The Great GIC Exit: Where Smart Canadians Are Moving Their Money as Rates Fall in 2026

I sat down at my laptop last month to renew a GIC that was maturing. It was one I had locked in back in late 2023 – a 2-year term at 5.2% with one of the big banks. At the time, it felt like a no-brainer. Five percent guaranteed? Sign me up. I remember feeling genuinely smug about it.

Then I saw the renewal rate: 3.7%.

That sinking feeling in my stomach was immediate. Not because 3.7% is terrible in a vacuum – it is not – but because I did the quick mental math. After tax. After inflation. I was looking at a real return that was basically… nothing. I had locked up my money for two years, collected a nice return, and now the bank was cheerfully offering me the privilege of doing it again for significantly less.

I did not renew. Instead, I moved that money into XEQT. And based on the conversations I have been having with friends, family, and readers over the past few months, I am far from the only one making that switch.

If you are one of the millions of Canadians with a GIC that has recently matured – or is about to – this post is for you.

1. What Happened to GIC Rates (and Why They’re Not Coming Back)

To understand where we are now, you need to understand the whiplash cycle Canadian savers just lived through.

For most of the 2010s, GIC rates were an absolute joke. You were lucky to get 2%. Then the Bank of Canada started hiking aggressively in 2022 to fight inflation, and suddenly GICs were paying 5% or more for the first time in over a decade. Money poured in. Canadians who had never bought a GIC in their lives were locking up term deposits at every bank and credit union they could find.

It felt like free money. And for a while, it kind of was.

But then the Bank of Canada pivoted. Inflation cooled. The economy needed support. And the rate cuts started – first slowly, then faster than most people expected.

Here is the timeline:

That top-right corner of the table – the 5% era – is over. And unless we get another inflation shock that forces the BoC to hike aggressively again, it is not coming back anytime soon.

The problem? Millions of Canadians built their savings strategy around those peak rates. They laddered 1-year and 2-year GICs in 2023 and 2024, expecting to renew at similar rates. Those GICs are maturing right now, and the renewal offers are a harsh wake-up call.

I wrote about this broader trend in my post on Bank of Canada rate cuts and their impact on investors. The short version: falling rates change the math on everything.

2. The Math Problem With GICs in 2026

Here is the part that really stings when you sit down and actually work through the numbers.

Let’s say you are a typical Canadian in a combined 30% marginal tax bracket (federal + provincial) and you are holding your GIC in a non-registered account. Today’s best 1-year GIC rate is about 3.5%.

Here is what your real return actually looks like:

• Gross GIC return: 3.5%
• Tax on interest income (30%): -1.05%
• After-tax return: 2.45%
• Inflation (~2.5%): -2.5%
• Real after-tax return: -0.05%

Read that last line again. Your money is not growing. It is not even treading water. After taxes and inflation, you are losing purchasing power – by a tiny amount, sure, but you are going backwards. And you locked your money up for a year to achieve this.

Even if you hold your GIC in a TFSA or RRSP (eliminating the tax hit), you are still only earning about 1% above inflation. That is better, but it is a painfully slow way to build wealth.

Compare this to where we were just two years ago:

The 2023 GIC actually earned you real money. The 2026 GIC is a treadmill. You are running and going nowhere.

This is the core frustration driving what I am calling the “Great GIC Exit.” It is not that GICs are bad instruments. They are not. They do exactly what they promise: preserve your capital and pay a guaranteed return. The problem is that the guaranteed return is no longer enough to meaningfully grow your wealth.

3. Why So Many Canadians Are Looking at XEQT

When your GIC matures and the renewal rate makes you wince, you start looking for alternatives. And for a growing number of Canadians, the answer is XEQT – iShares’ all-in-one equity ETF that holds over 9,000 stocks across 49 countries.

Here is what makes it attractive in the current environment:

• Historical average annual returns of roughly 8-10% over long periods. That is not a guarantee – it is a historical average – but it absolutely dwarfs what GICs are offering right now.
• Tax efficiency. In a non-registered account, XEQT’s returns come primarily through capital gains (taxed at a lower inclusion rate) and eligible dividends (eligible for the dividend tax credit), rather than interest income (taxed at your full marginal rate). I covered this in detail in my XEQT tax implications guide.
• No maturity dates. You do not have to think about renewals, rate shopping, or laddering strategies. You buy, you hold, and your money compounds. That is it.
• Global diversification. Your money is spread across Canadian, US, international, and emerging market equities. If one region stumbles, the others can carry the load.
• Liquidity. Unlike a GIC, you can sell XEQT on any trading day. Your money is not locked up.

