It appears that last year’s stock market volatility has taken its toll on investor confidence, sending many scurrying back to basics. The lowly Guaranteed Investment Certificate is enjoying a surge in popularity, according to one bank.
A review by RBC Branch Investments revealed Canadians are shifting to more conservative investments for 2012.
“In an uncertain economy, our clients have made more diversified investing a priority,” said Michael Walker, vice-president and head, branch investments, RBC. “What’s interesting is their move from one specific investment type like mutual funds to a diversified investment mix across longer term mutual funds, GICs and investment savings.”
The resurgent GIC is attributed to a combination of global uncertainty, a desire for higher yields available in longer term GICs and the view that interest rates will remain unchanged for the near term.
The review also found that investors are contributing to their RRSPs earlier than the usual two month mad dash before the deadline.
“We’ve seen many clients going back to the basics, recognizing that investing and saving is not just for what traditionally has been thought of as RRSP season, with good growth in regular contributions throughout the year,” said Walker.
According to the 22nd Annual RBC RRSP Poll, regular RRSP contribution plans gained in popularity among Canadian RRSP holders (35%), with almost half (48%) of younger RRSP owners aged 18-34 are using regular contribution plans.
“While we understand that it’s not easy juggling many financial priorities especially during challenging economic times, it is promising to see that regular RRSP contribution plans are gaining in popularity among Canadians,” said Walker.