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Yields on GICs tend to move up and down quite slowly – so considering their pace can be beneficial when you’re comparing options. Learn more about the ins and outs of investing with GICs:

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Remember the $100K CDIC limit.

Always keep the $100K limit in mind when purchasing GICs. Holdings under the $100K limit are protected by CDIC, a Crown corporation that is backed by the Government of Canada. Holdings above the $100K limit are subject to the creditworthiness of the individual borrower (as holders have a senior unsecured claim on company assets). These are two very different risk profiles and should be carefully considered as such.

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GIC rates tend to move up and down quite slowly.

In comparison to tradable bonds, the yields on GICs move slower in both directions (rate-rising and rate-falling environments). Investors should consider this when they decide to reinvest a maturing GIC or bond proceeds, as GICs might look more or less attractive compared to their alternatives.

 

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GIC rates should be higher than equivalent bonds.

GICs can be difficult to sell – RBC Dominion Securities actually has its own secondary market – so it’s wise to expect to return a higher yield than an equivalent tradable bond from the same borrower.