But I want to be honest about the trade-off, because this is where a lot of “just buy XEQT” content glosses over reality: XEQT can lose money in the short term, and GICs cannot. If you invest $50,000 in XEQT today, it could be worth $42,000 in six months. That does not happen with a GIC. For some people and some goals, that matters enormously.

Understanding how interest rates affect XEQT can help you appreciate why the current environment of falling rates is actually a tailwind for equity investors.

4. The Honest Side-by-Side Comparison

I think the best way to evaluate whether to switch is to lay everything out in one table. No spin, no cherry-picking – just the facts as they stand in mid-2026.

For a deeper dive into this comparison, I have a full XEQT vs GICs breakdown that covers the nuances in more detail.

The key insight from this table: neither option is universally better. The right choice depends entirely on your time horizon. And that brings us to the most important section of this post.

5. Who Should Actually Switch (and Who Shouldn’t)

This is where I want to be really careful, because not everyone with a maturing GIC should dump it into XEQT. Here is my honest framework:

You should seriously consider switching to XEQT if:

• Your time horizon is 5+ years. If you do not need this money for at least five years, the historical case for equities over GICs is overwhelming. Over any 10-year rolling period in history, a globally diversified equity portfolio has delivered positive returns.
• This is retirement savings and you are more than 10 years from retiring. Compounding at 8% versus 3.5% over a decade or two is the difference between a comfortable retirement and a tight one.
• You already have a separate emergency fund. More on this below.
• You can stomach short-term losses. Be honest with yourself. If a 15% drop in your portfolio would cause you to panic-sell, you need to address that before investing. Check out my XEQT for beginners guide to build your confidence first.

You should probably stick with GICs (or a GIC-like alternative) if:

• You need the money within 1-3 years. House down payment? Wedding? Car? Keep it in a GIC or high-interest savings account. A 3.5% guaranteed return beats the risk of XEQT being down 10% when you need the cash.
• This is your emergency fund. Your emergency fund should never be in equities. Keep 3-6 months of expenses in something safe and liquid.
• You genuinely cannot handle volatility. There is no shame in this. Some people sleep better knowing their savings are guaranteed. If that is you, the slight loss of purchasing power might be worth the peace of mind.

The grey zone: 3-5 year time horizon

This is where it gets tricky. For money you need in 3-5 years, neither option is perfect. GICs protect your principal but might lose to inflation. XEQT will likely outperform but could be down when you need it. A reasonable compromise: split the difference. Put half in a GIC and half in XEQT.

6. How to Actually Make the Switch

If you have decided that some or all of your maturing GIC money belongs in XEQT, here is the practical step-by-step:

Step 1: Wait for your GIC to mature. Do not break a GIC early – the penalties usually wipe out any benefit. Just note the maturity date and have a plan ready.

Step 2: Move the cash. If you are not already with a commission-free brokerage, open an account at Wealthsimple (it takes about 10 minutes). If the GIC is in a TFSA or RRSP, you can do an in-kind transfer to keep the tax-sheltered status. I walk through the whole process in my how to buy XEQT guide.

Step 3: Decide on lump sum or dollar-cost averaging. Research consistently shows that lump sum investing beats dollar-cost averaging about two-thirds of the time, because markets go up more often than they go down. But if investing a large amount all at once makes you nervous – and that is completely valid – splitting it into monthly chunks over 3-6 months can help you sleep at night. I break down the numbers in my lump sum vs DCA analysis.

Step 4: Buy XEQT. On Wealthsimple, this is literally typing “XEQT” into the search bar, entering an amount, and tapping “Buy.” No commission. No complexity.

Step 5: Set up automatic contributions. This is the most important step. Set up a recurring purchase – weekly, biweekly, or monthly – so you keep adding to your position without having to think about it. The GIC mindset of “set it and forget it” actually translates beautifully to XEQT. The difference is that instead of checking renewal rates every year, you just… don’t have to do anything.

7. The Hybrid Approach: Keep Some GICs, Invest the Rest

I want to be clear that switching from GICs to XEQT does not have to be an all-or-nothing decision. In fact, for many people, the smartest move is a hybrid approach.

Here is what that looks like in practice:

• Emergency fund (3-6 months of expenses): Keep this in a high-interest savings account. Not GICs (you need immediate access), not XEQT (you need certainty).
• Short-term goals within 1-3 years: Keep these in GICs or a HISA. Yes, the rates are lower than they were. That is fine. Capital preservation is the priority here.
• Long-term money (5+ years): This is where XEQT shines. Retirement savings, kids’ education funds (if they are young), or just general long-term wealth building.

