As a young adult, you may have heard the phrase “investing in the stock market” many times, but you may not be sure what it means. Investing in the stock market means buying stocks, which are shares of ownership in a company. Stocks can be risky investments because their value can go up or down quickly, depending on various factors, such as economic conditions, company performance and investor sentiment. Therefore, investing in the stock market can be intimidating, especially if you are risk averse or have limited knowledge of the market.

A safer and less volatile alternative to investing in the stock market is investing in Guaranteed Investment Certificates (GICs) through your credit union or bank. GICs are financial products that offer a fixed interest rate and a specific term. GICs can be a good investment option for young adults who want to earn a guaranteed return on their money.

Here are some reasons to consider investing in GICs:

1. Guaranteed Returns: Unlike stocks, which can fluctuate in value, GICs offer a fixed rate of return that is guaranteed by the issuing credit union or bank. This means that you know exactly how much interest you will earn on your investment, and you can calculate your return in advance. This predictability can be comforting for young investors who are looking for a stable investment option.

2. Government Insurance: Most GICs held in credit unions are protected from up to $100,000 to unlimited, depending on the province. Most GICs held in banks are protected up to $100,000 by the Canada Deposit Insurance Corporation (CDIC).

3. Low Risk: GICs are considered a low-risk investment because they are not affected by market fluctuations. Unlike stocks, which can go up or down based on economic conditions, company performance or other external factors, GICs offer a fixed rate of return regardless of market conditions. This means that your investment is not exposed to the same level of risk as stocks, which can be comforting for young investors who are just starting to build their portfolios.

4. Variety of Terms: GICs come in a variety of terms, ranging from a few months to several years. The longer the term of the GIC, the higher the interest rate tends
to be. This means that young investors can choose the term that best fits their financial goals and investment timeline. For example, if you are saving for a short-term goal, such as a down payment on a house, you may choose a GIC with a shorter term, such as six months or a year. If you are saving for a long-term goal, such as retirement, you may choose a GIC with a longer term, such as five or 10 years.

5. Easy to Open: GICs are easy to open and require minimal effort from the investor. To open a GIC, you simply need to find a credit union or bank that offers GICs, choose the term and interest rate that you want, and deposit your money. Unlike stocks, which require research and analysis, GICs do not require any special knowledge or expertise; however, it is essential to do your research and choose a reputable institution with competitive rates and terms that suit your investment goals.

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Investing in Guaranteed Investment Certificates can be a safe and reliable alternative to investing in the stock market for young adults. GICs provide a guaranteed rate of return, are backed by insurance backed by the government, and offer a predictable income stream. They are ideal for those who are risk-averse or who prefer a steady income stream. By investing in GICs, you take a step towards securing your financial future and achieving your long-term investment objectives.