A GIC is a Guaranteed Investment Certificate. As the name suggests, it’s a very safe investment option compared to mutual funds and individual stocks. This blog will help you understand what they are and if they might be helpful for you.

When you invest in a GIC, your principal (initial money invested) is guaranteed. Depending on the type of GIC you select, the interest rate you earn is also guaranteed.

GICs tend to have a low-interest rate of 3% or less but can be a great option when markets are experiencing volatility like they are now in 2022.

There are a few types of GICs that are available to investors.


Non-redeemable GIC

Your money is locked in for a predetermined period of time. If you withdraw your money early from this type of GIC, you will be charged a penalty. As a result, interest rates are generally higher than redeemable GICs. The terms can be anywhere from 30 days to 10 years.


Redeemable GIC (or cashable GIC)

These are great if you think you might need access to your money, so they can be great for holding cash. There’s no “penalty” for early withdrawal from a Redeemable GIC, but if redeemed earlier than the agreed term the interest rate might differ from the original rate. It’s also important to note that their rates are not as high as non-redeemable GICs.


Market- or equity-linked GIC

These are linked to the performance of an underlying stock market index or basket of stocks. The return is not guaranteed, but your principle is. You only know what the return will be when it matures. This can be a great way to take advantage of the growth potential of the stock market without risking your principal.


Having GICs as part of your portfolio can make a lot of sense depending on your risk tolerance and time horizon. The return is low, but typically better than having cash in a savings account.

We recommend speaking with a professional investment advisor about your options. It all depends on your personal circumstances, so we think they’re worth looking into.

If you have any questions about GICs feel free to Contact Us.

Click here for more information about GICs.