GIC
A fixed-income investment with guaranteed principal and predictable returns. Perfect for conservative investors.
Professional Explanation
A Guaranteed Investment Certificate (GIC) is a fixed-income investment product offered by Canadian financial institutions. When you purchase a GIC, you're essentially lending money to the issuing institution for a predetermined term in exchange for a guaranteed interest rate and 100% return of your principal at maturity.
Core Characteristics:
- • Principal Guarantee: 100% of your initial investment is guaranteed
- • Interest Rate: Fixed for the term (or market-linked with minimum guarantee)
- • Term Options: Typically 6 months to 10 years
- • CDIC Protection: Up to $100,000 per eligible category per member institution
- • Tax Treatment: Interest earned is taxable income in the year paid/accrued
Current Market Rates (2025):
Types of GICs:
Non-Redeemable GIC:
- • Highest interest rate
- • Cannot access funds before maturity
- • Best if you know you won't need the money
Cashable/Redeemable GIC:
- • Lower interest rate than non-redeemable
- • Can redeem early with minimal penalty (or sometimes no penalty)
- • Provides flexibility
Market-Linked GIC:
- • Minimum guaranteed return (usually 2.5%)
- • Upside potential linked to stock market index
- • Caps on maximum return (typical cap: 40%)
- • No downside below minimum guarantee
CDIC Insurance Protection:
- • Automatically covers GICs issued by CDIC member institutions
- • Eligible if held within CDIC deposit insurance category
- • Coverage limit: $100,000 per category per member institution
- • Combined with cash deposits in same category
- • Example: $90,000 GIC + $20,000 cash = only $100,000 covered
GIC Ladder Strategy:
Many investors use GICs as part of a "GIC ladder":
- • Buy multiple GICs with staggered maturity dates
- • Example: Buy 5-year GIC, 3-year GIC, 1-year GIC, etc.
- • As each matures, reinvest at current rates
- • Provides flexibility and captures changing interest rate environments
Simple Explanation
Easy to UnderstandA GIC is basically a promise from a bank. You give them your money for a certain amount of time (like 1 year, 3 years, or 5 years), and they promise to give you back all your money plus interest at the end.
It's super safe because the bank is legally required to give you back your full amount. The longer you're willing to lock up your money, the more interest they'll pay you. Right now, if you lock money up for 5 years, they might pay you 4-5% interest. If you just keep it in a regular savings account, they might only pay you 0.5%.
The catch: You can't touch the money before the time is up (unless you get a "redeemable" GIC, which pays less interest but lets you access it early).
It's super safe and predictable—perfect if you have money sitting around that you won't need for a while.
Best For
- Conservative investors
- Fixed-term savings goals
- Risk-averse investors
- Capital preservation
Key Benefits
- 100% principal guarantee
- Predictable returns
- CDIC protection
- GIC ladder flexibility
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