5 Benefits of Guaranteed Investment Certificates

5 Benefits of Guaranteed Investment Certificates (GICs)

Guaranteed Investment Certificates provide customers with guaranteed returns and proper interest rates over an agreed period of time. They are divided into three i.e. cashable GICs in which money can be cashed at any time based on the time agreed upon by the financial institution. Non-redeemable GICs are those in which the money cannot be withdrawn until maturity. Lastly, index-linked GICs are those linked to the stock market. The best GIC rates include the following benefits:

  1. Guaranteed security of investment

GICs as their name suggest always guarantee customers that their original investment will be returned with interest at maturity. The customers will loan the financial institution with a sum of money and in exchange, the financial institution pays them interest over a predetermined period of time. The original amount is usually protected and cannot be lost over this period of time. The issuing financial institutions provide a known rate of return for any sum of money deposited in a GIC which makes it possible to calculate the amount the customer should expect upon completion of the term agreed upon.

2. Guaranteed growth

GICs provide an assurance for the growth of investment. The original amount of money deposited in GIC, because of guaranteed security, will be returned with interest. This is especially useful in instances in which customers cannot absolutely tolerate any drop in the value of their investment. It, therefore, ensures that customers can build their savings with very minimum risks and nervousness on any kind of fluctuations in the market.

3. Protected savings

GICs are superior to saving accounts as far as protecting savings is concerned. When properly applied GICs offer important saving strategy in case consumers have saving goals and objectives they want to achieve. They ensure that savings cannot be accessed within the stated period as there are usually unexpected needs and wants that tempt customers into consuming their savings and compromise their saving goal.

4. Assured Flexibility

Customers using GICs have many terms and interest rate options that they can choose from. Using cashable GICs, they can access the money before the end of the agreed term or can opt to choose higher interest rates. The terms can range from as little as one day to up to 10 years depending on the financial institution and the products they offer.

5. Simplicity at Its Best

GICs are easily understood by the majority and they are also simple to manage. Almost anyone can invest in GICs as they do not require comprehension of technical financial principles.

From the benefits listed, it is evident that Guaranteed Investment Certificates are important options for individuals seeking financial security for their investment. With the rising inflation GICs will be better options for individuals seeking value on their investments.

GICs are important for individuals whose saving is for short term and those that cannot put up with drops in investment value.