Q&A: GIC Investing — A Good Idea?

Sitting on cash, a reader wonders about investing in market-linked GICs.


Q – I have a basic understanding of investments and I have never considered GICs as a good place to invest. However, circumstances have changed and security has become much more critical for me. My bond funds are struggling and I have a large amount of cash sitting in a savings account. Have GICs become more viable, especially ones like TD Bank’s, which are linked to the equity markets? – Pam B.


A – I have never recommended equity-linked GICs and would certainly not do so now with stock markets so high and a correction likely on the way. If you want the security of GICs, I suggest you swallow hard and accept the low rates being offered on regular certificates. A five-year ladder – dividing your money into five equal parts and investing one-fifth each for one, two, three, four, and five years – is the most effective approach. – G.P.


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