January 26, 2023.
With return rates for Guaranteed Investment Certificates (GICs) now above five per cent and interest rates widely thought to have potentially peaked, some investors might be considering locking in those high returns.
But investors should consider the possible opportunity cost of having their money locked up for several years, which is why a short-term GIC might be a preferable option, according to wealth advisors.
“The current GIC environment is enticing for shorter terms,” said Diana Orlic, portfolio manager and wealth advisor at Richardson Wealth’s Orlic Harding Cooke Wealth Management Group.
“GICs are competitive in the one to two-year range and the yields start to drop past two years. Once you are past two years, you are no longer being rewarded for locking in longer term.”