How to invest as a teenager in Canada + MORE Mar 13th

Guaranteed investment certificates (GICs) are a no-risk way to invest your money with the confidence that you’ll get back your principal plus interest. Usually, GICs offer interest rates that are better than savings accounts, especially now that the Bank of Canada’s recent rate hikes have boosted their returns. Over the long run, GIC returns may not be as high as those of stocks, but that’s part of the trade-off to avoid volatility.

Right now, GICs are having a moment—and that’s great news for Canadians who want to save towards a goal without risking a loss. Deciding to invest in a GIC is a solid first step, but you might feel like you need more guidance. Here’s how to choose the best GIC for your needs, and how to purchase a GIC at Scotiabank. 

Which GIC is right for you?

A GIC is an investment asset, but it also works like a loan to the bank. It’s how a bank borrows from you. You agree to give the bank your money and in return, they agree to give it back, with interest, on a set maturity date…

Can you write an article on how family RESPs work once the oldest children start to take money out of the plan while for the youngest we are still putting money into the plan?

What are the rules? Can you find one child with more money from the plan than another child? If one child does not go to post-secondary can their funds be used to fund one of the children in the plan?

—John

How a family RESP works

Good question, John. It’s surprising how few people know the withdrawal dynamics of an individual registered education savings plan (RESP), let alone how a family plan works.

Just to bring everyone up to speed, a family RESP is a tax-deferred education savings investment account with annual government grants that has multiple beneficiaries. A beneficiary can qualify for grants of 20% or more of a contribution, subject to both annual and lifetime limits, historical contributions, age, income, and province or territory of residence.

A family RESP is generally opened by parents or grandparents, though technically can be opened by a sibling, however unlikely…

Guaranteed investment certificates (GICs) have always been a convenient and accessible option for Canadians who need a place to park their cash. GICs offer a better rate of return than a typical savings account. And right now, they’re paying out more interest than usual—the upside of Bank of Canada (BoC) rate hikes over the past year.

You can start investing in GICs with as little as $500. In this GIC guide for Canadians, we’ll show you how these versatile investments can help you preserve your purchasing power in the face of high inflation, without risk to your savings.

2022 Income Tax Guide for Canadians: Deadlines, tax tips and more
READ NOW

How do GICs work?

A GIC is a type of investment asset. Buying a GIC is like making a loan to a bank (or another financial institution) for a set amount of time—from as little as 30 days to as long as 10 years—at an agreed-upon interest rate.

How GIC interest rates work: Canada’s rising interest rates have one major upside: higher returns on GICs…

A guaranteed investment certificate (GIC) may seem like your grandfather’s kind of savings product. After all, his generation was fond of similar investment tools, like government savings bonds and treasury bills, and benefited from periods where interest rates were high enough to make these low-risk products quite attractive.

Issued by banks and trust companies, GICs work much like a savings account with interest rates that are slightly higher. The main difference is you promise to leave the funds alone for a set amount of time—usually ranging from one to five years. Your principal is protected by the Canada Deposit Insurance Corporation (CDIC) (or provincial deposit insurance, for GICs with credit unions or trust companies), up to $100,000 per product, in most cases. You can have multiple insured GICs up to $100,000 in each of your RRSP, TFSA, non-registered accounts and joint spousal non-registered accounts at one financial institution, and do the same at another institution as needed to ensure your money is fully protected…

If you’re starting to save the money you’ve received from birthdays, holidays and part-time jobs, you may be wondering how you can invest your savings. An important life lesson for any young person is the habit of saving—so, investing for some teenagers can be the next step. 

In Canada, many provinces have upped their personal finance curriculum content for elementary and high school since I was a kid. Social media also has a lot more information about money and investing, as well as trending content about spending money as well. One word of caution: There may be good non-professional advice out there on social media, but some of it is downright bad. Get qualified advice before making any decisions. 

How to start saving as a teen (or younger, or older for that matter)

A minor —under the age of 18 or 19, depending on the province or territory—will generally need a parent or guardian to be listed on an account as well. A parent or grandparent can open a bank account for a child—even a newborn…