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GIC: All about Guaranteed Investment Certificate

[ecis2016.org] Outlined in this article is all about GIC or Guaranteed Investment Certificate, including why it is needed and how you can get it

GIC full form

GIC stands for Guaranteed Investment Certificate. A Canadian investment option, GIC is considered as one of the less risky investment options, when it comes to losing one’s principal amount. The reason why it is considered safer than other investment options is because the Guaranteed Investment Certificate is received from the government by the investor, who invests money with the government for fixed return rates for a certain time period.

Also read: What is NSC full form?

GIC: Advantages associated

GIC is one of the ways in which the government raises funds. The investor invests money for a fixed rate of return. Note that irrespective of how the stock market performs, the rate of return agreed by the government to the investor does not change. Owing to this, a GIC can also be termed as a debt investment option and is considered a safe investment by many. However, do note that returns in GIC are directly proportional to the risks it poses. As the risk involved is very less in GIC investments in comparison to other investment products in the market like stocks, bonds, mutual funds, etc., the returns available on the GIC investments is also less.

Also read all about ELSS fund

GIC: Risks involved

While GIC is a safe investment option as it is government-backed, it does not mean that it is risk-free. An investor opting for Guaranteed Investment Certificate, has to lock his investment for a particular period of time with the government. So, an investor who wants to redeem his investments before the agreed time period ends and the GIC matures, may lose some interest that he may earn on the investment, although there may be no loss, as far as the principal amount is concerned. Also, there are chances that the investor may be penalised for redeeming the investment before its maturity.

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GIC: The various investment options

When it comes to GICs, you can invest in options that may mature in one month or may even extend till more than 10 years.

You can explore investing in a GIC if you:

  • Want to invest in short-term investments
  • Prioritise safety over returns
  • Want to be comfortable with the discipline of investments and locking your money
  • Are looking for a variety of investment options so that you have a diverse portfolio.

Source: https://ecis2016.org/.
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Debora Berti

Università degli Studi di Firenze, IT

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