About
GICs
Guaranteed Investment Certificates (GICs) are secure investment options offered by financial institutions, providing a guaranteed return on your investment over a fixed period. They are considered a low-risk investment, making them an attractive choice for investors seeking stability and capital preservation.
GICs offer a predetermined interest rate for a specific term, ranging from a few months to several years. This fixed rate is an essential feature that shields investors from market fluctuations, ensuring the principal investment amount and interest earnings at maturity.
These instruments are commonly used for short to medium-term goals, such as saving for a down payment, funding education, or creating an emergency fund. Their security and guaranteed returns offer peace of mind to investors concerned about market volatility.
GICs come in various types, including redeemable and non-redeemable options. Redeemable GICs offer flexibility, allowing investors to cash out before maturity, albeit often with lower interest rates. On the other hand, non-redeemable GICs usually offer higher interest rates but restrict early withdrawal.
Financial institutions typically insure GICs through the Canada Deposit Insurance Corporation (CDIC), providing additional security by insuring eligible deposits up to a specified amount per insured category.
While GICs provide a secure and stable investment avenue, their fixed returns may not always keep pace with inflation, potentially leading to lower purchasing power over time. Despite this, GICs serve as a foundational component in many investment portfolios due to their reliability and protection of invested capital.
