The Truth Behind Risk-Free Rates: Are Risk Free Returns Risky

After an era of rock-bottom interest rates, many investors find themselves attracted to more lucrative yields. As of mid-October 2023, one-year Guaranteed Investment Certificates (GICs) in Canada are paying around 5.15%. Short-term Government of Canada treasury bills also offer yields investors could only dream of a few short years ago. The one-year treasury is currently yielding 5.23%, and many investors think they can simply purchase these “risk-free” investments to achieve financial success. Unfortunately, higher risk-free rates do not tell the whole story. Amidst financial uncertainties and a rising rate environment, “risk-free” investments, such as government treasury notes & GIC’s, have emerged as a…