A guaranteed investment certificate is a form of investment that involves depositing a sum of money that will earn you interest after a specified period of time. It is a security for your investments sold by trust companies and banks in Canada. The rates of return are fixed and the risks are generally low. Given that there are other financial institutions that want you to deposit with them, a broker becomes appropriate to help you get the best GIC rates. Below are some roles that a GIC broker plays.
1. Help one to get the best possible rates
A GIC broker is equipped with enough knowledge about interest rates from various financial institutions and this makes them eligible to help people who want to make deposits to look for the best interest rates around. Their primary role is to ensure their clients enjoy the best rates offered by financial institutions.
2. To conduct research
Since it is a broker’s responsibility to ensure their clients get the best GIC rates, they consequently have to have that information meaning they search for those rates at banks, insurance companies and credit unions as well. It is fundamental for a guaranteed investment certificate broker to search for those rates and have that information.
3. They help to spread your risk
Making a deposit with a substantial amount of money gives a broker a responsibility above making sure you get the best rates. They are supposed to also make sure that your finances are guaranteed with a guaranteed investment certificate insurance. Buying GICs from only one financial institution can limit the level of protection that you get. Investing in more than one financial institution ensures that more money is secure. If you have say 500,000 dollars that you wish to invest in a given bank in Canada, the deposit insurance corporation can only protect the first 100,000. A broker would help you spread the risk by depositing in five banks. This way, all of your money is guaranteed.
4. They deal with lots of clients
GIC brokers are dealing with many clients and this works to their favor because they are pooling resources to help them get the best interest rates. You know your money is safe because a GIC broker generally has a higher bargaining power than any given individual with respect to the amount they invest. As an individual, you might want to invest a thousand dollars whereas a broker can multiply that investment by a hundred and get a better interest rate.
5. They help you to save
GIC brokers help one to save. On the short term, they offer savings accounts that actually yield a lot. In addition to working with individuals, they also work with small businesses. These roles indicate that it is of importance to have a GIC broker