So much for rising interest rates: The returns on GICs have taken an unexpected downturn - GIC Wealth Management

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Special Rates
1 year 1.65% *
2 year 1.70% *
3 year 1.80% *
4 year 1.90% *
5 year 2.10% *
Minimum Investment $25,000 * Minimum Investment $50,000 **

CDIC Deposits Insured up to $100,000 DICO Deposits Insured up to $250,000 Assuris Deposits Insured up to $100,000


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Certain minimums may apply. Call for details.
E&OE.

Today's Rates

As of 10 Aug 2020
TermGICRRSPRRIF
11.750%1.750%1.750%
21.850%1.850%1.850%
31.950%1.950%1.950%
42.050%2.050%2.050%
52.250%2.250%2.250%

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Rates are subject to change without notice.
Certain minimums may apply. Call for details.
E&OE.

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GIC Wealth Management Inc. is a member of the Registered Deposit Brokers Association. The RDBA is the professional standards Self-Regulatory Organization (SRO) for the Canadian Deposit Broker Industry. Membership in the organization includes Financial Institutions, Deposit Brokers and their representatives. The organization is a strong supporter of a regulated industry and strives to work closely with federal and provincial governments and other regulators to insure investor safety and compliance with regulatory mandates.With every deposit we make on your behalf, a Client Consent and Information Form issued by the RDBA and signed by the client is required. If you have any questions about the RDBA, or the required form, please contact us.

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I have used the services of GIC Wealth Management Inc. for the past 8 years, and have found both Kevin and Brandon to be very helpful and knowledgeable in the investment industry. It has always been a quick and simple process to have my investments transferred to one of the institutions they represent. I will definitely keep my investments with GIC Wealth.”

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So much for rising interest rates: The returns on GICs have taken an unexpected downturn

So much for rising interest rates: The returns on GICs have taken an unexpected downturn

ROB CARRICKPERSONAL FINANCE COLUMNIST
PUBLISHED JANUARY 15, 2019UPDATED 17 MINUTES AGO

The rising trend for rates on guaranteed investment certificates has abruptly fizzled.

Some fairly good deals are still available, but rates on average have actually fallen lately.

Brandon Brot of GIC Wealth Management says his firm’s best rates on one-year GICs were 0.11 percentage points lower in the second week of January than at the beginning of December, and two-year rates were an average of 0.16 points lower. Yields on terms of 3-to-5 years have also fallen, but to a lesser degree.

Were you waiting for the rising-rate momentum of the past 18 months to carry GIC rates ever higher? Mr. Brot understands your pain. “I think we’ve come so far so fast, everyone just seems to think that rates will continue to rise and a 4-per-cent, five-year GIC is just around the corner.”

The lesson here is not to sit on the sidelines waiting for higher rates. The economic growth and inflation concerns that drove interest rates higher have, at least for now, abated. A wait-and-see approach may result in you losing out.

For the conservative investor who uses GICs only or mostly, the traditional five-year ladder approach continues to make good sense. Divide your money evenly over terms of one through five years and buy into a new five-year term when a GIC matures. By doing this, you free up money every year to take advantage of higher rates and contain the damage if you have to renew at lower rates.

The best value in GICs continues to be the one-year term, where EQ Bank, Hubert Financial and Oaken Financial were offering 3.1 per cent as of Jan. 11. If you prefer more familiar names, Tangerine and Simplii Financial (owned by Bank of Nova Scotia and Canadian Imperial Bank of Commerce, respectively) were paying 3 per cent. Across GIC-land, the reward for extending the term to five years seems to top out with a return of 3.6 per cent at EQ and Oaken.

The problem with betting on the one-year term is that you could find yourself having to renew at lower rates in 12 months. Mr. Brot’s suggestion for investors, notably seniors, is to use a GIC ladder. “Investing only short term, or sitting on the sidelines waiting for rates to rise, ends up costing them money.”

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