Cheryl Zhao

A Guaranteed Investment Certificate (GIC), alternately known as term deposits, is one of the safest means to financial security. Offering short to mid-term savings goals, it keeps your money safe that you can access after the specified maturity period. GIC is a type of Canadian investment, so only Canadian banks, life insurance companies, trust companies, and credit unions can issue it. What Is a Guaranteed Investment Certificate (GIC)? GICs are similar to a savings account where you can deposit money for a specific period and earn a guaranteed interest at an annual rate. The rate is higher for a long-term deposit. Unlike a traditional savings account, the most common GIC type locks your money for a period of time that agreed upon by both parties. You cannot redeem the money until maturity, and doing so will result in a penalty. GICs are much favored in the consumer level because: There is no fee to invest in a GIC Most of them beat the savings account interest rates offered by the banks The investor is guaranteed to get the principal after the maturity period Types of GICs to Choose From Based on the interest rates, term lengths, and a few other variables, it is possible to categorize GICs into several groups. Let’s probe into some brief assessments to see which is the most suitable for you: Fixed-Rate vs Variable-Rate The interest rate won’t change throughout the term in a fixed-rate GIC. So, you will know how much you are going to get when the deposit matures. A variable-rate, on the other hand, does not offer any fixed rate. It depends on how the business – stock market, for instance – on which you invested is doing. You can score a higher or lower interest amount than you have expected. Your initial […]