If you live in Canada you might be aware of something called a guaranteed investment certificate. It means that as an investor, you can be sure that you are going to get a certain level of return within a specific time period. An example of this would be that you could look forward to getting 25% return on your investment within 5 years. As a result of GIC rates, the current state of the economy and the levels of uncertainty, you will see that there are more and more people that are investing in this type of thing.

The main draw card of the guaranteed investment certificates or GICs is that the rate of return is guaranteed. A lot of people look at this as a great way to invest their money in something they are sure will give them a good return as opposed to stocks or bonds which while able to give a large rate of return can also yield a low rate of return because of the volatile markets which they are set in. Because of the nature of guaranteed investment certificates they are seen as a low risk investment unlike the stocks and bonds which are seen as a high investment.

The guaranteed percentage will depend on how long you invest for and of course also on how much you are going to invest. If you decide that you are going to invest for ten years then you are definitely going to get more out than if you were only going to put money into a bond for three years. The great thing about GIC is not only in the certainty that they bring, but also in the flexibility as you can invest from anywhere between six months to ten years. So you are going to be the creator of your own destiny with this investment product.

Another contributing factor that helps to determine the interest rate of the guaranteed investment certificate is the interest rate that has been specified by the Bank of Canada. These rates cannot be altered and will have a heavy influence on the rate of interest earned for each certificate.

You will find that there is more than just one type of GIC investment that you can look at and there is one that is potentially higher gain than others. Having said this though, it is important to note that it also carries with it a higher amount of risk as well. This is a type of GIC that is called market growth equivalent or stock indexed GIC which means that if the market grows then you will get the same rate of return.

You will find that if the stock does very, very well then you are guaranteed that you are going to get a fantastic interest rate. But if the stock does lose or it doesn’t make a gain at all then you could have no interest. But the issue is that you are not going to lose money and this is the most important aspect.

One thing that you will have to accept is that you are only going to get a 25% return on a three year investment period.

Once the certificate matures, you can always decide if you want to cash it in or renew it for another period of time. Make sure that you get good GIC rates.

When you’re deciding to buy a house, some of the factors that you have to take into account are mortgage rates. As mortgage rates are important for home-buyers, GIC rates are important for investors. If you’re interested in a customized financial plan, remember to visit us.

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