The acronym GIC stands for Guaranteed Investment Certificate, a fixed rate of return investment offered in Canada. It is considered a low-risk investment, as potential for loss is virtually nonexistent. It yields returns smaller than those that could be expected from stock or bonds, which involve more risk. GIC's are sold by trust companies or banks in Canada, and there are a few different types of them available. They are offered with a fixed rate, variable rate, or with the rate based on the market index. Many Canadians take advantage of GICs, especially those whose portfolios require a good degree of safety.

These investments are basically a special type of deposit. You are lending your money to the institution or bank for a fixed period of time, which could range from a few months to a several years. Your initial investment is usually guaranteed, making this a very safe way to invest your money.

Important Things to Know about Guaranteed Investment Certificates
1.The minimum investment amount is usually $500.
2.There are no additional fees incurred with the purchase of a GIC.
3.The majority of GICs offer a fixed interest rate for a fixed term, which can be anywhere from 6 months to 10 years.
4.Other variable rate GICs are available, and their rate is based on a specific market index.
5.The interest rate earned with a GIC increases as the term of the investment increases.
6.Interest payments may be received at different intervals throughout the investment period, or all at once on the maturity date.
7.Requesting your investment back before the maturity date typically results in a penalty fee. This is not the case with redeemable or cashable GICs.
8.The CDIC protects GICs up to certain limits.
9.Your GICs can be held in registered investment accounts including TFSAs, RRIFs or RRSPs.

Make Saving Automatic
You can treat your GIC like a savings account and have monthly deposits made into it automatically. This will allow you to invest a much greater amount without having to shell it all out at once. This is done via pre authorized debit from an existing account, or can be deducted from your pay under certain circumstances. Many Canadians choose to invest this way, as it is the most practical way to invest for those of average means.

Benefits of GIC's
Safety and security are the primary benefits that come with this type of investment. Your initial investment is never at risk, and with fixed rate GICs the rate of growth is guaranteed. As safe as they are, they also offer fairly good interest rates and very flexible terms for investment.

Canadian citizens who are considering their investment options would be well served to learn more about GICs and the role they could play in a balanced investment portfolio. They are used strategically by many as a counterbalance to riskier investments with greater potential returns. Visit a local bank or financial institution to find out what types of GICs are available to you.