GICs vs. Bonds and Liquid Cash

GICs vs. Bonds and Liquid Cash

The value of mutual funds, stocks, and other securities can fluctuate dramatically, but high-quality bonds offer a guaranteed rate of return. They also provide passive income, with low risk, and their value will typically increase at a time when other asset classes are declining.

Guaranteed Investment Certificates are typically a safe bet if you’re concerned about protecting your principal investment. They offer a guaranteed interest rate and redemption value. However, a non-redeemable GIC will be locked in. If you need access to your cash, there is a penalty for early redemption; and you might also lose any interest earned.

Bonds are more liquid. They can be easily cashed out ̶ without incurring penalties. Their value is tied to market conditions, so if interest rates drop, it can increase the value of your bond. Many investors will plan to take advantage of this, selling their bonds before the term expires, to increase their profits.

Bonds offer variable rates of interest depending on whether they’re corporate or government issued. Your Carte Financial Advisor can help you assess the bond you wish to purchase, the rate of return, and the level of risk you are taking.

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