Is Investing in GIC worth it today ?

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  • Dec 2nd, 2022 2:08 am
Jr. Member
Mar 17, 2015
183 posts
North York, ON

Is Investing in GIC worth it today ?

EQ Bank is offering a 5.50% on GIC (1-year term) is it worth it is given that inflation is at 7%?
7 replies
Mar 17, 2008
456 posts
Cocoboy1993 wrote: EQ Bank is offering a 5.50% on GIC (1-year term) is it worth it is given that inflation is at 7%?
If inflation remains at 6.9% and that matches your personal inflation rate, then the buying power of your investment will be lower a year from now.TFSA is best place. If inflation drops back to 4.1% you might break even. Could come close?

Don't forget that If you hold the GIC in a taxable account, your after-tax yield on the GIC will be lower - at 30% marginal tax rate 3.85% vs 6.9% or whatever the inflation is by then.

There are alternatives like bonds and preferred shares with higher yields, but no guaranty to return your investment. As always, you have to incur risk to possibly earn more.

HISA might be another option, but only if you think interest rates will get a LOT higher over 12 months. Unlikely! I have been using them to delay purchasing GICs and other fixed income, but not for much longer!
Deal Expert
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Feb 8, 2014
27009 posts
Socially Distanced
Assuming you don't need this money can you get higher risk free returns elsewhere?
Your options are basically no interest bank accounts/couch/mattress, savings accounts, GICs or market investments.
In fact in Rand McNally they wear hats on their feet and hamburgers eat people
Deal Addict
User avatar
Jan 11, 2020
4258 posts
Hey, if you can find a better risk-free investment then no...
Can't do shit about inflation really, take the likely guaranteed loss (as we don't know what inflation is as I'm typing this) or take the risk and go into stocks/real estate/commodities. The choice is yours...I did the latter lol...Read too much history to trust cash instruments for the long run. For short-term, sure, cuz risk-on assets are burning right now...It is hoped inflation will go down (so that these yields are meaningful), but you can only see that in posteriority.
Deal Addict
Nov 6, 2015
1134 posts
Guelph, ON
It's definitely worth it if you need the money within a year (5% is better than what you get under your mattress). Not every financial need is geared around beating inflation.