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A guide to Guaranteed Investment Certificates (GICs)
– moneysense.ca
Table of Contents
What is a GIC?
How does a GIC work?
Terms and Maturity
Withdrawal penalties
Types of GICs
GIC laddering
Are GICs worth it?
As the saying goes, it’s better to be safe than sorry. And for investors seeking safety, guaranteed investment certificates (GICs) can be a useful part of your overall financial plan, as they preserve your principal while returning a predictable amount of interest. Here’s what you need to know to use GICs effectively in your own plan.
What is a GIC?
A GIC works much like a loan–except you’re loaning money to a bank, instead of a bank loaning it to you, and it’s you who is paid the interest. When you purchase a GIC, the interest rate is already determined, so you know how much money you will earn from the “loan.” GICs are considered a safe an investment option, because GIC buyers are guaranteed their initial funds plus interest.
GICs are similar to savings accounts. It can feel similar to just depositing money in a bank account and earning interest…
