Follow these six steps to buy Guaranteed Investment Certificates (GICs):
1. Decide how much money you want to invest, what your goals are, and how long you can keep your money invested in a GIC. Unless you buy a redeemable GIC that can be cashed anytime, your money will be locked-in for that period of time.
2. Start shopping. Look at GIC rates on the Internet. Talk to some banks or companies where you may want to buy a GIC. The person who helps you will be your adviser while you choose your GIC.
3. Ask about the GICs they have. What choices do they offer? Are there any fees? Don’t be afraid to ask questions. Now is the time to ask, not later when you may fear that you made the wrong choice. Be sure to ask:
- What happens if, for some reason, I need to get my money early?
- When will I receive interest payments from my GIC?
- How much will I make in total?
- Can I get a better interest rate than the one that is advertised or posted?
- Which GIC do you think is best for me?
4. When you are ready, choose the type of GIC(s) you want at the financial institution you prefer. If you do not have an account with them, you will need to provide proper identification (ID). Try to bring two pieces of ID with you. At least one of them must be from the government.
Tip: To see a list of acceptable ID, read about Opening a bank account on the Financial Consumer Agency of Canada website.
5. Decide how you are going to pay for the GIC. This could be from:
- Money you have in a bank account
- Money you have in a sheltered plan, such as a Registered Retirement Savings Plan (RRSP) or a Registered Retirement Income Fund (RRIF)
- Money you have in another GIC that is about to mature and that you want to invest again.
6. Fill out and sign the paperwork. You will have to give some personal information and state
how you are going to pay. Keep a copy for your files.
Remember: There are no fees when you buy GICs.
The financial institution covers its costs when it sets its GIC rates. Be sure to shop around for the best deal you can get.
CANNEX offers a survey of interest rates for GICs from banks and other companies across Canada.
Content in this section is provided in partnership with the Investor Education Fund, a non-profit organization promoting financial literacy to Canadians. To find out more go to GetSmarterAboutMoney.ca.