Chuck it All and Buy GICs?

It’s possible to make a reasonable argument that the average investor would be better off investing in GICs than stocks and bonds. Unfortunately, David Trahair fails to make this argument well in his book Enough Bull: How to Retire Well Without the Stock Market, Mutual Funds, or Even an Investment Advisor. So, I’ll try to make it for him.

The main argument in favour of investing in stocks is their higher expected returns (called the risk premium) than guaranteed investments like GICs. However, the typical Canadian investor working with a financial advisor is invested in balanced mutual funds (half stocks and half bonds) and pays yearly fees in the 2%-3% range. To these fees we can sometimes add front-end loads and deferred sales charges. On top of that we can add the losses that come from panicking and selling at the wrong times.  Read More…


  1. At the rates being offered at banks i think stock investing is the better way to go

  2. I am guessing $100,000 is more than enough for most people. And my guess is most people that have that much laying around will just make a 2nd, or 3rd account to spread it out insuring them all.

  3. A CDIC insured bank doesn’t mean your money is entirely safe. They only cover up to $100,000.

  4. Mad Hatter: You make a good point about high-interest savings accounts. Relative to brick and mortar banks these internet alternatives have higher interest rates that even rival gics.

    For me a lot of my money is tied up at ICICI bank in their high savings account.

  5. Why go GIC’s when you can just slap down your money into a high interest savings account offered at CDIC insured internet banks such as President’s Choice? there rates equal and sometimes top a GIC.

  6. I have a mix of gic, bonds, and several emerging market funds. I don’t think there is a magic bullet except to diversify.

  7. I’ve read Enough Bull and i agree he doesn’t make a good case into buying guaranteed investments. I think the reason is because stocks usually beat them over longer hold periods (5 years), especially for Index equities.

  8. The problem is GICs don’t pay much in returns as say stocks do in the long-term. Studies consistently show that in the long-term stocks returns beat any other instrument.

  9. BINGO! The killer in investing in the stock market is the rediculous fees one has to pay when buying to and taking out. You’d think the risk getting in was enough but nope, gimme gimme.

    Most of my savings are in GIC and that is good enough for me.

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