Skip to main content Skip to chat

Why I'm investing in GICs for the first time in years

Learn why I think GICs are a worthwhile investment and how I plan to invest in them this year and why interests rates are influencing my investing.

February 25th , 2022

Written by Anne Papmehl 

Key takeaways

  • I'll be earning some money, rather than having it sit in cash.  
  • It will keep my principal safe no matter what the markets do.  
  • I'll have a guaranteed rate of return. 


Why I'm investing in GICs for the first time in years

When I was in my early thirties, interest rates were at an all-time high. I was earning a professional salary, had paid off my student debts and was ready to start investing. 

At my dad's suggestion, I put $5,000 into a GIC in a non-registered account. Though it wasn't the most tax-efficient move—this was the pre-TFSA era and the GIC was not in an RSP—I made a decent return when it matured five years later. 

I haven't invested in GICs since 

Shortly after I locked in, interest rates took a nosedive, and GICs lost their appeal to many investors—including me. Sure, they kept your money safe and guaranteed at a slightly higher rate of return than the average savings account, but when interest rates were at record lows, there wasn't much incentive for me to lock in my savings. 

GICs regaining some of their lost lustre 

I'll be parking some of my RSP money in GICs for the next year—something I'd probably even advise my thirty-something self to do if she were investing today. 

First, I'll be earning some money, rather than having it sit in cash and doing nothing until I find the right stock or ETF to invest in. Second, it will keep my principal safe no matter what the markets do. Third, I'll have a guaranteed rate of return. 

Short-term GICs with staggered maturity dates 

But this time, unlike my thirty-something self, I won't be locking in all of my GIC savings for five years. Instead, I'll buy five GICs of one thousand dollars each and with differing terms. This is a portfolio management technique often referred to as laddering, where you buy several GICs with staggered maturity dates and rates of return. 

Here's why I'm doing it this way 

While the ideal scenario is to purchase GICs when interest rates are at their highest, trying to figure when they'll hit their peak is like trying to time the equity markets. It's basically impossible to do. 

By staggering my purchases, I'm bound to lock in at least one GIC at a higher interest rate. With some of my GIC savings maturing in the shorter term, I'll have more frequent opportunities to capture higher rates if rates end up rising. If rates don't rise, I've managed to keep a portion of my money safe and earning something at a guaranteed rate. 

And by saving in RSP GICs, I've kept a portion of my RSP portfolio safe with some tax-deferred interest. 

If you're new to GICs and would like to give it a try, this beginner's guide to GICs will get you started. 

This article or video (the “Content”), as applicable, is provided by independent third parties that are not affiliated with Tangerine Bank or any of its affiliates. Tangerine Bank and its affiliates neither endorse or approve nor are liable for any third party Content, or investment or financial loss arising from any use of such Content.

The Content is provided for general information and educational purposes only, is not intended to be relied upon as, or provide, personal financial, tax or investment advice and does not take into account the specific objectives, personal, financial, legal or tax situation, or particular circumstances and needs of any specific person. No information contained in the Content constitutes, or should be construed as, a recommendation, offer or solicitation by Tangerine to buy, hold or sell any security, financial product or instrument discussed therein or to follow any particular investment or financial strategy. In making your financial and investment decisions, you will consult with and rely upon your own advisors and will seek your own professional advice regarding the appropriateness of implementing strategies before taking action. Any information, data, opinions, views, advice, recommendations or other content provided by any third party are solely those of such third party and not of Tangerine Bank or its affiliates, and Tangerine Bank and its affiliates accept no liability in respect thereof and do not guarantee the accuracy or reliability of any information in the third party Content. Any information contained in the Content, including information related to interest rates, market conditions, tax rules, and other investment factors, is subject to change without notice, and neither Tangerine Bank nor its affiliates are responsible for updating this information.

Tangerine Investment Funds are managed by 1832 Asset Management L.P. and are only available by opening an Investment Fund Account with Tangerine Investment Funds Limited. These firms are wholly owned subsidiaries of The Bank of Nova Scotia. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated.