Greeting fellow Canadian investors. I came across an interesting GIC (Guaranteed Investment Certificate) offered by TD Canada Trust – one of Canada’s largest banks – and I thought I’d share it with you. This GIC is what they call a “stepper” GIC, which means that the interest rate increases each year of the term. With this particular GIC offering the interest rate will rise in the 5’th year to 8% – a very good return considering that at the moment the average return is around 2.50%. I very much doubt that by the 5’th year interest rates will rise to the 8% mark.
This investment features a 5-year term with an annual interest rate that increases on each anniversary date. You also have the option of redeeming all or a portion of your investment on each anniversary date of the purchase of your GIC. Interest is compounded annually and paid at maturity or on redemption. You can own this GIC in a Registered (RRSP), Tax Free Savings Account, or Non-Registered account – it’s up to you.
Here are the purchase minimums:
Non–registered and Registered (TFSA) $1,000 Compounded annually and paid at maturity
Registered (RSP, RESP, RIF) $500 Compounded annually and paid at maturity
* On each anniversary date in full or in part. Interest paid on redemption.
* Minimum withdrawal of $1,000 for non-registered and $500 for Registered, while maintaining at least the minimum investment balance.
Also I’d advise you to look into “laddering” your GIC investments. This proven method of investing (also known as a laddering strategy) can help you reduce the risk of interest rate fluctuations and increase your portfolio’s overall return. It is often difficult to predict future interest rate trends, but laddering maturities provides a strategy for maximizing return while minimizing risk.
For more details hop on over to the TD Canada Trust GIC selection page:
That does it for this post. I wish you all happy and profitable investing!