bowvalleycu - Term Deposits

Term deposits (aka Guaranteed Investment Certificates or GICs) are what you would think: a guaranteed and secured way to grow your money. It doesn’t get much better than that. Term deposits are risk-free and can help you grow your investment portfolio or save for a specific goal.

Our Term Deposits come in a wide range of terms and interest rates to fit your investment needs and are designed to give you peace of mind. They:

Have a set rate of return so you can calculate exactly what your investment outcome will be.
Have a variety of terms and rates to choose from.
Can be bought on their own or within a registered plan.
Are protected by our 100% deposit guarantee (all principal and interest is 100% guaranteed by the Credit Union Deposit Guarantee Corporation, excluding common shares, investment shares, and mutual funds).

Redeemable

These Term Deposits are all about flexibility. Their terms and rates can be different, but the bottom line is that you’re able to get our money back before the term is up if that’s what you want to do.

Non-Redeemable

These Term Deposits have fixed terms and better rates. You money is locked in for the duration, but with so many options for how long you would like to invest for, you are the one making the big decisions.

Short-Term

Earn interest while enjoying the security of investing funds for less than a year. If you have a goal you're saving for and you don't want to access your savings, a GIC may be a better option than a savings account.

Rate-Lifter

This offers a fixed interest rates that increase every year for 3 years. The average of all the rates will equal the total yield of the interest you earn. The longer you keep your money locked in, the more interest you’ll earn.

Redeemable

Non-Redeemable

Short-Term

Rate-Lifter

While there are many benefits, you should consider them in the context of your overall investment and tax management strategy.

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Registered Terms
You can hold Terms in your registered accounts, like TFSAs, RRSPs, and RRIFs. Like other registered investments, you don’t pay tax on your earnings until withdrawal (with a TFSA you don’t pay tax even then). Your money grows tax-free and you can still get the benefits of various GICs – like guaranteed interest, escalating rates, or the option to cash out every year. One thing to remember – the contribution rules of these registered accounts still apply.

Non-registered Terms
Non-registered Termsaren’t sheltered from taxes – you pay taxes on the income generated by the account each year. On the plus side, you aren’t limited by any contribution rules, so a non-registered GIC can be a great place to invest your money if you’ve already reached the maximum limits set by accounts like your RRSP and TFSA.

One of the ways you can get the most out of Term Deposits is by laddering – you divide your investment into different Terms instead of locking in to one long-term investment.

Here’s an example of how it works: Divide your initial investment by five. Invest each of those smaller amounts in separate Term Deposits: 1-year, 2-year, 3-year, 4-year, 5-year. Then, when each term matures, you can access some of the money if you need it or reinvest in a GIC with a 5-year term. As long as you follow this pattern, you’ll have a GIC that matures every year and your overall annual return will likely be much higher than if you were investing in GICs that mature at the same time.

This gives you flexibility, security, and higher returns.

Some people wonder why they should bother with Term Deposits – the interest doesn’t seem like much compared to the potential returns of investing in something like stocks. Also, since Terms are a low-risk option, people sometimes assume that they’re only good for investors with low risk tolerance.

GICs are good for everyone. The interest rates may not seem like much, but they’re guaranteed – something that can’t be said for the stock market. Plus, the longer you keep your money invested, the more guaranteed interest you’ll earn. As for risk tolerance, if you’re interested in pursuing higher risk investments, a Term Deposit (or more) can balance out the overall risk to your portfolio.