My advice • April 04, 2023
modified on June 06, 2024
ActionGICs: where safety and performance converge
Yes, you can invest in the stock market without putting your capital at risk!
Najat Chabi, Private Banker at the Saint-Leonard and Anjou branches.When shopping around, you’re going to seek out an investment that’s a good fit for your profile. If you’re in the market for more safety and higher returns, you should know that there’s an investment option out there that might just be the perfect fit for you. Armed with its one-of-a-kind features, a market-linked GIC—referred to as an ActionGIC here at Laurentian Bank—can get you the best of both worlds. Laurentian Bank’s Najat Chabi is a Senior Private Banker, so it’s her mission to optimize her clients’ finances. Keep reading as she explains what an ActionGIC is, exactly, and what it can do for you.
What’s an ActionGIC, exactly?
With ActionGICs, the principal—the amount of money you initially invest—is 100% guaranteed. Returns, however, are tied to market performance, and any interest earned at the end of the investment term is calculated using a reference index, which is also known as a stock market index.1
At Laurentian Bank, reference index stocks are based on returns, reliability, and diversity. “Our experts regularly monitor stock market index performance and adjust periodically for higher return potential,” explains Najat.
The importance of diversifying your investments
To be sure that an ActionGIC is a good option for you, it’s important to know your investor profile first, which basically means having a solid grasp of your investment goals, risk tolerance, investment horizon, financial and personal situation. Once that’s done, go on a fact-finding mission. “It’s important to learn about all the investment options available so that you can make the right choices for you and invest with confidence,” Najat tells us.
Given today’s economic landscape, diversification is more important than ever. Najat advises her clients to vary the contents of their investment portfolios as much as possible. That might entail, for example, opting for a blend of ActionGICs and fixed-rate GICs, which will provide a certain level of guaranteed returns and leave room for higher return potential at the same time, depending on stock market performance of course. You can also diversify your investment terms, which will give you more flexibility and open the door to more opportunities.
Who’s the right fit for an ActionGIC?
“ActionGICs are an excellent option for several kinds of investors, depending on what their goals are,” says Najat. “You need to be okay with a certain level of risk, since they’re tied to the stock market. Even though it’s rare, an ActionGIC may provide negative or zero returns. In such cases, your principal will be protected, but you won’t earn any interest, unfortunately. However, some ActionGICs offer a minimum guaranteed return in addition to the guaranteed principal.
There are many reasons to make ActionGICs a part of your investment strategy. Keep reading for two illustrative real-life case studies.
1st Case Study: Protecting an inheritance
When her mother passed on, Ashley2 inherited $200,000. Although she would normally invest in mutual funds, it was important for her to protect her mother’s money, since she had worked so hard saving for it. That said, Ashley was also interested in benefiting from the returns possible when you invest in the stock market. After discussing goals and reviewing Ashley’s investor profile, Najat proposed an ActionGIC—the perfect balance between her client’s desire to protect her mother’s principal and take advantage of solid return potential.
2nd Case Study: Investing the proceeds from the sale of a second home
After the sale of her cottage generated a profit of $250,000, Jessica2 wanted to buy a car and invest the rest—but prudently. “I suggested that she set aside the amount allotted for the car in a high-interest savings account, which would earn her interest while still giving her access to the funds whenever she wanted,” explains Chabi. “For the remainder, I advised her to invest a portion in fixed-rate GICs to guarantee returns, and another portion in ActionGICs to tap into the earnings potential offered by the stock market.”
Our ActionGICs: invest in Canada, without all the risk.
At Laurentian Bank, we have ActionGICs that can take your savings to the next level and support the Canadian economy at the same time. You can choose to invest in Canadian or local businesses—or keep it to companies that are environmentally responsible. The choice is yours.
Every individual is, well, an individual, with goals that are unique to them. That’s why our advisors are standing by to help you determine whether ActionGICs are the right fit for your investment portfolio. If you decide that they are, your advisor will be able to help you choose the ActionGIC that will help bridge the gap between you and your goals. Reach out today!
+ Legal Notices
Existing investment accounts are offered by Laurentian Bank of Canada or LBC Financial Services Inc. LBCFS is a wholly-owned subsidiary of Laurentian Bank and a separate legal entity from Laurentian Bank, B2B Trustco and all other issuers or mutual fund companies whose products it distributes. Newly opened investment accounts will be offered by LBCFS. Every Laurentian Bank advisor is also a licensed LBCFS mutual fund representative. LBCFS’s liability is limited to the conduct of its representatives in the performance of their duties for LBCFS.
- The return is not guaranteed and may be nil at maturity. The posted rate corresponds to the maximum rate of return. The final rate of return of a Laurentian Bank ActionGIC is calculated based on the performance of the reference index between the issue date and the maturity date of the investment. The value at maturity is obtained by calculating the average value of the index at closing, on the three dates for the calculation of the reference index as specified in the purchase agreement. The final return of the reference index is determined by calculating the sum of the return for each share in the reference index during the period divided by the number of shares making up the reference index. Since the rate of return of this investment depends on the performance of a reference index comprised of securities, any fluctuations in the reference index will affect the investment’s final rate of return. Past performance is not an indicator of future performance. If the total return obtained is negative or nil, the invested capital is fully guaranteed and will be remitted upon the investment’s maturity, but no interest will be paid out. If the total return obtained is positive, the invested capital and interest (up to the maximum rate of return set on the issue date) will be paid out upon the investment’s maturity, since the return will be known only at that time. This investment is eligible for a non-registered or a registered plan such as an RRSP, RRIF or TFSA. A minimum investment of $500 is required. Laurentian Bank of Canada is a Canada Deposit Insurance Corporation (CDIC) member institution. This product is eligible for deposit insurance from the Canadian Deposit Insurance Corporation (CDIC) up to the maximum limit for coverage from the CDIC and subject to applicable conditions. The terms and conditions of this product are available at the branch. For more information, please contact an advisor. The Laurentian Bank reserves the right to modify, suspend or withdraw this offer at any time without notice. ActionGICs will not be listed on any securities exchange. No secondary market will be provided. ActionGICs are only redeemable before maturity in the event of your death or as otherwise permitted by law. In the event the ActionGIC is redeemed before maturity, your principal shall be reimbursed; however, no interest shall be paid. The Laurentian Bank ActionGIC is non-cashable prior to maturity under the Home Buyer’s Plan (HBP) or the Lifelong Learning Plan (LLP). To find more information about ActionGICs (calculation method, payment of interest….), visit our website.
- The first names have been changed in order to preserve the anonymity of the persons.
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