A Market-Linked GIC is a savings product that combines the security of a guaranteed investment with potential to capture market returns. It is an attractive option for many investors, but there are aspects to consider before investing.
Pros: The primary benefit of Market-Linked GICs is that they typically offer a guaranteed minimum return but have the potential to capture market gains, providing a decent rate of return in both up markets and down markets. They also offer more flexibility than traditional GICs, allowing investors to redeem their fund before maturity should unforeseen circumstances arise, while still providing protection against loss of principal.
Cons: While Market-Linked GICs have the potential to provide greater returns, there is no guarantee that they will. Investors must weigh the risks of investing in an unpredictable or volatile market, as their return could be lower than what could have been achieved with other investments. Additionally, Market-Linked GICs usually come with high fees and charges, making them costly investments.