Guaranteed Investment Certificates – GIC

What is the (GIC) Guarantee Investment Certificate account?

A Guaranteed Investment Certificate or GIC is a Canadian (Ontario), investment that offers a guaranteed rate of return over a fixed period of time.Cause of low risk portfolio, the return is usually less than other investments such as stocks, bonds, or mutual funds. The interest rate is fixed for the term of the GIC (1year up to 10 years) which is typically longer than normal saving accounts.

How many type of GIC are in the market?

There are two type of guaranteed investment certificate (GIC) account in the market:

  • Redeemable GIC account
  • Non-Redeemable GIC account

Non- redeemable GIC cannot be cash before maturity date unless the account owner suffers extreme financial hardship or dies. However both kinds of GICs are transferable.

How much is interest rate of guarantee investment certificate GIC?

GIC account interest rate in Toronto and Ontario is varying from bank to bank and insurance company but usually around the inflation rate which now (2012) GIC depends on amount of money and term of the account is around 2.5% interest per year.

How is the tax consequence of guarantee investment certificate?

Depositing to GIC account will accumulate interest over the period of time. When you withdraw in maturity date of your GIC account, the principal is tax free (was after tax money at the time of deposit) but the growth is consider as income and is taxable according your income-tax bracket of withdrawal date.

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