3 Ways to Secure the Best Guaranteed Investment Certificates
People are always looking for ways to make money by investing and there are numerous ways to do so. Stocks consist of buying shares in a company and getting a cut of their earnings through dividends. Bonds are loans given by an investor and used by the debtor as needed with payments being made back to the lender plus a variable or fixed interest rate.
While both of these have high potential of favourable returns, they are also high risk because the rates fluctuate depending on the market. If you are thinking about investing but want a return that is more of a sure thing, GICs should be considered. These are investments that guarantee you get your principal investment back plus any interest earned over the specified period of time.
While you may not receive as high of a return as you potentially could through stocks or bonds, it is guaranteed nonetheless and therefore safer. Even though GICS can be similar among institutions, there are still differences among them. Below are some tips to guide you when purchasing this type of investment.
1. Compare rates
As stated previously, while GICs are similar, their rates can vary and even a difference of less than 1 percent can add up over the years in terms of the return you will receive when you cash out. Therefore, you want to compare rates so you can secure the highest interest rate possible.
When purchasing GICs, shop around and determine the interest rates available among banks and credit unions. Even if you think you have found the highest rate possible, you still need to look at other institutions. If they can match the rate, buy from them. If they cannot, buy from the institution that offered the highest rate. To avoid this legwork you can also go online. There are many different websites that can compare GIC interest rates for you. That way, you can rest assured that you got the best possible rate available.
2. Get help
If you are new to investing, chances are you could use all the help you can get. If you are well-versed in GICS, you could still probably use some help. After all, doing so may increase the return you receive once the GIC expires which is obviously beneficial.
Most people who purchase GIC do so from the bank or credit union that they presently use because they are familiar with them and enjoy the service they are provided. However, there are deposit brokers available to assist. Like mortgage brokers, deposit brokers work on your behalf and consult with a variety of different companies offering GICs to secure you the best GIC rates.
You do not have to pay these brokers as they get paid by the institutions that you ultimately end up buying from. Using them will ensure you get a GIC that is insured and offers the best interest rate.
3. Ladder your investment
The goal of investing in a GIC is receiving a return at the end of the term based on te interest accumulated. Therefore, it is in your best interest to take steps to ensure the best payout possible. One way to do this is laddering your GIC.
Laddering a GIC refers to the process of investing different sums for different periods of time. That way, you are guaranteed payouts every year. This will put money in your pocket and you will not have to stress over fluctuating interest rates that will influence the return that you receive. Laddering a GIC will also allow you to avoid trying to determine which investment length you should choose as well.