Guaranteed Investment Certificates (GICs) are a great way to save, safely, for the future. GICs are a financial products that allow Canadians to invest their money over a set term (typically one to five years) and earn a guaranteed set amount of interest, which is paid out along with the return of the principal investment, at the end of the term.
There are two types of GICs in Canada – registered and non-registered. Registered GICs are registered in one of Canada’s savings deposit accounts (RSP, RESP, RIF, etc.). Non-registered GICs are not invested in one of these accounts.
In this article, we will be looking specifically at non-registered GICs.
Why invest in GICs?
There are many reasons someone may choose GICs over other investments. The biggest advantage they have over others is that they offer a guaranteed return. Your money is completely safe when placed in a GIC, and your principal investment is given back in its entirety – along with the interest earned – at the GIC’s maturity.
However, the money placed inside a GIC cannot be accessed until the maturity date. If an investor thinks he or she might need access to the principal amount sometime before that date, they may be better served with something like a high-interest savings account.
The best GICs in Canada
We’ve assembled a list of the best GICs in Canada, based solely on rates. Below, you will find two for each category from one year to five years: The best GIC offered by a bank and the best GIC offered by a credit union.
Banks vs. credit unions
Before we dive in, let’s take a look at the differences between a bank and credit union.
Credit unions are financial cooperatives that are locally owned and count their customers as members. Their model is not-for-profit – unlike banks – that gives back to its members by reinvesting profits back into their businesses and issuing dividends to members.
A credit union’s board is run by volunteers and each member, regardless of deposit size, gets a vote in business matters.
Banks, meanwhile, operate as for-profit businesses. These include the big-five (Scotiabank, TD Canada, Trust, Canadian Imperial Bank of Commerce, Royal Bank of Canada, and Bank of Montreal), along with dozens of other, smaller entities. Investors in banks don’t have to be customers and board members are elected by shareholders.
If you want to take a deeper dive into what differentiates the too, check out our blog post on banks vs. credit unions.
Now, without further ado, let’s take a look at the best non-registered GICs in Canada – from both banks and credit unions.
The best one-year non-registered bank GIC in Canada
Oaken Financial currently offers 3% on its one-year non-registered GIC. That’s good for a first-year return of $150 with an investment amount of $5,000.
The best one-year non-registered credit union GIC in Canada
Implicity Financial’s one-year non-registered GIC also has a rate of 3%.
The best two-year non-registered bank GIC in Canada
Oaken Financial, once again, reigns supreme with its two-year GIC. It offers a rate of return of 3.15% — that’s good for a total return of $315 on an initial investment of $5,000.
The best two-year non-registered credit union GIC in Canada
MAXA Financial offers the best two-year GIC with a rate of return of 3.15%. An initial investment of $5,000 would earn $315 in interest.
The best three-year non-registered bank GIC in Canada
In what seems to be a trend, Oaken Financial’s three-year GIC is currently the best currently offered by a bank. It offers 3.3% — good for a total return $495.
The best three-year non-registered credit union GIC in Canada
Implicity Financial’s 3.15% three-year GIC is good for the best credit union rate currently offered in Canada. It will give you a total return of $473.
The best four-year non-registered bank GIC in Canada
Surprise, surprise. It’s Oaken Financial with the best four-year GIC in Canada. It offers 3.35%, which would return a total of $670.
The best four-year non-registered credit union GIC in Canada
Once again, Implicity Financial offers the most competitive four-year GIC with a rate of 3.4% (good for a $680 return).
The best five-year non-registered bank GIC in Canada
It’s a clean sweep for Oaken Financial, as it offers the best five-year GIC in Canada. At a rate of 3.4%, an initial investment of $5,000 will earn a return of $850 at maturity.
The best five-year non-registered credit union GIC in Canada
And, finally, we have our winner for the best five-year non-registered GIC currently offered by a credit union.
Well, winners, to be more accurate. Both Implicity Financial and MAXA Financial offer rates of 3.5%; both would earn $875 at maturity.