Guaranteed investment certificate (GIC),
Definition of Guaranteed investment certificate (GIC):
A Canadian investment instrument designed to deliver a modest rate of return with low risk. Such certificates are sometimes used in personal retirement plans to limit exposure to losses. With fixed interest rate certificates, the capital and interest amount are both guaranteed. Variable rate certificates may earn less interest than expected, but the capital is not at risk. The relative value of assets may decrease due to inflation.
A guaranteed investment certificate (GIC) is a deposit investment sold by Canadian banks and trust companies. People often purchase them for retirement plans because they provide a low-risk fixed rate of return and are insured, to a degree, by the Canadian government.
The GIC works much like a certificate of deposit in the U.S. In the case of GICs, you deposit money in the bank and earn interest on that money. The catch is, the money must be deposited for a fixed length of time, and interest rates vary according to how long that commitment is. When you buy a GIC, you are basically lending the bank money and getting paid interest in return for the favor.
How to use Guaranteed investment certificate (GIC) in a sentence?
- When buying a GIC, investors deposit money in the bank for a fixed length of time, receiving interest on that money and the principal when the investment matures.
- A guaranteed investment certificate (GIC) is an investment sold by Canadian financial institutions.
Meaning of Guaranteed investment certificate (GIC) & Guaranteed investment certificate (GIC) Definition