Bonds outperform GICs for cautious investors in 2025

In 2025, bonds are seen as a better investment than guaranteed investment certificates (GICs) for cautious investors. While GICs previously offered higher yields, the gap has narrowed, with bond yields around 3.3% compared to GICs at 3.5% to 3.95%. Bonds provide potential for capital gains and liquidity, unlike GICs, which do not increase in value. With expectations of falling interest rates due to economic pressures, bonds may offer better total returns through price increases and interest payments. The liquidity of bonds allows investors to manage market uncertainty. In contrast, GICs offer stability but limit growth potential. Overall, bonds are regaining favor after a challenging 2022.