Benefits of holding GICs in RRSPs

GICs are a popular method for Canadians to invest and save. While you can purchase GICs within a number of registered or non-registered plans, purchasing GICs inside your RRSP comes with several benefits, including:

• A safe and secure way to invest your money, as you’re guaranteed not to lose your principal investment amount
• Offering interest over the life of the GIC so you know your rate of return on your investment
• Qualifying investments could grow tax deferred within your RRSP and you only pay tax on the money you withdraw
• Eligibility to be insured by the Canada Deposit Insurance Corporation (CDIC), up to a maximum of $100,000 CAD per CDIC member for each CDIC insured category

Here’s an example of how your investment of $10,000 can grow when you purchase GICs in RRSPs:
If you invested $10,000 in an RRSP over a 3-year term with a GIC paying 1.50% compound interest, you could potentially defer taxes as your guaranteed investment grows by $456.78.

How to invest GICs in RRSPs

GICs are considered a safe, stable way to invest and build your personal wealth, especially in turbulent economic times. TD offers a variety of GICs and Term Deposit Rates.

It’s easy to purchase a GIC in an RRSP:

• Choose the amount you’d like to invest;
• Select the type of GIC you’d like to purchase;
• Select the duration of your GIC.
  

TD GICs are easy to understand, quick to purchase and come with no fees. They are a steady investment choice to help round out your overall investment portfolio. Our GIC Selector tool can help you choose the right investment for your goals.

Can I withdraw from my RRSP early?

The simple answer is “Yes”. However, making early withdrawals† from your RRSP has three major impacts:

• Reduced potential to overall investment returns
• You’ll have to pay tax on your RRSP withdrawals unless you're participating in the Home Buyers Plan or Lifelong Learning Plan and adhere to the repayment schedule
• Permanent loss of RRSP contribution room

^†Early withdrawals mean taking money from your RRSP before it converts to a Registered Retirement Income Fund (RRIF), which must take place by the end of the year in which you turn 71.

Should I invest in a GIC in an RRSP?

GICs are widely considered to be a safe, and stable investment type offered in Canada. GICs offer 100% principal protection with the potential of a return on your investment, based on interest rates and length of the GIC term.

You choose the interest rate available and the length of your GIC term. As a matter of fact, when the economic climate is stormy, GICs offer steady growth over a set period of time. Investing in GICs within an RRSP offers steady, guaranteed growth with the additional benefit of being tax-deferred.

There are also GICs that are tied to the performance of the stock market. Unlike traditional GICs, Market Growth GICs offer both a guaranteed minimum return plus a potential bonus return based on the performance of the underlying stock market linked to the GIC.