Is it a good time to buy GIC?

I heard from quite a few financial professionals suggesting that now it is a good time to buy GIC because the interest rate has not been so high for a long time.

It all depends on when the person needs the money. If the person got a decade or more, perhaps it is a good time to buy stocks or bonds because both prices are so much lower now.

If someone wants to park the money and wait for further dip of the stock market, GIC doesn’t provide that flexibility though.  It is hard to predict the market bottom anyway.

It is not a good place to save for emergency fund either also due to lack of withdrawal flexibility.

It would be suitable for retirees or who is closer to retirement to buy GIC for several years of living expenses in cash.

Someone shared this experience with me. He just graduated from university and got a stable job in IT with decent income. He saved some money and walked into a bank asking for investing advice for retirement. The financial advisor asked him to fill out a questionnaire to understand his investing profile. When he said that he was afraid of risks, the advisor just suggested him to put all his money in GIC!

Is this a bit robotic? Or misuse the investing profile? How about a little bit financial literacy to educate the client first so that they can make a well-informed decision? He was afraid because he lacked financial literacy.  For a young guy in his 20s who has a stable income and regular savings, he should have very good risk tolerance because he has several decades to save for retirement. Just buy S&P500 index ETF whenever he has extra savings after putting aside some for emergency fund.  The earliest he started investing, the easiest and fastest to achieve his financial freedom thanks to the power of compounding.  I guessed perhaps banks do not have the time or even motivation to teach clients financial literacy.

Everyone is different. We need to tailor the financial decision for each person.  Hope 2023 will be a better year for us.

Published by Worthfy

Financial literacy and counselling

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