{"id":8998,"date":"2022-09-19T11:45:42","date_gmt":"2022-09-19T10:45:42","guid":{"rendered":"https:\/\/cowrywise.com\/blog\/?p=8998"},"modified":"2023-03-12T10:40:41","modified_gmt":"2023-03-12T09:40:41","slug":"mutual-funds-vs-gic","status":"publish","type":"post","link":"https:\/\/cowrywise.com\/blog\/mutual-funds-vs-gic\/","title":{"rendered":"Mutual Funds or GIC: Which is Right For You?"},"content":{"rendered":"\n

Mutual Funds and GIC are two types of investments with different risk levels. If you’re searching for a low-risk investment with a guaranteed return, GICs are a good choice. On the other hand, investors that are willing to take on a little bit more risk for higher earning potential can consider mutual funds.<\/p>\n\n\n\n

What is a GIC?<\/h2>\n\n\n\n

GIC stands for Guaranteed Investment Certificate<\/strong>. It’s a type of investment that gives the investor interest on their money over a specific period.<\/p>\n\n\n\n

The way GIC works is when a bank or financial institution opens an opportunity for the public to invest in them and get a percentage interest in return. e,g, \u201cYou are guaranteed a 5% interest rate for five years when you invest your money\u201d. <\/p>\n\n\n\n

It is similar to a loan actually. You’re lending the bank money and charging them annual interest.<\/p>\n\n\n\n

What is a mutual fund?<\/h2>\n\n\n\n

A mutual fund is a collective investment that pools money from a group of investors to buy a variety of securities like stocks or bonds. This means you have a share or fraction of the different investments purchased. <\/p>\n\n\n\n

Mutual funds<\/a> are a way to make diversified investments and allow investors to have a stake in various investments. Here, the fund manager follows a predetermined approach to purchasing a broadly diversified portfolio of investments.<\/p>\n\n\n\n

Differences between Mutual Funds and GIC<\/h2>\n\n\n\n
<\/td>GIC<\/strong><\/td>Mutual Funds<\/strong><\/td><\/tr>
1.<\/td>GIC has a lock-in period, so you can\u2019t easily access your money.<\/td>There is no lock-in period, meaning you can access your money anytime.<\/td><\/tr>
2.<\/td>GIC is a low-risk investment<\/td>Mutual funds are riskier but have higher interest returns.<\/td><\/tr>
3.<\/td>There are penalties and extra fees for early withdrawal.<\/td>There are no penalties or extra fees. You can buy and sell your unit anytime.<\/td><\/tr>
4.<\/td>They do not require any type of initial fee. The only thing you need to deposit is your money (investment)<\/td>Mutual funds are somewhat expensive because you are paying initial deposits, as well as paying for the service of the funds’ manager among other fees.<\/td><\/tr>
5.<\/td>You won’t have to worry about monitoring or
supervising market fluctuations.<\/td>		The fluctuations are monitored or handled by a funds manager who is an expert in the stock market<\/a>.<\/td><\/tr>
6.<\/td>It\u2019s not a flexible investment option, there are certain agreements put in place.<\/td>There is more flexibility with mutual funds.<\/td><\/tr>
7.<\/td>It\u2019s a good option for low-risk investors because there are almost no risks. <\/td>It\u2019s the best option for medium to high-risk investors because of the volatility of the stock market.<\/td><\/tr>
8. <\/td>GIC is covered by insurance and deposits are insured. Losses can be recovered in the case of bankruptcy.<\/td>There is no insurance. Losses can\u2019t be recovered.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

Similarities of GIC and Mutual Funds<\/h2>\n\n\n\n