Guaranteed Investment Certificate, GIC

Increase your GIC investments one coin at a time.Provided through WCS Financial Services/BridgeForce Financial Group, one of the largest Canadian owned and operated Managing General Agency.

A Guaranteed Investment Certificate (also known as GIC) is a Canadian investment. GICs are purchased for a predefined period of time such as 6 months, one year, or longer. At maturity, a guaranteed investment certificate can be either cashed or renewed. As with any investment, GICs can be registered or non-registered.

One advantage of a GIC is its low risk of losing your initial invested amount but its disadvantage is that it usually provides a lower rate of return (earned interest) over the long term, compared to other investments (such as stocks, bonds and mutual funds. Another advantage of a GIC is the stability it adds to your total investment portfolio; it offsets the ups and downs of the stock market and other investments which reduces your overall portfolio risk.


Types of GIC

There are two types of guaranteed investment certificates:

  • Conventional term deposits which pay a guaranteed interest
  • Market investments where the interest rates are determined by a specific stock market such as the TSX. For example, if the TSX has a market growth increase of 20% in 3 years, starting at the same point in time the GIC was issued, the rate of return of the GIC will be 20%. If on the other hand, the market had a downturn where there was no growth, the interest rate return could be 0%. All market growth GICs have a maximum return which means that if the TSX has a market growth increase of 30% and the GIC has a maximum return of 25% over 3 years, the interest rate returned would be 25%.

A GIC investment strategy is quite simple – diversify by type and maturity. By having different types of GICs you can take advantage of the benefits each offers. And by having GICs maturing at different times you can take advantage of rising interest rates and be protected from rate declines.

Talk to Jacqui McFarlane and benefit from her training and many years of experience.