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If you have some cash to invest and still unsure about where to put it, short term investments is an option if you can lock your money up for 1 or 2 years. Guaranteed Investment Certificates, or often called GICs are short term investments that guarantee a set principal amount of money and interest over a specified period of time, from 90 days to 5 years. You know exactly what you will get at the end of the locked in period.

There aren’t many options when it comes to investing for a short period of time as investing in the equity markets (individual stocks and mutual funds) come with short term volatility. If you have 10+ years and have an understanding of market volatility and comfortable taking some risk to make a return, do see a financial advisor for guidance. If you are looking to save for a few years for things like a down payment for a home, it is still in your favor today to put it into a 1 or 2 year GIC. With rates up to 5.35% (at time of writing) on a 1 year term, it is a no brainer considering there is no risk of losing your principal capital.

Don’t just go to your bank for GICs, as not all GICs are equal. The Big Six banks won’t be as competitive as some other institutions like Tangerine and EQ Bank, offer more competitive rates. Make sure to confirm that the GIC you are purchasing is protected by Canada Deposit Insurance Corporation (CDIC), a federal Crown corporation funded by its member institutions, including the Big Six banks. 

Don’t forget that you can also invest in to a GIC through registered accounts like RRSP(registered retirement savings program) or TFSA(tax free savings account), which can either give you a tax deduction up front(and is tax deferred until withdrawal) or provide a tax free growth opportunity respectively. Depending on your goals, whether it is for your down payment on a new house or purchasing a new vehicle, the type of registered account used matters greatly.

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