GICs are a great way to start investing

When you start hitting the big milestones of adulthood – like starting your first job, paying off your student loan debt, purchasing your first car and home, starting a family and establishing your savings – it might be the perfect time to start investing to have funds saved up for security and retirement. And while the world of investing may seem daunting, it doesn’t have to be. There are some easy options to start investing that are low-risk and still give you a good return.

The basics of investing 

Investing starts when you can put money away each month that you don’t need for expenses. You then commit that money to a fund, stock or bond to be able to get a return. However, it can be scary to put your money in stocks or mutual funds that are at the mercy of market fluctuations – especially when you’re just starting to dip your toes in the investment waters  

Here are some signs that you could be ready to start investing: 

• You don’t have a heavy high-interest debt load, like credit card debt. For the most part, the return on your investment isn’t going to outpace the interest you must pay on your debt, so it’s normally a good idea to pay down debt before you think about investments.
• You have access to emergency savings. The general rule of thumb is to have six months to one year of expenses saved in the event of an emergency. 
• You have a savings goal in mind. If you are still saving up to make a down payment on a property or for a large purchase, you may wish to consider a less risky investment when you’re starting out.  

GICs are a good option for beginner investors 

GICs, or Guaranteed Investment Certificates, are issued by banks and other institutions for a variety of terms usually ranging from 30 days to several years. The principal you invest is guaranteed to be returned to you at the end of the investment term, making this one of the easiest and most secure ways to earn investment income. That said, while GICs don’t offer the highest possible investment returns by their very nature they are an excellent option for first-time investors who are starting on the journey of their investment strategy.  

While you may assume that online trading accounts are for savvy investors only, a lot of investors use them specifically to purchase GICs. Many online GIC options in fact offer higher interest rates than those available from your bank link.  

You have the option of choosing your GIC term, as well as the type of account you would like to have your GIC held in. For instance, you can choose to have your GIC held in a registered, tax-deferred account like a TFSA or RRSP, or you can opt for a non-registered account.  

As you move forward with your investment strategy throughout your life and make more income, you will want to diversify your portfolio. Regardless, you will likely always want to hold a portion of your investments in a secure option like a GIC.