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A non-redeemable GIC (or Guaranteed Investment Certificate) is an investment product that offers higher interest rates in exchange for a less flexible redemption contract. With this type of GIC, you must pick a set time period to lock your investment in for and agree to pay a penalty if you take your money out before your GIC matures.
Find out more about how non-redeemable GICs differ from cashable GICs, and learn how to compare products to find the best fit for you.
A non-redeemable GIC is a Canadian investment product that offers a guaranteed return over a set term. The terms for redemption on this type of GIC are often quite strict, meaning you won’t be able to withdraw funds until your investment matures. If you do need to take out money early, you’ll usually have to pay a fee or penalty.
The main benefit of non-redeemable GICs is that they generally offer higher interest rates than cashable GICs. That being said, you should make sure you can commit to the full term of your GIC because you may lose the interest you earned on your funds and have to pay an additional fee if you take your money out early.
A non-redeemable GIC may be an appropriate choice if you don’t mind locking your funds away for a set time period. You can decide in advance how long you can commit to, with terms ranging from 3 months to 10 years. If you need fast and easy access to cash and don’t want to pay a fee for early redemption, a cashable GIC is probably the best fit for you.
Non-redeemable GICs are a low-risk and reliable investment option. They offer a guaranteed return while also protecting the principal you invest. This means that if you put $5,000 into a fixed rate GIC over 1 year at a 2% interest rate, you will earn $100 in interest. And you’ll get this money back (plus your principal of $5,000) when your investment matures.
While non-redeemable GICs are less flexible than cashable GICs, they offer interest rates as much as 1-2% higher to compensate. These GICs can be a good fit if you have spare cash sitting around that you want to earn a higher return on. For example, perhaps you received a surprise inheritance that you want to start collecting interest on straight away and you haven’t yet decided what you want to do with that money in the long-term.
If you choose to go with a fixed rate GIC instead of a market-linked GIC, you can also use non-redeemable GICs to balance risk in your portfolio, given that they protect your cash from fluctuations in the stock market and offer a guaranteed return on principal.
Non-redeemable GICs can be compared using a number of different features:
Non-redeemable GICs are relatively low-risk investments but there are a couple of drawbacks you should watch out for.
A non-redeemable GIC is a suitable option if you’re looking for a low-risk investment with a guaranteed return. They are best suited to investors who won’t need to access their money in the near future. Find out more about how these products work and learn how to compare providers to find the best deal.
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