4-minute read

Smarter saving starts with GICs.

Market fluctuations are prompting many Canadians to turn to financial products that allow them to stabilize their investments. That’s why Guaranteed Investment Certificates (GICs) are attracting renewed interest from clients, both young and not-so-young, who have big plans in mind.

Whether it’s going back to school, doing major renovations, putting a down payment on your first home, preparing for retirement or taking a sabbatical, we offer GICs with rates of return that can help you make your dreams a reality.

Every time clients meet with her to discuss plans that are important to them, Zineb Tanine, Laurentian Bank’s Terrebonne branch manager, springs into action. Since joining the branch in 2018, she has looked beyond the numbers to offer clients a fully personalized saving strategy that, at times, takes them out of their comfort zone.

“Branch advisors are not there to take orders,” she explains. “It’s a case-by-case basis. Our role is to ask each person the right questions and offer them a combination of investment vehicles based on their financial situation, investor profile and the goals they wish to achieve.”

Faced with a more volatile market, many clients are realizing that GICs may be more attractive than previously thought.

According to Tanine, “The competitive rates offered by Laurentian Bank allow clients to earn attractive returns on their investments while securing their assets thanks to guaranteed capital.”

That’s why Tanine doesn’t hesitate to make GICs part of a diversified portfolio for both young savers and older clients.

Case 1^*: Philip and Sofia, ages 36 and 34, teachers

• Household income: $150,000

• Amount invested in GICs: $15,000

• Term: 3 years

• Rate¹:^⁠ 3% with compound interest

• Value of investment at maturity: $16,390.91^⁠2

Since they both work at the same school, Jean-Philippe and Sofia have long wanted to replace their 2 gas-powered cars with a single electric vehicle. However, they decided to be patient and wait a couple of years before taking the plunge to see if they can manage with just 1 car, or perhaps even do without one altogether.

After reviewing the couple’s financial situation, Tanine suggested that they invest the proceeds from the sale of their second car into a 3-year GIC. “Since they won’t need these funds immediately, they might as well make the money grow in the meantime,” she says. “They can use the returns to pay the registration or part of their car insurance or home charging station, while the capital, which will have been protected, can be used to purchase the new vehicle.”

Case 2^*: Denise, age 57, laboratory technician

• Salary: $67,000

• Amount invested in GICs: $20,000

• Term: 5 years

• Rate:^⁠1 3.35% with compound interest

• Value of investment at maturity: $23,582.10^⁠2

• Amount invested in GICs: $10,000

• Term: 3 years

• Rate:^⁠1 3% with compound interest

• Value of investment at maturity: $10,927.27^⁠2

As retirement approaches, Denise is starting to keep a closer eye on her budget. She’s particularly concerned about the costs of maintaining her home, especially since she lives alone and will have to cover these expenses on one income. The shingles on her roof are starting to curl, reminding her that she should start setting aside money now, while she’s still earning a full salary, in anticipation of eventually replacing the roof.

But she wonders what investment vehicle or type of account she should use: GICs? Her Tax-Free Savings Account (TFSA)? A High Interest Savings Account (HISA)? She’s even considering her Registered Retirement Savings Plan (RRSP), while she can still contribute to it.

Right away, Tanine provided some enlightening information: Denise can save with a GIC in a registered plan such as a TFSA or RRSP.² This means the future retiree can invest part of her savings in a TFSA, using a GIC, so that they grow tax-free. Since Denise is concerned about unexpected expenses that may arise, the branch advisor suggested that she invest in GICs with different maturities: 3 years and 5 years.

Tanine explains: “Denise will have access to part of her invested capital at various maturity dates if she needs it sooner than expected. She could even request annual interest payments by choosing a simple interest GIC, if she wishes.”

Note that GICs are investment vehicles that can be held in a registered plan such as an RRSP or TFSA, which are tax-sheltered, or a non-registered plan, which is taxable. Tanine sums it up this way: “It’s the perfect balance between security, flexibility and return.”

Whether you’re interested in GICs or any other financial product, Laurentian Bank advisors are well positioned to help you find the best strategies to make your numerous plans a reality.

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