Quebec nurse had to clean up after husband's death in Montreal hospital
On a night she should have been mourning, a nurse from Quebec's Laurentians region says she was forced to clean up her husband after he died at a hospital in Montreal.
Rising interest rates might be bad news for Canadians with mortgages, but it also means higher rates on savings vehicles such as guaranteed investment certificates (GICs), prompting renewed interest in the investments.
Mahima Poddar, senior vice-president and group head of personal banking at Equitable Bank, said GICs haven't been popular in recent years, but with the rise in rates they are now more attractive and demand at EQ Bank, the bank's digital platform, has never been higher.
"I do think we're going to see more and more people going back to GICs," she said.
According to rate-watching website Ratehub.ca, rates for GICs are now north of four per cent, with some offerings for five-year investments reaching five per cent.
And while the annual pace of inflation is outpacing the rates being offered by GICs, the guaranteed nature of the investment may be appealing for investors burned by the downturn in the markets this year.
"When you compare that to a guaranteed five per cent rate with no downside risk, it becomes incredibly attractive," Poddar said.
Naveen Senthamilselvan, director of strategic initiatives at Meridian Credit Union, said GICs in the spring of last year were sitting at one to 1.5 per cent, while today they are paying four to five per cent.
However, he said it is still important to work with an adviser to make sure you have the right option because GICs can vary as to how easily you can access the money and your rate of return.
"That's what you really need to understand and speak to your adviser about. What are my options and what really suits your needs as an investor. Do you need the money in six months, do you need that flexibility. Are you OK putting a portion of your GIC into a fixed non-redeemable for a longer term," he said.
"You want to be informed when you're making that final decision."
Depending on what you choose, they can be cashable or non-redeemable for a term that you decide on, with redeemable options generally paying a lower interest rate. The length of the term can also vary, with longer term options generally offering higher interest rates. Payout schedules for the interest can also differ between offerings.
Senthamilselvan said a lot of investors are looking at a laddered strategy that has a portion of their money in GICs reaching maturity each year giving them the option to reinvest or reallocate some of their overall investment each year.
Aarash Rafiaie, a financial planner at RBC, said it is important to understand what you need the money for because that will guide how the money should be invested.
"I think the majority of Canadians need to plan more now than they probably did in the past, especially since we're seeing volatility in not only equity markets but also interest rate," he said.
Rafiaie said GICs can be a great source of secure income, but depending on the option they may not be redeemed as easily if you need the cash when you compare them to a bond or a dividend paying stock. However, he added that GICs are more secure than bonds or stocks, which can fluctuate with the market.
"There tends to be more volatility in equity-based investments in general and even in bonds than there would be in the GIC world because you have a set rate, a set time frame, you know and that's it, but the risk could be that you might not beat inflation," he said.
Poddar added that it is important to shop around when looking for a GIC because the rates will vary between institutions and to stay on top of them as they come up for renewal to ensure you are always getting the best rate available.
"You will see quite a big variance in rate," she said.
This report by The Canadian Press was first Aug. 11, 2022.
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