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GICs can help cushion savings against the impacts of inflation and balance risk in a portfolio. Here’s how GICs work, the types of GICs you can choose from, and how to buy them.
Guaranteed investment certificates (GICs) have always been a convenient and accessible option for Canadians who need a place to park their cash. GICs offer a better rate of return than a typical savings account. You can start investing in GICs with as little as $100. In this GIC guide for Canadians, we’ll show you how these versatile investments can help you preserve your purchasing power in the face of high inflation, without risk to your savings.
A GIC is a type of investment asset. Buying a GIC is like making a loan to a bank (or another financial institution) for a set amount of time—from as little as 30 days to as long as 10 years—at an agreed-upon interest rate.
The length of time is called the “term,” and the interest is paid to you annually, semi-annually or at the end of the term, depending on the GIC you buy. The last day of the term is the GIC’s “maturity date.” At that point, you’ll get your principal back, along with any remaining interest. Most GICs are “non-redeemable,” meaning you can’t cash them in early.
When buying a GIC, you can choose whether to hold it in a registered or non-registered account. In a registered account, your earnings will be tax-sheltered or tax-free, depending on the type of account.
Buying GICs can be convenient—Canada’s banks and other financial institutions all offer them. If you don’t have an investment account yet, you may need to open one to get started.
GICs can play a role in your investment portfolio no matter what life stage you’re in. Below, we’ve rounded up articles packed with investment ideas.
This is an editorially driven article or content package, presented with financial support from an advertiser. The advertiser has no influence on the creation of the content.
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