GIC that works for you

Wherever your financial goals and investment potential intersect, GICs will be there as a secure option to improve your portfolio and add stability. And with more, innovative options available with these guaranteed investments, they are no longer simply reliable, but are an asset to getting the returns you want in your saving strategy.


Speak to a Meridian Financial Advisor to help you plan for all your investments. 

 

 


 

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