GICs are excellent additions to investment portfolios without taking on additional risk. This blog post looks at where you can buy GICs and how the purchasing process works.

1. What Are GICs?

Guaranteed Investment Certificates are investments that guarantee you’ll receive at least the principal amount you invested. GICs earn interest on a fixed or variable rate. Some GICs also earn interest based on a predetermined formula.

GICs are an investment exclusive to Canadians. GICs have a low-risk profile which makes them an excellent choice for people looking to expand their investment profile without taking on unnecessary risk. In order for you to get the best GIC rates, your success depends on factors such as the length of the term, current interest rates, and the financial institution you purchase your certificate from.

Your initial investment in a GIC is guaranteed to be returned to you unless the financial institution you used goes out of business. The Canada Deposit Insurance Corporation (CDIC) insurances GICs up to a maximum of $100,000 as long as the financial institution you choose is a CDIC member, and the original term is less than five years.

2. Common GIC Issuers

When investing in a GIC, you can use a GIC issuer or GIC distribution channels. GIC issuers are financial institutions that directly deal with GICs.

3. Banks

The easiest and most common place to get a GIC is from your bank. The most common GIC issuers are banks such as Scotiabank, CIBC, Bank of Montreal and other large banks. Any member of the CDIC can issue GICs which includes smaller banks such as the Western Bank of Canada. Smaller banks usually offer more competitive rates.

4. Credit Unions

There are hundreds of member-owned credit unions in Canada to choose from. Credit unions operate as co-operatives and usually offer attractive rates. Going through credit Unions (or Causes Populaires in French communities) is another way you can purchase a GICs.

5. Trust Companies

Trust companies have a lot of similarities with regular banks. Trust companies are federally incorporated and governed according to the Trust & Loans Act. Banks, on the other hand, are regulated according to the Bank Act. Trust companies often include subsidiaries of regular banks such as the CIBC Trust Corporation or insurance companies such as Sun Life Financial. Trust companies are another trustworthy source you can use to purchase GICs.

6. Independent Deposit Brokers

Independent brokers work with a variety of banks, trust companies, and credit unions. Because they do large volumes of business, they usually can offer competitive rates for your GIC. Before selecting an independent broker, make sure they’re a member of the Registered Deposit Brokers Association of Canada. You also need to ensure that GIC Insurance covers the GIC product you buy.

7. Online Discount Brokerages

Online discount brokerages offer you the convenience of making your investments without paying an in-person visit to your bank. Online brokerages often require a blank cheque so they can manually link your bank account to the brokerage. Once you’re connected, you can invest in GICs from the comfort of your home.

8. Banks & Trust Companies

In order to purchase a GIC from a bank or a trust company, you need to open an account and deposit some money into the account. The money you deposit in the account can be used to purchase the GIC. Usually, GICs are bought in person when going through a bank or trust company. They’ll help you decide which type of GIC to invest in and get you to sign a few confirmation forms. After making your initial purchase in person, you can continue to purchase GICs through the bank via their online banking.

All in all, there are a number of different ways to purchase GICs in Canada. Finding the best interest rates for your GIC requires a bit of shopping around. Consult with a few different companies before making your final decision.