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.
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.