BMO Term Investments today announced the launch of its new family of BMO RateOptimizer GICs, which offer investors interest rate maximization and protection from reinvestment risk.
The new GICs use an advanced laddering strategy designed to help investors earn higher rates of return sooner.
With a unique “blend and extend” feature:
- investors begin by earning a 5-year interest rate on all of their funds, right away;
- each year, when the investment is automatically renewed, 20% of the investment’s blended interest rate is updated by factoring in the current five-year renewal rate.
Investors now automatically benefit in a rising interest rate environment, as each year 20% of their investment is reinvested at the potentially higher 5-year interest rates. If interest rates actually fall, only a portion of the investment is affected.
Investors can also choose to lock in their rate at any time, providing them with more protection in the event that rates fall.
“The new BMO RateOptimizer GIC is an all-in-one solution — ideal for a long-term, security conscious investor who wants stability, security and performance,” said Julie Sheen, vice president, BMO Term Investments. “This new solution provides all the benefits of a laddering strategy without the need to track and renew multiple GICs and takes the guess-work out of interest rate fluctuations.”
Recent research commissioned by BMO Bank of Montreal and compiled by Sigma Analysis and Investment Management, one of Canada’s leading providers of independent investment research and portfolio management, found that GICs can potentially reduce risk and/or increase returns when included in the portfolios of conservative investors. These findings can help guide conservative investors to build better overall portfolios without compromising the security they’ve come to expect.