Attention Baby Boomers Who Own GICs
A Simple Strategy to Earn Income from Your Money
What follows is a simple strategy you can follow when your GICs mature to boost returns and protect yourself from the ravages of inflation.
When your GICs mature, move the money you had invested in GICs into quality, dividend paying stocks.
Why? Because the inflation rate, the rate at which your money is losing value, exceeds the return your money is earning when it is sitting in a GIC with a 1% return. That means that even though your money is earning a small return, you are actually losing money!
By switching your money from a low yield product like a GIC to a higher yield product like dividend paying stocks you can super size your returns.
What is a Dividend Paying Stock?
A dividend is simply a periodic payment you receive from a company you invest in. These are payments from the company’s profits that are distributed to shareholders. Some companies pay dividends and others do not.
If you’re not overly familiar with dividends, we have prepared a free special report for you called “How to Convert GICs to Dividend Paying Stocks” which you can download by following this link.
How GICs Differ from Dividend Paying Stocks
GICs (guaranteed investment certificates) are guaranteed to pay you a specific return over a specific period of time. Because they are guaranteed GICs are generally considered low risk investments. This also means they have a very small yield or return compared to other investment vehicles.
The tricky part is to understand that because GICs currently do not return much, they can actually be riskier than other investments when the rate of inflation, or how much money loses value over time, is higher than the rate GICs are paying out.
If your GIC pays a 1% return and the rate of inflation is 3%, holding a GIC means you can actually buy less with your money when you get it back.
Dividend paying stocks on the other hand can go up and down depending on the market. This means there is more risk involved in owning dividend paying stocks than there is when holding GICs. With dividend paying stocks however, you are paid dividends, a form of income, and if you invest into solid companies, you have the potential for greater growth of your money through capital appreciation.
If you’re ready to learn more about how you can implement this strategy, please follow this link to download a copy of our free “How to Convert GICs to Dividend Paying Stocks” report to learn more.
From Erosion of Your Wealth to Growth
GIC rates, along with yields on high quality bonds, are low due to the current low interest rate environment. If your GIC is maturing now or in the near future, you should consider searching for high quality stocks that pay regular dividends. This switch provides the opportunity to increase returns while potentially protecting yourself from the ravages of inflation.
Smart planning and professional advice are also important. You need to ensure you choose dividend paying stocks that compliment your other investments, your goals, your risk tolerance and other factors. Always make sure you follow a plan and speak with an advisor skilled in choosing these kinds of investments.
GICs Have Their Place and Time, But That’s Not Now
GICs do have a place and time depending on your investment goals and the current interest rate environment. But in times of low interest rates, when the rate of inflation is higher than the return a GIC pays, holding GICs can be counter productive. In fact, if you’re earning even a small negative return, your buying power could be significantly reduced in a short period of time!
Choose Right and Reap the Rewards
There are many small companies that pay big dividends. Many of them are in real estate, investment trusts, pipelines, utilities, and others. A lot of these companies are quite stable, and have dividend yields in the 6.5% to 11% range, with regular cash payouts.
Some of these companies pose potentially good opportunities for investors looking to switch from GICs, but others do not. Keep in mind that some companies have high yields because they may be risky. The challenge is to get competent advice so that you add the right stocks to your portfolio and avoid companies who pose too much risk to your portfolio.
Your Next Step
…and a Story of How One Woman Turned $5,000 into $22 Million
If you would like to learn more about how this strategy could work for you, follow this link to download a copy of our free “How to Convert GICs to Dividend Paying Stocks” report.
And be sure to read the story “HOW SHE TURNED $5,000 INTO $22 MILLION” of one of the most famous dividend investors of all time which is linked to in the report.
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