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My advice • April 04, 2023
modified on April 10, 2023

ActionGICs: where safety and performance converge

Yes, you can invest in the stock market without putting your capital at risk!

Businesswoman standing in office. Portrait of a confident businesswoman.
portrait of Najat Chabi Najat Chabi, Private Banker at the Saint-Leonard and Anjou branches.

When shopping around, you’re going to seek out an investment that’s a good fit for your profile. If you’re in the market for more safety and higher returns, you should know that there’s an investment option out there that might just be the perfect fit for you. Armed with its one-of-a-kind features, a market-linked GIC—referred to as an ActionGIC here at Laurentian Bank—can get you the best of both worlds. Laurentian Bank’s Najat Chabi is a Senior Private Banker, so it’s her mission to optimize her clients’ finances. Keep reading as she explains what an ActionGIC is, exactly, and what it can do for you.

What’s an ActionGIC, exactly?

With ActionGICs, the principal—the amount of money you initially invest—is 100% guaranteed. Returns, however, are tied to market performance, and any interest earned at the end of the investment term is calculated using a reference index, which is also known as a stock market index.1

At Laurentian Bank, reference index stocks are based on returns, reliability, and diversity. “Our experts regularly monitor stock market index performance and adjust periodically for higher return potential,” explains Najat.

The importance of diversifying your investments

To be sure that an ActionGIC is a good option for you, it’s important to know your investor profile first, which basically means having a solid grasp of your investment goals, risk tolerance, investment horizon, financial and personal situation. Once that’s done, go on a fact-finding mission. “It’s important to learn about all the investment options available so that you can make the right choices for you and invest with confidence,” Najat tells us.

Given today’s economic landscape, diversification is more important than ever. Najat advises her clients to vary the contents of their investment portfolios as much as possible. That might entail, for example, opting for a blend of ActionGICs and fixed-rate GICs, which will provide a certain level of guaranteed returns and leave room for higher return potential at the same time, depending on stock market performance of course. You can also diversify your investment terms, which will give you more flexibility and open the door to more opportunities.

Who’s the right fit for an ActionGIC?

ActionGICs are an excellent option for several kinds of investors, depending on what their goals are,” says Najat. “You need to be okay with a certain level of risk, since they’re tied to the stock market. Even though it’s rare, an ActionGIC may provide negative or zero returns. In such cases, your principal will be protected, but you won’t earn any interest, unfortunately.”

There are many reasons to make ActionGICs a part of your investment strategy. Keep reading for two illustrative real-life case studies.

1st Case Study: Protecting an inheritance

When her mother passed on, Ashley2 inherited $200,000. Although she would normally invest in mutual funds, it was important for her to protect her mother’s money, since she had worked so hard saving for it. That said, Ashley was also interested in benefiting from the returns possible when you invest in the stock market. After discussing goals and reviewing Ashley’s investor profile, Najat proposed an ActionGIC—the perfect balance between her client’s desire to protect her mother’s principal and take advantage of solid return potential.

2nd Case Study: Investing the proceeds from the sale of a second home

After the sale of her cottage generated a profit of $250,000, Jessica2 wanted to buy a car and invest the rest—but prudently. “I suggested that she set aside the amount allotted for the car in a high-interest savings account, which would earn her interest while still giving her access to the funds whenever she wanted,” explains Chabi. “For the remainder, I advised her to invest a portion in fixed-rate GICs to guarantee returns, and another portion in ActionGICs to tap into the earnings potential offered by the stock market.”

Our ActionGICs: invest in Canada, without all the risk.

At Laurentian Bank, we have ActionGICs that can take your savings to the next level and support the Canadian economy at the same time. You can choose to invest in Canadian or local businesses—or keep it to companies that are environmentally responsible. The choice is yours.

Every individual is, well, an individual, with goals that are unique to them. That’s why our advisors are standing by to help you determine whether ActionGICs are the right fit for your investment portfolio. If you decide that they are, your advisor will be able to help you choose the ActionGIC that will help bridge the gap between you and your goals. Reach out today!

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