If your GIC is reaching maturity, deciding how to use the money can be confusing. Failing to allocate the funds properly can result in disappointment and costly errors from improper investments. To ensure your money is handled correctly, continue reading below where the steps to take are outlined in detail.
1. Consider Current Needs
Prior to pulling out the money from the account its recommended for investors to consider their current needs. If the money could be used to fund immediate needs such as: housing or mortgage payments, food, medical bills or debt it may be best to allocate a portion of the funds to cover these costs.
This can prevent the need to pay additional bank fees or interest rates if the bills are not paid off immediately. Given the cost savings that it provides investors should also consider their financial needs in the near future to determine if they’ll need to use the money in the coming years.
2. Renew the Investment
When a GIC reaches maturity, it’s also recommended that investors to consider renewing its terms. It’s important to note that most banking institutions will automatically renew an investment with their organization which is why it’s critical to be vigilant and read the fine print of the investment contract.
Otherwise, failing to understand the terms and conditions can result in disappointment if you don’t want to renew and you don’t give the required notice. Finally, it’s also suggested to research different financial institutions as a way to confirm renewing with the company gives you the best rate possible.
3. Re-Invest in a Different Account
Another option that investors should consider when their GIC reaches maturity is to re-invest the amount in a different type of account. Investors that are wanting to re-invest should take the time to consider the variety of options including: stocks, bonds, mutual funds, or exchange traded funds. However, investors should be careful seeing as some options may be more volatile when compared to a standard GIC account because the initial investment may not be protected.
Inexperienced investors are at risk of losing the initial amount if the investment doesn’t perform as well as they thought. Although this potential loss can deter some from using an alternative account the volatility also increases the chance of earn more money that standard accounts. Given how unpredictable some investments can be its best to speak with a trained financial professional who can advise on the best account for you.
4. Cash in the Amount
Once the initial investment reaches maturity investors can choose to pull the money out of the account by cashing it in. This option is recommended for those in need of immediate funds seeing as the money can be directly deposited into a bank account or provided in a cheque by the bank. Having this immediate access to the funds enables the account holder to freely use as much of the money as they’d like without having to incur costly bank fees from cashing in early. Plus, if the full amount isn’t used the remaining balance can be re-invested in another account.
5. Speak to an Advisor
The final step that investors should take when their GIC reaches maturity is to speak with a financial advisor. A financial advisor will be able to assess the state of your current finances and accounts. Based on their assessment the advisor will be able to provide honest advice about the money and how it should be spent to ensure your funds are managed correctly.