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What is a Guaranteed Investment Certificate (GIC)?

A guaranteed investment certificate (GIC) is an investment sold by Canadian banks and trust companies that provides a fixed rate of return to investors. GICs are often purchased as retirement savings vehicles plans because they provide a low-risk fixed rate of return.
 
GICs are insured by the Canadian government for up to $100,000 Canadian per account. 
 
1. CDIC Deposit Protection. “Guaranteed Investment Certificates.”
 
2. They are marketed in Canada in much the same way U.S. banks market certificates of deposit to their customers. In the U.S., GICs are created and promoted by insurance companies and have a slightly different client focus.

A GIC works much like a certificate of deposit in the U.S. You deposit money in the bank and earn interest on that money. The money must be deposited for a fixed length of time, and interest rates vary with the length of the commitment.

When you buy a GIC, you are lending money to 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 investors’ principal and interest. Even if the bank fails, investors are insured for up to $100,000 Canadian by the Canadian Deposit Insurance Corporation (GDIC)

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