MY PARENTS MADE A STUPID DECISION
Before I came to Canada, my parents bought Guaranteed Investment Certificates (GICs) in Royal Bank of Canada. It is a secure investment that guarantee to preserve your principal, and investors can earn some interest, at either fixed or variable rate, or based on a predetermined formula. This depends on which type of GICs you buy.
My parents bought redeemable-GICs. This type offers investors a fixed rate of return for a specific term, with both principal and interest guaranteed. As I know, RBC will return a part of money once a month. It seems that if people buy GICs, they can easily earn some money by getting the interest. For example, if individuals invest $1000, and the interest rate is 10%, after one year, they can get $1100. However, it is impossible that the interest rates are that high. This is the data about the interest rates RBC provides for GICs investors. Some interest rates are even lower than the inflation rate in BC.
| Term to Maturity |
For Investments of | |||
|---|---|---|---|---|
| $5,000 to $99,999.99 |
$100,000 to $249,999.99 |
$250,000 to $999,999.99 |
$1,000,000 to $4,999,999.99+ |
|
| [%] | [%] | [%] | [%] | |
| 1 to 29 days | n/a(1) | 0.300 | 0.300 | 0.300 |
| 30 to 59 days | 0.500 | 0.600 | 0.600 | 0.600 |
| 60 to 89 days | 0.650 | 0.750 | 0.750 | 0.750 |
| 90 to 179 days | 0.800 | 0.900 | 0.900 | 0.900 |
| 180 to 269 days | 0.900 | 1.000 | 1.000 | 1.000 |
| 270 to 364 days | 0.900 | 1.000 | 1.000 | 1.000 |