Generally speaking, a credit union term deposit (also known as GICs) is a sensible investment with very little risk. Using one of our partners as an example, term deposits acquired from Coastal Community Credit Union are fully guaranteed by the Credit Union Deposit Insurance Corporation of BC.
A term deposit works like a savings account. You deposit money into it and earn interest on that money. The difference is that you need to leave your money in a term deposit account for a specified period. If you take it out early, you may have to pay a penalty – depending on the type of term deposit you own.
When you buy a term deposit, you are agreeing to lend the credit union your money for a specified number of months or for up to 5 years. In exchange, your money will earn interest. The longer the term, the more interest you earn. At the end of the term, you get the entire amount you deposited plus the interest.
Better Than Their Reputation
Term deposits sometimes receive a relatively bad rap, which is usually associated with their typically modest rates of return. But wait. In a recent article in The Globe and Mail, highly regarded financial columnist Rob Carrick wrote: “We have a highly competitive market for GICs right now, so much so that big banks have been pushing their rates to new highs.”
In addition to competitive interest rates, term deposits offer several specific degrees of investor reassurance, especially welcome in turbulent times like now. A few of the benefits associated with a term deposit/GIC:
- Low risk, secure & flexible solutions: You can choose the term you want, including a fixed or variable interest rate and you can decide to lock in your money or have the option to access it at any time.
- Tax saving potential: You can reduce your tax liability by holding a term deposit within a Registered Plan, such as a Registered Retirement Savings Plan (RRSP) or a Tax-Free Savings Account (TFSA).
Advice Is At Hand
Everything Retirement partners Interior Savings, Coastal Community Credit Union and Coastal Community Private Wealth Group are available to answer any questions you may have and to advise you on any of your investment choices.
It’s also worth noting that most credit unions offer a wide range of term deposit products, including cashable term deposits, non-redeemable term deposits, personal redeemable term deposits and even market linked term deposits.
Each of these term deposit products have their own unique features and benefits, so you need to talk with your credit union financial advisor to discover how these increasingly sought-after investment products can fit into your portfolio.
