What You Need To Know About GIC Rates
November 24th, 2009 by Adriana NotonThe world of investment is a difficult one to conquer at this stage and this is of course especially true when you consider the type of economic circumstances that we find ourselves in at the moment. So if you are able to find something that takes away the uncertainty then obviously this is going to be popular and this is one of the reasons that there is now a lot of interest in GIC rates.
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.
In terms of the GIC rates that are used, the percentage is often dependent upon the type of certificate as well as the length of time that the certificate is invested for. For example, you will have a higher rate of return and rate of interest earned if you leave the GIC invested for ten years as opposed to three years. The length of time one invests for can vary from six months to ten years. It is all dependent upon the personal choice of the investor.
The Bank of Canada also has a role to play when it comes to specifying the rate of return. The country's central bank will determine the interest rate and this will lead to the type of rate that you can get on your investment. They can't be changed though and this will mean that there is a good deal of influence on your investment.
However if you opt for the market growth or stock indexed guaranteed investment certificate, your interest rate is determined by the amount of growth of a specific stock within the market. This type of certificate is also seen to be a low risk investment when compared with stocks and bonds but can also be seen as slightly high risk when compared to the standard GIC.
If the stock makes big gains then the likelihood of having a great amount of interest is certain. However should the stock not make any gains or even make losses for a certain period, you can have a zero percentage balance of interest. Another drawback is that you can only have a maximum of 25% return over a period of three years.
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.
You can put a good future in motion for yourself by taking advantage of the GIC rates and the certainty that they offer you. This is a great type of investment that will mean that your money is secure and you can look forward to a good term of investment. What more could you want in this type of investment.
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