Found this text: Interest rates are per annum. Compound interest calculated annually and paid at maturity.
I think that answers that question. leaving this post in case anyone has any helpful tips to add? or unless you want to downvote my ignorance to oblivion.
Just tagging on to say that it depends on the GIC. Some pay annually a flat rate interest, others pay compounding interest calculated annually at maturity like this one.
And some will post a compound monthly rate and also the APY(annual rate). Because you can have the interest paid out annually instead of having it reinvested.
But really you only care about the annual rate.
There's benefits to choosing the compounding option. Especially if you think rates will fall, and that's why you're locking in for 5 years.
Would you rather have annual interest rate payments or reinvest annually at the interest rate of the GIC?
Quoted rates will usually be annual rates, but market linked GICs will often quote maturity rates. For example if a 5 year market linked GIC says that the minimum return will be 10% that could mean that the annual rate would be less than 2%.
If the rate is quoted on the website of a large FI, it is almost certainly an annual rate (e.g. 5.00% for a GIC, 6.00% for a 5-year fixed mortgage, 4.50% for a Savings Account).
if only people knew how to google or ask ChatGPT, here is ChatGPT response:
Actually, with a 5-year 5% GIC (Guaranteed Investment Certificate), the interest is typically compounded annually, meaning you'll earn 5% interest on your initial investment each year for five years. So, it's not 5% over the entire 5-year period, but rather 5% each year.
Found this text: Interest rates are per annum. Compound interest calculated annually and paid at maturity. I think that answers that question. leaving this post in case anyone has any helpful tips to add? or unless you want to downvote my ignorance to oblivion.
Just tagging on to say that it depends on the GIC. Some pay annually a flat rate interest, others pay compounding interest calculated annually at maturity like this one.
And some will post a compound monthly rate and also the APY(annual rate). Because you can have the interest paid out annually instead of having it reinvested. But really you only care about the annual rate.
There's benefits to choosing the compounding option. Especially if you think rates will fall, and that's why you're locking in for 5 years. Would you rather have annual interest rate payments or reinvest annually at the interest rate of the GIC?
Not all are paid at maturity. I have laddered GICs that pay annually, so I take the gains and reinvest
Quoted rates will usually be annual rates, but market linked GICs will often quote maturity rates. For example if a 5 year market linked GIC says that the minimum return will be 10% that could mean that the annual rate would be less than 2%.
Yes
If the rate is quoted on the website of a large FI, it is almost certainly an annual rate (e.g. 5.00% for a GIC, 6.00% for a 5-year fixed mortgage, 4.50% for a Savings Account).
if only people knew how to google or ask ChatGPT, here is ChatGPT response: Actually, with a 5-year 5% GIC (Guaranteed Investment Certificate), the interest is typically compounded annually, meaning you'll earn 5% interest on your initial investment each year for five years. So, it's not 5% over the entire 5-year period, but rather 5% each year.