Quote:
Originally Posted by JDMDreams
Surprised no one is talking about this but 1 year gic is 5.8% now, good luck y'all
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While I haven't seen our bank offer 5.8 on a 1-year, I guess the bigger question is why does that matter? A GIC paying you 1.8% when Prime is 2.95% is the exact same as a GIC paying you 5.8% when Prime is 6.95%. People fool themselves into thinking that somehow this world where GICs are 5%+ is a better universe for them since they can safely earn 5%.
The S&P is up 15% this year, and the Nasdaq is up over 30%. Inflation is probably near to double digits, though you can fight about the exact decimal places until you are blue in the face.
Bottom line is locking in a 1-year GIC at 5.8% is a guaranteed loss of purchasing power. In 1-year, it probably won't matter. But if you save in GICs, buying 1 year terms every year for your retirement fund, by the time you get to retirement, you'll be broker than you are today. It's just math.
People dramatically overestimate their risk of losing their capital in equity markets and other types of investment and equally underestimate the devastating effect of not outpacing inflation.
-Mark