If you want to eliminate all uncertainty about your return on investment and the return of your capital, you may find deposit instruments like cash deposits, term deposits or Guaranteed Investment Certificates (GICs) to be the most suitable option.
These instruments are usually issued by financial institutions like chartered banks, trust companies and credit unions. They offer a guaranteed rate of interest payable on your deposit, and guarantee the return of 100% of your deposit at the maturity date. The term between the date of your deposit and the maturity date may be as short as 1 day or as long as 10 years or more. Most terms are 5 years or less, to be eligible for deposit insurance.
Deposit insurance ensures that 100% of your capital will be returned at maturity, even if the issuing financial institution is insolvent or bankrupt at the time of maturity. The main provider of this insurance is the Canada Deposit Insurance Corporation (CDIC), which guarantees up to $100,000 of accumulated value per depositor at each institution. CDIC is reliable because it is funded by the member financial institutions, and has the backing of the Government of Canada. Additional coverage is available for jointly-owned deposits and RRSPs. More information can be found at CDIC’s website at www.cdic.ca.
We act as Deposit Brokers, meaning that we can place your deposits at any of a large number of different financial institutions. You benefit in two ways:
- Institutions offer our clients their ‘wholesale rates’ which are generally 0.5% to 1.0% higher than the rates offered in their retail branches because they don’t have to cover the costs of branch office space and staff.
- Institutions may increase their interest rates on certain terms for a day or two to raise capital for loans they must make in the next few days. Because we can see every rate on offer each day, we can place your deposit with the institution offering the highest rate for the term you want on that particular day.
We are members of the Registered Deposit Brokers Association of Canada, a professional standards association for the industry. For more information, see their website at www.rbda.ca.
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