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When should you invest in a GIC?

February 16, 2023
min read

GICs allow you to to earn interest without worrying about the ups and downs of the stock market. But are they right for you?

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Nervous about investing in the stock market? If only there was a way to grow your savings without any risk…

That’s what GICs are for!

A guaranteed investment certificate takes the stress out of investing. With a GIC, you’re guaranteed to get your investment back, plus the interest you’ve earned.

Not only is your initial deposit guaranteed, but your interest rate is, too.

When you purchase a GIC, you can’t withdraw the money until the end of the term. It's locked in until the GIC reaches maturity.

With interest rates on the rise, GICs are rising in popularity. Are GICs a good fit for your savings goals? We’re exploring the benefits of GICs and when you might choose to purchase one:

How Do GICs Work?

When you buy a GIC, you agree to loan your money to a financial institution for a defined period of time.

As payment for that loan, the institution will pay you interest on your money.

You select the length of time that your money will remain in the GIC. A 1-year GIC matures after 1 year, and so on.

To buy a GIC, you must make a minimum deposit of $1,000. If you’re under 22 years old, you can deposit a minimum of $100 into a GIC.

At the end of your term, you’ll get back your principal (the money you put into the GIC), along with the interest you’ve earned.

When your GIC reaches maturity, you can either have your funds paid out to your account or renew the GIC into a new term.

The Benefits of GICs

Is a GIC right for you? To help you decide, we’ve listed the main reasons why some members choose GICs:

Deposit guarantee

Your money is safe with us. At Cambrian Credit Union, all deposits are guaranteed without limit by the Deposit Guarantee Corporation of Manitoba.

The DGCM ensures that all deposits have a 100% repayment guarantee, including the interest you accrue on your GIC.

Most banks only insure investments up to $100,000. At Cambrian Credit Union, 100% of your account balance is protected.

Regardless of market conditions, you can rest assured that your deposit is safe.

Fixed interest rates

Do fluctuating interest rates stress you out?

With a GIC, it’s not just your principal that’s guaranteed—your interest is, too.

A fixed interest rate means you’ll know exactly how much interest you’ll earn on your GIC.

From the start of your term to the very end, your rate will remain the same. No matter how the market performs, it will not increase or decrease in value.

Higher returns than a savings account

GICs often have higher rates than high-interest savings accounts do.

Our GIC rates are among the best in our local market. Check out Cambrian’s GIC rates!

Flexible terms

Do you have a short-term savings goal? If you need to access the money within the next 1-5 years, you’re probably looking for an investment option with minimal risk.

At Cambrian, we offer GIC terms that range from 1-5 years; you can choose one that’s the right fit for your savings plans.

In general, the longer the term, the higher your interest rate is.

If your GIC term is longer than 1 year, you can have the interest paid out every 12 months or leave it to compound annually.


Do you find it tough to resist temptations when you’re saving up for a big purchase?

GICs are a way to protect your funds—you can think of them like a forced savings account.

Once your money is in a GIC, you can’t withdraw it until the maturity date. That will help you take pause the next time you’re tempted by an impulse purchase.

Shield your money from inflation

Each year, inflation makes goods and services cost more, from groceries to gas.

This means that year after year, your money is worth slightly less. Over time, inflation can erode your purchasing power.

You want to grow your savings—not let inflation shrink them! A GIC can help you keep up with inflation.

How Are GICs Taxed?

Any interest you earn through your GIC is fully taxable.

GIC interest is taxed at your marginal tax rate. This is the same rate that your personal income is taxed at.

Your tax rate is determined by your total income for the year. The more money you make, the more you’ll pay in taxes.

You are required to report GIC interest on personal income tax return. Your financial institution will issue a T5 stating the interest earned.

There’s one exception to this rule—and that’s if your GIC is held in a registered savings account.  In this case, your interest is sheltered from tax until such time as it is withdrawn.

What kinds of registered savings accounts can you hold your GIC in?

Looking to reduce the tax you pay on your GIC? You can do that by adding your GIC to a registered savings plan.

Simply add your GIC to an RRSP, RRIF, or TFSA to defer or save on taxes.

With a tax-free savings account, you won’t pay taxes on the interest you earn.
With a registered retirement savings plan, your contributions will reduce your taxable income, and you’ll only pay taxes when you withdraw the funds.
With a registered retirement income fund, you can defer taxes until you withdraw the money. You’ll set up monthly withdrawal amounts for the term of your GIC.

Are GICs Right For You?

When you’re trying to choose between different investment options, ask yourself this: How long do you plan to invest your money?

As long as you’re planning to save it for one year or more, a GIC can be a secure way to earn interest without any risk.

A GIC may be right for you if…

  • You value the security of your investment above all else
  • You don’t need to use the money in the account for at least 1 year (or however long your term is)
  • You want to take advantage of the high interest rates currently being offered
  • You have a short-term savings goal

Something to keep in mind with GICs is that in a way, you’re paying for peace of mind.

If you invest in the stock market directly, you could get a higher return if conditions are favourable.

But you could also lose money if the market goes down.

With a GIC, you may get a lower return than you would have with a different investment product. However, you’ll be safe from any risk of losing money and earn a guaranteed interest rate.

Purchase a GIC with Cambrian Today!

Cambrian members can buy GICs directly through their Online Banking account. Simply log into your account, and you can purchase a GIC through your dashboard.

We offer GIC Rate Climbers, which allow you to take advantage of the 5-year rate, but still redeem your GIC on each 12-month anniversary date if you choose.

Want to talk through it with one of our advisors first? We’re always happy to help. Book a meeting by video or in-person at one of our Winnipeg or Selkirk locations today!

Today’s Rates

*All rates and yields subject to change without notice.
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