Canadian High Interest Savings Accounts

The banks in Canada are much more regulated than those in the United States, making them (and thus Canada’s economy as a whole) a much more stable investing environment. The CDIC, or Canada Deposit Insurance Corporation, protects Canada’s banks and operates in a similar manner to the FDIC in the United States. When one considers opening a savings account, the Interest Rates that the account pays is of prime importance. Interest rates on savings accounts in Canada, similar to in the United States, are very low and most Canadian savings accounts only offer a small yield. However, a good piece of information to be aware of is that online banks in Canada usually offer a higher rate of interest than that of which is offered by traditional brick-and-mortar banks, so investors would be wise to consider investing with an online bank in order to enjoy a better rate of return on their money. These are therefore often known as High Interest Savings Account.

The GIC, or Guaranteed Investment Certificate, is a Canadian investment where the rate of return is fixed over a specified period of time. This investment can be ideal for a person having a low risk tolerance. However, the return on an investment certificate is typically much lower than the pay out of stocks, bonds, and/or mutual funds. The time frame allowed for interest to accumulate is from one day to ten years. The longer the waiting period, the higher the interest rate will be. An individual’s risk tolerance will determine which investment track is the best choice for their portfolio goals.

There are some investment certificates that require you to lock-in your money for a predetermined timeframe; these investments are called unredeemable certificates. Other types of certificates allow the investor to access his/her funds before the certificate matures; investments of this nature are called redeemable certificates. Furthermore, some investment certificates allow you to invest in them in periodic intervals before the maturity date, therefore increasing the value of the certificate.

Also available to investors are variable rate investment certificates. These certificates are directly tied to the Canadian prime interest rate. Another type of certificate, market-linked investment certificates, are linked to stock market performance. Obviously, these two types of investment certificates do not offer the stability of the fixed rate investment certificate. However, higher returns can be earned if the investor is willing to take on the added risk.

Investment certificates should be considered when contemplating your investment strategy, and if you have a higher risk tolerance, then you should not rule out the stock market either. It is important that connect with a knowledgeable Financial Advisor, to ensure that your money is put to best use. However, in the endArticle Submission, the types of investments that an individual invests in will be determined the individual investor’s risk tolerance and portfolio goals.

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