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Dale Jackson

Personal Finance Columnist, Payback Time


Call it the battle for the souls of the next generation of Canadian investors. 

On one side, financial planners are reporting a surge in Generation Z and Millennials in their 20s and 30s adding guaranteed investment certificates (GICs) to their investment portfolios.

On the other side, a new survey by HelloSafe finds 30 per cent of the same age group prefer putting their money in cryptocurrencies, compared with less than 10 per cent from all age groups.

On the risk spectrum, the contrast between the two securities cannot be starker, and the outcome will impact how a generation of Canadians will live in retirement. 


The new found interest in GICs can be attributed, in part, to this year’s dramatic stock market selloff. 

Securities law prohibits the use of the word “guarantee” for any investment unless  its posted return is literally guaranteed. Although qualifying financial institutions issue GICs, they are ultimately backed up by the Government of Canada.

The other motivator behind the popularity of GICs is their rising yields as central banks raise interest rates to combat inflation. While yields are guaranteed, there’s no guarantee inflation won’t eat away at returns. 

At the same time, rising interest rates tend to push yields up while putting downward pressure on inflation. If high inflation persists, interest rates and yields will likely remain high; giving GICs a built-in hedge as they mature and are reinvested over time.

Right now yields on GICs with various maturities have topped five per cent. Assuming the yield holds at five per cent, the return on annual GIC investments of $5,000 over a 30-year period will come to $348,800, nearly $200,000 of it as interest compounded over time. 

Time is on the side of Gen Z and Millennial investors who can also lower their tax bills by putting the GICs in their registered retirement savings plans (RRSPs) or tax-free savings accounts (TFSAs).    


Cryptocurrencies can also be included in RRSPs and TFSAs but their returns, if any, are far from predictable over time.

The recent collapse of FTX, and the subsequent selloff of cryptocurrencies, are a perfect example of their unpredictable nature.

Unlike GICs, cryptocurrencies have no underlying intrinsic value. Their price at any given time is derived from the value new buyers place on them based on a belief they will go up. They will only go up if new investors continue to drive their prices up on that belief; making it a classic pyramid structure. 

The prospect of quick riches leaves little doubt as to why they are marketed toward young males much like online sports betting. 


Cryptocurrencies can be considered an investment as much as blackjack or slots, but the long-term success of retirement investing lies in other areas along the risk spectrum.

In most cases, GICs alone are not enough to meet return goals, and diversification into riskier assets with the potential for greater returns is required.

A portion of any balanced portfolio should be allocated to fixed income like GICs and investment grade bonds for stability against equity market turmoil, but it will likely be equities that drive growth.   

The same HelloSafe survey found 54.6 per cent of respondents of all ages prefer to put their money in stocks, followed by 34.7 per cent in real estate (such as a home). 

In both cases it’s the relationship between its price and intrinsic value that makes them good investments. In the case of real estate, it’s the ground beneath your feet. For stocks, it’s the true value of whatever the company produces.

Striking that balance between risk and reward is difficult, and could require professional help at a cost that doesn’t eat into returns.