GICs, Bonds and High-Interest Savings Accounts – How do they compare right now?

Jean Hénault, Portfolio Manager with TWM Group at iA Private Wealth presents our video. You can also see this video in French presented by Nader Hamid by clicking here

GICs have been a topic of interest over the past few months. With higher rates, investors now have more options. One question we often get is: Should you lock your money into a GIC at current rates?

What is the best option for the conservative portion of your portfolio?

Let’s compare the current yields of GICs, Bonds and High-Interest Savings Accounts.
As we speak, rates on 5-year GICs’ are at around 4.1%, and they were even over 5% a few months ago. This contrasts drastically with the average return of GICs over the past 10 years, which has been as low as 1.86%.

Now, let’s compare this to bonds. This January, a portfolio composed of short-term quality bonds offered a yield of approximately 5.6%.

As a third option, you can keep your liquidity in a High-Interest Savings Account, currently at 4.5%. This is generally good for short-term cash flow needs.

The Key Takeaway?

Although returns for GICs may look attractive for the conservative portion of your portfolio, bonds and high-yield saving accounts currently offer higher yields and additional advantages.

The unprecedented speed of recent interest rate hikes was painful. However, we now have options that haven’t been available to us for a long time. We are moving from an environment of TINA (There Is No Alternative) – where there was no alternative to stocks, to now TARA –There Are Reasonable Alternatives. This sets the stage for building stronger diversified portfolios going forward.

On behalf of the TWM Group, thank you for watching. See you next time.

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Our clients and their families typically have a net worth of $2M or more. If you have an amount under the minimum, we still invite you to get in touch with us to discuss your options.

*Please note that TWM Group does not provide investment advice nor do we solicit or share personal information through public forums or platforms such as social media. Please communicate with us only through official channels like email, the client portal or your portfolio manager.