GICs

[GrooveTunes]

Every financial book I've ever read said the same thing, GICs are for yer gramma. If you want to lose against inflation, go ahead, make a banks day and park your money in a GIC.

But a GIC doesn't have a tenant calling you to say the dryer caught on fire either. (Yes, that happened to me.)

Might check this out myself.

http://www.bmo.com/returnenhancinggic/?BMO_VSC=RIP%5EDISPLAY%5EE13355%5Een&BMO_VSC_ADV=apb00030%5Easi014ba%5Ease0aa0c%5Ef0000007%5Ead0030a5

[Merry]

ING offers 5 year GIC's at 2.25% which, if we assume an inflation rate of 2%, is slightly higher than inflation. So, if this product is purchased within a TFSA it means you can protect your principal and keep up with inflation at the same time. And given the current economic environment I think that's a good thing.

The stock market is very volatile right now, so I'm reluctant to park too much of my money there. And the mutual funds I've held for over 20 years have not shown me an overall good rate of return. Some have gained while others have lost, and at the end of the day they haven't done all that much better than my GIC's have over the same time period. (Bearing in mind that money I put into GIC's at the same time as the money I put into mutuals has, over the years, earned over 6% at times).

So, for me, GIC's have been a very important and necessary part of my overall portfolio and consequently I continue to buy some every year, despite the current low interest rates. I think the key to overall financial success is diversification, and GIC's are part of the diversified package. I was certainly very, very grateful to have them when the stock market crashed a few years ago.