I have written extensively about this exact strategy in my barbell strategy post. The basic idea: you keep your “safe” money genuinely safe (GICs and cash) and let your “growth” money actually grow (XEQT). No mushy middle. No “balanced” funds charging you 2% MER to deliver mediocre returns.

The beauty of this approach is that it respects what both GICs and XEQT are actually good at. GICs are excellent capital preservation tools. They are just terrible wealth-building tools – especially at today’s rates. XEQT is an excellent wealth-building tool. It is just terrible for money you might need next year.

Use each for what it does best.

8. Let’s Talk About What Happens When XEQT Drops

This is the section I almost did not write, because it is uncomfortable. But it would be irresponsible to leave it out.

If you have spent years in GICs – watching your balance grow steadily, never seeing a red number, always knowing exactly what you will have at maturity – your first experience with XEQT volatility is going to feel terrible. I am not going to sugarcoat that.

At some point after you invest, XEQT will drop. Maybe 5%. Maybe 10%. Maybe 20% during a real market downturn. You will log in, see a number that is lower than what you put in, and every fibre of your being will scream: “I knew I should have just renewed the GIC.”

Here is what I want you to remember in that moment:

This is normal. XEQT’s underlying indexes have historically dropped 10% or more roughly once every 18 months on average. It is not a sign that something is broken. It is the price of admission for long-term returns that vastly exceed GICs.

It is temporary. Over any 10-year period, global equities have historically delivered positive returns. The drops feel permanent when you are in them, but they are not. Markets recover. They always have.

Your GIC was “dropping” too – you just could not see it. When your GIC was earning 3.5% and inflation was running 2.5%, your real purchasing power was essentially flat. That is a loss in everything but name. The difference is that GICs hide the loss, and XEQT shows it on your screen in bright red numbers. The visibility does not make it worse. It just makes it more stressful.

Zoom out. Pull up a 10-year chart of a global equity index. Every single dip – the ones that felt like the end of the world at the time – looks like a tiny blip in the context of the larger upward trend.

If you are worried about your ability to stay the course, start with a smaller amount. Move $10,000 into XEQT first, live with the volatility for a few months, and then move more as your comfort grows. There is no rule that says you have to switch everything at once.

9. The Numbers That Should Keep You Up at Night

If you are still on the fence, let me paint a picture of what staying in GICs versus switching to XEQT could look like over the next 20 years. These are projections, not guarantees – but they are based on reasonable assumptions.

Assumptions: $100,000 starting balance. No additional contributions. GIC rate averages 3.5% over 20 years. XEQT returns average 8% over 20 years. Both held in a TFSA (no tax drag).

That last row is the one that matters. Over 20 years, the difference between renewing GICs and holding XEQT could be more than a quarter of a million dollars – on just $100,000. And that gap only widens if you are making regular contributions.

This is not about GICs being scams or XEQT being magic. It is about the raw power of compound growth at 8% versus 3.5%. The math is relentless, and time amplifies the gap exponentially.

Of course, XEQT’s returns will not be a smooth 8% every year. There will be years of +20% and years of -15%. But the long-term trajectory is what matters, and the long-term trajectory overwhelmingly favours equities.

10. The Golden Era of 5% GICs Is Over

Here is the uncomfortable truth that many Canadian savers are still processing: the brief window where GICs offered genuinely attractive returns – late 2022 through mid-2024 – was an anomaly. It was the product of the fastest rate-hiking cycle in decades, itself a response to the worst inflation spike in 40 years.

That window has closed. And while nobody can predict the future with certainty, the Bank of Canada’s trajectory is clear. Rates are coming down, and GIC rates are following them.

If you are sitting on a maturing GIC right now, you have a choice. You can renew at 3.5% and watch inflation eat your returns. Or you can take that money, put it into something with the potential to actually grow your wealth over the long term, and give yourself a real shot at financial freedom.

For me, that something is XEQT. One ETF. Over 9,000 stocks. 49 countries. No rate shopping. No renewal anxiety. No maturity dates. Just steady, automatic investing in the global economy.

I am not saying everyone should abandon GICs entirely. Keep your emergency fund safe. Keep your short-term money protected. But your long-term savings? They deserve to actually work for you. And at 3.5%, they are not working – they are napping.

The best time to start investing in XEQT was years ago. The second-best time is the day your GIC matures. Don’t let your bank sweet-talk you into another term at a rate that barely keeps up with the cost of groceries.

Your money is worth more than that. And so are you.

Disclaimer: This post is for educational purposes only and does not constitute financial advice. GIC rates, interest rates, and investment returns referenced are approximate and may vary. Past performance does not guarantee future results. XEQT can lose value in the short term and is not suitable for all investors or all time horizons. Always consider your own financial situation, risk tolerance, and time horizon before making investment decisions.