Guaranteed Investment Certificate
- Guaranteed Investment Certificate
A Guaranteed Investment Certificate or 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.
Overview
GICs can be Registered or Non Registered, and come in many forms, from conventional term deposits to market investments. GIC's regularly have lifespans of 6 month, 1, 2, 3, 4, 5 or 10 year terms. To own a GIC you must deposit at least $500.00. At maturity they can be cashed as taxable income or renewed for another term. For most GICs, if you withdraw money before the term is done, you will not be paid any interest and may even be required to pay a fee. Usually, regular term deposits for financial institutions carry an interest rate from 1-9% depending on the various factors, such as the length of the term and specified interest rates from the Bank of Canada.
"Example:"The current interest rate is 3% - For every $100.00 I invest, I receive $3 in interest. I invest in a 3 year GIC with $1000.00 I receive $30.00 the first year, now I have $1030.00 in my GIC. The next year, I get $30.90 in interest. I now have $1060.90 in my GIC. In the third year the interest rises to $31.83. My GIC is done now and I have gained $92.73. If I want, I can renew my GIC to gain more money.
----
However, other GICs such as Market Growth GICs or Market Stock-Indexed GICs have their interest rates determined by the rate of growth of a specific stock market (such as the TSX or S&P 500). For example; if the TSX has a market growth increase of 30% in 3 years, beginning at the same point in time the GIC was issued, the GIC will return with an interest of 30%. However, unlike other GICs there is always a possibility that the market could perform poorly, having even no growth at all, in which the interest rate could return at 0%. Just like regular GICs, Market Growth GICs are extremely low-risk; your capital is guaranteed to remain intact (though the purchasing power is not), even if the stock market shrinks.
See also
* Certificate of deposit
External links
* [http://www.investored.ca/en/investoranswers/Pages/topic-GICsavingsbond.aspx Investor Education Fund - GICs and Savings Bonds]
Wikimedia Foundation.
2010.
Look at other dictionaries:
Investment certificate — This article is specific to the United States.An investment certificate is an investment product offered by an investment company or brokerage firm designed to offer a competitive yield to an investor with the added safety of their principal. [… … Wikipedia
Guaranteed Investment (Interest) Certificate - GIC — A deposit investment security sold by Canadian banks and trust companies. They are often bought for retirement plans because they provide a low risk fixed rate of return. The principal is at risk only if the bank defaults. The bank s profit is… … Investment dictionary
Guaranteed Mortgage Certificate - GMC — A bond backed by a pool of mortgages. These bonds are issued by the Federal Home Loan Mortgage Corporation (Freddie Mac). These bonds pay out both interest and principal on a semiannual basis. The pool is made up of residential mortgages. If the… … Investment dictionary
Silver as an investment — Silver, like other precious metals, may be used as an investment. For more than four thousand years, silver has been regarded as a form of money and store of value. However, since the end of the silver standard, silver has lost its role as legal… … Wikipedia
Gold certificate — A gold certificate in general is a certificate of ownership that gold owners hold instead of storing the actual gold. It has both a historic meaning as a US paper currency (1882 1933) and a current meaning as a way to invest in gold.Perth MintThe … Wikipedia
Index-Linked Certificate Of Deposit — A certificate of deposit (CD) with a return based on a specific index. These CDs are purchased for a fixed price. There is a chance for a high return, depending on the outcome of the index, and there is no risk of a loss as the CD is FDIC insured … Investment dictionary
ING Direct — is a marketing name for a branchless direct bank with operations in Australia, Canada, France, Germany (branded ING DiBa ), Austria (branded ING DiBa ), Italy, Japan, Netherlands (branded Postbank ), Spain, United Kingdom and the United States.… … Wikipedia
GIC — The acronym GIC can refer to :* Global Inspiration Conference [http://www.globalinspiration.org www.GIC 2008] , a week long celebration of Conscious Breathwork * Guaranteed Investment Certificate, a financial instrument * Guaranteed Investment… … Wikipedia
Time deposit — For an article more specific to the United States, see Certificate of deposit. Banking A se … Wikipedia
GIC — Cette page d’homonymie répertorie les différents sujets et articles partageant un même nom. Sigles d’une seule lettre Sigles de deux lettres > Sigles de trois lettres Sigles de quatre lettres … Wikipédia en Français
