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Mutual Funds or GICs


A diversified portfolio is always a better solution. If your definition of risk only considers future value of investments compared to the initial investment, mutual funds may be risky because future value can’t be guaranteed. The general purpose of most investments is to cover future expenses such as retirement or post-secondary education, which are subject to inflationary increases, so consider inflation a risk factor when assessing the suitability of an investment.

The average five-year GIC rate for the 10 year period ending December 31, 2014 was 2.28% while average annual inflation was 1.81%. This means GIC investors made only 0.47% annually, after inflation. S&P TSX Composite Index provided average annual returns of 4.7% for the same period. After adjusting for inflation, market-based investments provided returns of 2.89% annually - over six times more than GICs.

Whilst GICs can guarantee principal and return of an investment, investing in GICs alone, can increase the likelihood that investors long-term financial objectives may not be met.


Mutual funds, other securities and securities related financial planning services are offered through Credential Securities, a division of Credential Qtrade Securities Inc. Credential Securities is a registered mark owned by Aviso Wealth Inc. Mutual funds and related financial planning services are offered through Credential Asset Management Inc.

Unless otherwise stated, mutual funds, other securities and cash balances are not covered by the Canada Deposit Insurance Corporation or by any other government deposit insurer that insures deposits in credit unions.


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