Guaranteed Investment Certificates

What are Guaranteed Investment Certificates?

A Guaranteed Investment Certificate (GIC) is a Canadian investment that offers a guaranteed rate of return over a fixed period of time, most commonly issued by trust companies or banks. Due to its low risk profile, the return is generally less than other investments such as stocks, bonds, or mutual funds. It is similar to a time or term deposit as known in other countries.


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How GICs work

When you buy a Guaranteed Investment Certificates (GIC) from a bank, trust company, or credit union, it's like you are lending them your money for a while. The financial institution pays you to borrow your money for a set number of months or years.

  • How do GICs work?
  • You may have to invest at least $500.
  • You agree to keep your money in the GIC for a certain amount of time, such as six months, one year, two years, or up to 10 years.
  • Most GICs pay you interest. A GIC may pay a higher interest rate than savings accounts, but not always

    Example: An interest rate of 3% means that you get paid $3 each year for every $100 you invest.
  • In most cases, the longer you agree to put your money in a GIC, the more interest you will make.
  • With some GICs, if you need to get your money back sooner, you won't earn any interest. In fact, you may have to pay a fee or penalty.

Remember: With a GIC, you agree to lend your money for a set time. If you think you may need your money back early, buy a GIC that allows you to change your mind without any penalty.



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