Are the returns that you earn on investments important to you? Or is the guarantee of capital and interest what is most important? If the latter describes your investment philosophy, it is safe to say that peace of mind is paramount to you.
Let’s discuss the options: 1) you have capital to provide enough interest earned by GICs (Guaranteed Investment Certificates) and, possibly principal you can dip into if necessary to fund your lifestyle for the rest of your life, and, leave the legacy you wish to your children. If this is the case, you have been happy with returns well below 3% per annum for 1-3 year term deposits for numerous years. The reason you choose GICs may be because you have been burned in the markets previously and you cannot afford to lose more. Maybe you are very leery of the markets and do not want to ‘gamble’ with your and your spouse’s future. 2) you can trade the GIC guarantee for a guaranteed lifetime income, for you and your spouse, or a guaranteed cash value you can access for yourself/spouse in the future. You can access the cash value for any reason - health care costs, travel around the world, or, a guaranteed tax free legacy for your children. Your investment can grow tax free, guaranteed and accessible in the future if necessary. I am talking about insurance, not just life insurance – life insurance only pays when you die, I am talking about annuities and insurance you use as an asset class during your lifetime. Even repositioning a portion of your GICs can make a difference.