BMO Financial Group

BMO Financial Group
BMO Bank of Montreal

BMO Bank of Montreal

December 16, 2013 06:00 ET

BMO Report: Canadians Looking for 'Guaranteed' Investment Options in 2014

- Two-thirds of Canadians believe there will be a market correction in the next decade

- Canadians' interest in purchasing Guaranteed Income Certificates increases significantly as the return on investment also increases

- Many Canadians believe GICs help provide peace of mind and ease of budgeting

TORONTO, ONTARIO--(Marketwired - Dec. 16, 2013) - A new investment poll from BMO Bank of Montreal reveals that two-thirds of Canadians (63 per cent) expect a market correction within the next decade and more than half (51 per cent) indicate they will look for safer investment options in 2014.

"Our survey results show that Canadians are interested in safer investments. Guaranteed Investment Certificates GICs, for example, are a safe investment vehicle that offers Canadians – or Canadian business owners – a flexible range of investment options and competitive returns," Ryan ffrench, Director, Term Investments, BMO Financial Group, "It's important, however, for consumers to explore the many options available to them to help ensure they are making the most of their money."

BMO offers the 3-year BMO RateRiser® Plus GIC which provides Canadians with the best of savings accounts and investments, offering guaranteed competitive returns that increase annually and providing customers with accessibility to their money. A special rate offer is in effect until December 31, 2013, where you can earn annual returns of 1.50 per cent in the first year, 2 per cent in the second year and 2.10 per cent in the third year.*

Purchasing a GIC and Return on Investment

According to the survey, one-quarter (27 per cent) of Canadians currently own a Guaranteed Investment Certificate (GIC), with 32 per cent planning to purchase a GIC within the next year and nearly half (44 per cent) likely to purchase additional GICs in the next five years.

Canadians' interest in purchasing GICs increases significantly as the level of return rises. For example:

  • At a 2 per cent / year return, 14 per cent of Canadians would purchase a GIC.
  • At 3 per cent, more than one-third (38 per cent) of Canadians would purchase a GIC within the next year.
  • At 4 per cent, a majority (57 per cent) of Canadians say they would buy GICs.

"With our call that the Federal Reserve will start raising rates in the first quarter of 2016, and the Bank of Canada looking more dovish, we predict the Bank of Canada will hike rates starting in the third quarter of 2015," said Michael Gregory, Deputy Chief Economist, BMO Capital Markets. "We believe the Bank will move cautiously to prevent fuelling too much Canadian dollar strength - likely no more than one rate increase per quarter until the Fed joins the tightening party."

The survey also found:

  • Respondents believe GICs are a safer investment (78 per cent safe) than bonds (64 per cent), precious metals (46 per cent) or mutual funds (43 per cent).
  • Compared to before the financial downturn, Canadians are twice as likely to have become safer, rather than riskier, investors (34 per cent vs. 17 per cent).
  • Peace of mind and ease of budgeting are the primary reasons Canadian investors own GICs (53 per cent and 44 per cent, respectively).

Regional and Demographic Findings

  • Canadians from the Prairies were found to be nearly twice as likely as Atlantic Canadians to own a GIC (36 per cent versus 19 per cent).
  • Canadians under 35 are four times more likely to prefer safer rather than riskier investments (43 per cent versus 11 per cent).
  • British Columbians are the most likely to believe there will be a market correction in the next 10 years (67 per cent); Albertans are the least likely (58 per cent).
Overall Atl Que Ont Prairies Alb B.C.
Own GIC 27 % 19 % 21 % 31 % 36 % 32 % 25 %
Consider GIC Safe 78 % 71 % 73 % 81 % 79 % 83 % 80 %
Believer market correction is likely within next 10 years 63 % 61 % 63 % 63 % 62 % 58 % 67 %

* Interest paid annually or compounded annually and paid at maturity. Terms and conditions apply.

The survey results cited in the report conducted by Pollara are compiled from an online sample of 1,023 Canadians 18 years of age and over between November 29 and December 5, 2013. A probability sample of this size would yield results accurate to ± 3.1 per cent, 19 times out of 20.

About BMO Financial Group

Established in 1817 as Bank of Montreal, BMO Financial Group is a highly diversified North American financial services organization. With total assets of $537 billion as at October 31, 2013, and more than 45,000 employees, BMO Financial Group provides a broad range of personal and commercial banking, wealth management and investment banking products and solutions.

Contact Information