A Secure Path to High Returns
In recent years, interest rates have risen significantly, leaving many of our clients, who are older and risk-averse, seeking safer investment options with guaranteed rates. To cater to their needs, we wanted to be able to shop around for the best rates and provide a more attractive solution. To do this, we partnered with GIC Direct to offer Guaranteed Investment Certificates (GICs).
GICs are investments that provide a secure and predictable return on your money over a set period. They work by locking in your funds for a specific term, during which you'll receive regular interest payments or a lump sum payout at the end of the term. Given the current market conditions, where interest rates have roughly tripled, GICs have become an even more appealing option.
This blog post will discuss Tax-Free Savings Accounts (TFSAs) and how they can complement GICs. Since the interest earned within a TFSA is tax-free, this investment is a powerful tool for maximizing your savings and investment growth. If you've never opened a TFSA and meet the eligibility criteria, you can contribute up to $88,000.
Consider this scenario: You and your spouse are in your 60s and have never had a TFSA. You can deposit $176,000 into your TFSA accounts using your combined contribution room. Note: Most couples name their spouse as the beneficiary of their TFSA; we recommend using a successor owner. This way, if the owner dies, the spouse can roll the TFSA into their own, and it's not considered an overcontribution versus a beneficiary who would simply receive the funds in cash.
As a GIC deposit broker, we pride ourselves on providing better rates than major banks. For instance, popular banks currently offer GIC rates of around 4-5% for a one-year term, non-redeemable. In contrast, GIC Direct (Tune's provider) offers a competitive 5.7% interest rate for the same term. With just a .7% difference, this seemingly small margin translates to a significant $1,232 increase in returns on a $176,000 investment.
If you already have a TFSA and have diligently contributed to it over the years but are now seeking better returns without the market's volatility, GICs can be an excellent alternative for securing wealth and achieving your financial goals.
At Tune Financial, we are unwaveringly dedicated to offering our clients a strong array of options. To do this, we take pride in partnering with numerous investment and insurance companies across Canada. By remaining independent of any single provider, we can present you, our esteemed clients, with a wide range of possibilities, bringing you one step closer to your goals.
