5 Investment Activities for Smart GIC Investors

Did you know you don’t have to settle the GIC rates that your bank offers? You can actually get better returns without having to compromise your GIC investment.

Although low-risk investments are associated with low returns, you can employ a couple of tricks to guarantee above-average returns. For guaranteed returns, keep off the volatile high-risk stock market and instead settle for the more predictable guaranteed investment certificates (GICs).

Below are some tips to help you leverage your GICs investment for better profits.

1. Look for the Best Rates Online

You will more likely get the best GIC rates for shopping online than approaching your local bank. Most big banks post GIC rates that are lower than what other small institutions offer. Why would one want to lock in on GICs with lower rates when there are institutions with better rates?

All you need is internet access to identify the lenders with the best rates. You can do this by comparing GICs and term deposit rates offered by credit unions, banks, life insurance and trust companies. All you have to do to get this information on your fingertips is to go online.

2. A Deposit Broker Will Get You the Best Rate

Just like there are mortgage brokers who scour the market for the best rates, there are also deposit brokers who turn the market upside down in search of GICs with the highest return. You are better off using a deposit broker to help you find the best rates.

The only difference between a mortgage and a deposit broker is the latter looks for GICs with the highest rates while the former looks for mortgages with the lowest rates. To sweeten the deal, deposit brokers won’t charge you upfront fees since these are paid by the financial institution they represent.

3. Get a Deposit Broker from the Registered Deposit Brokers Association

To find a deposit broker in your area, consult the Registered Deposit Brokers Association, which has upwards of 1,600 brokers and representatives throughout Canada. The brokers provide a one-stop service for people looking for term deposits and GICs with the best rates, annuities, and other guaranteed deposit facilities.

Whatever rates big banks offer you, the RDBA deposit brokers claim they can beat them by a full percentage point based on the specific institution and the facility term. A deposit broker pours through dozens of institutions offering GICs to get the best rate for you.

Another reason to go through deposit brokers is that they have an arrangement with financial institutions that guarantee you the best rate. You won’t get the same rate if you approached a financial institution directly. Besides, deposit brokers can spread your deposits across a number of financial institutions to make sure you are covered by federal or provincial deposit insurance limits.

4. Consider Small Institutions

Small institutions are able to offer higher returns than big banks since their operational costs are low. They also have less expansive and therefore less costly overheads than the big banks. Although some of these institutions don’t use the services of deposit brokers, they still provide better rates than the big players.

5. “Ladder” Your Investment across Five Years

A deposit broker can help you maximize returns by laddering your investment into one, two, three, four, or five-year certificates. Once a specific GIC matures, it is rolled into a fresh five-year term.

GICs are especially popular with retirees who are not ready to gamble with their retirement benefits by investing in the volatile stock market. In most cases, a deposit broker will get you the best rates and help you “ladder” your investment across various institutions for even better returns.

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