What are guaranteed investment certificates?
A guaranteed investment certificate is a Canadian investment that offers a guaranteed rate of return over a fixed period of time,
most commonly issued by banks & insurance companies. Due to its low risk profile, the return is generally less than other
investments such as stocks, bonds, or mutual funds.
How does GICs work?
The GIC works much like a certificate of deposit in the U.S. In the case of GICs, you deposit money in the bank and earn interest on that money. The catch is, the money must be deposited for a fixed length of time, and interest rates vary according to how long that commitment is. When you buy a GIC, you are basically lending the bank money and getting paid interest in return.
GICs are considered safe investments because the financial institutions that sell them are legally obligated to return investor’s principal and interest
What are the benefits of investing in GICs?
GICs come with a whole lot of benefits, like:
- They have very low risk involved.
- No matter what is happening in the markets, your GIC investment will earn interest. So, GICs have guaranteed growth.
- There are many term and interest rate options to choose from. You can lock your money in to earn a higher interest rate or choose a cashable GIC that lets you access your money before the term ends
- GICs are easy to understand and manage because they are predictable and require very little monitoring.
- You can buy a GIC for a wide range of investment products. This introduces all the GIC benefits into your other savings.
