A Guaranteed Investment Certificate is a scheme offered by Canadian Banks and other money-lending places like trust companies. In this, there is a ‘guaranteed’ return on your investment, given to you at a fixed, stipulated time. This period of time could vary depending on a variety of factors, such as the income that you earn. You could get a return either monthly, or semi-annually.
Due to its nature, and being of much less risk, without much initial investment to begin with, a GIC has much less risk, as compared to other forms of investment, such as a mutual fund, or stocks and bonds.
Rate of Return
Naturally, the rate of return on a GIC is much more than the average rate of interest in Canada. The rate of return on a Guaranteed Investment Certificate is often decided by the Bank of Canada, depending on factors such as the rate of inflation in the country. The length of time that you are going to keep a GIC account also plays into this factor.
How safe is Your Money?
With a GIC, your money is pretty safe, if not more than all the other forms of investing in the country. The GIC is a gateway for you to get some additional money, with a very little initial investment. If your term of investment is initially five years or less, then you can hope to get up to $100,000 in this time. However, you can obviously increase your investment time further, if you wish to do so.