The Guaranteed Investment Certificate (GIC)
The GIC is one of the safest investments in Canada. Your principal is guaranteed, your return is known in advance, and your savings are protected — no matter what happens in the markets.
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What is a GIC?
A Guaranteed Investment Certificate (GIC) is a fixed-income investment offered by financial institutions. You deposit an amount for a predetermined period (the term), and in return, the issuer guarantees full repayment of your principal plus a predetermined interest rate.
Unlike mutual fund or equities, the GIC carries no risk of capital loss. It is an ideal tool for cautious investors or for securing a portion of their portfolio.
Capital protected
Your initial investment is 100% guaranteed — no risk of loss, regardless of the markets
Predictable return
The interest rate is known from day 1 — no surprises at maturity
Flexible terms
From 30 days to 10 years — choose the duration that suits your goals
Types of GIC
Fixed-rate GIC: The most common type. The interest rate is fixed at the time of purchase and remains the same until maturity. Ideal for those who want a predictable and guaranteed return.
Variable-rate GIC: The rate fluctuates based on a benchmark index (like the prime rate). The return can be higher than a fixed-rate GIC, but it is less predictable.
Market-linked GIC: The return is linked to the performance of a stock market index (such as the S&P/TSX). The capital remains guaranteed, but the return depends on the market — it can be zero if the market falls.
Cashable GIC: You can withdraw your capital before maturity, usually after a minimum period (e.g., 30 or 90 days). The rate is often lower in exchange for this flexibility.
Non-redeemable GIC: Your capital is locked in until maturity. In return, the interest rate offered is generally higher.
Benefits of GICs
Absolute security: The main advantage of a GIC is the capital guarantee. Regardless of market fluctuations, your investment is protected.
Yield known in advance: The interest rate is fixed at the time of subscription, you know exactly what you will receive at maturity — ideal for financial planning.
Simplicity : No active management required. You invest your money, and you get it back with interest at maturity.
No fees: GICs generally have no direct fees for the investor. The displayed earnings are net.
Limitations to consider
Restricted liquidity: With a non-redeemable GIC, your capital is locked in until maturity. Early withdrawal may result in penalties or the loss of interest.
Modest yield: GICs offer lower returns than stocks or Segregated funds in the long term. They are designed for security, not aggressive growth.
Risk of inflation: If the GIC interest rate is lower than the inflation rate, your purchasing power may decrease in real terms despite a positive return.
Integrate GICs into your strategy
GICs are an excellent tool for the stable portion of a diversified portfolio. They can balance more volatile investments such as stocks or mutual fundsHere are some strategic uses:
Short-term objectives: Savings for a major purchase (house, car, trip) in the next 1 to 5 years.
Approaching retirement: Secure a portion of your capital as retirement approaches, gradually reducing your exposure to risk.
GIC scale: Spread your investments across several GICs with different maturities (1 year, 2 years, 3 years, etc.) to combine return and liquidity.
Strategy: The GIC scale
Instead of putting all your capital into a single 5-year GIC, divide it into 5 equal shares with maturities of 1, 2, 3, 4, and 5 years. Each year, one GIC matures—you can then renew it at the current rate or withdraw the funds. This way, you benefit from the best long-term rates while maintaining regular access to your capital.
Taxation of GICs
Interest earned on a GIC held in a non-registered account is taxable annually as interest income—even if you don't withdraw it. It's added to your taxable income at your marginal tax rate.
To maximize tax efficiency, it is advantageous to hold your GICs in a TFSA (non-taxable interest) or a RRSP (Interest with tax deferral). Our advisors can help you determine the best structure for your situation.
Deposit protection
The GPCs issued by member institutions of the SADC Deposits insured by the Canada Deposit Insurance Corporation (CDIC) are protected up to $100,000 per eligible deposit class, per member institution. This protection is in addition to the capital guarantee of the GIC itself.
Everything you need to know about GICs
A GIC (Guaranteed Investment Certificate) is an investment that offers a guaranteed rate of return over a specified period. You invest your money for a chosen term, and at maturity, you receive your principal back plus the accrued interest.
Yes. The principal of a GIC is guaranteed by the issuer. In addition, GICs issued by CDIC member institutions are protected up to $100,000 per deposit class.
GICs are offered with different terms, ranging from 30 days to 10 years. You choose the term that best suits your financial goals.
It depends on the type of GIC. A redeemable GIC allows for early withdrawal (often after 30-90 days). A non-redeemable GIC locks the capital until maturity — penalties may apply.
Yes, some GICs are indexed to inflation or linked to a stock market index. The capital remains guaranteed, but the return varies according to the benchmark index.
In a non-registered account, interest is taxable annually as interest income. In a TFSA, it is tax-free. In an RRSP, the tax is deferred until withdrawal.
The GIC ladder involves spreading your capital across several GICs with different maturities (1, 2, 3, 4, 5 years). Each year, one GIC matures, providing you with liquidity and better long-term rates.
No, GICs generally do not have direct fees for investors. The earnings shown are net of the product's internal costs.
Yes, there is usually a minimum amount (often between $500 and $1,000). The amount varies depending on the type of GIC and the issuer. Contact us for details.
GICs form the stable portion of a diversified portfolio, balancing out more volatile investments. They are excellent for short-term goals or for securing capital as retirement approaches.
A GIC offers a guaranteed, fixed rate for a set period, while a high-interest savings account offers a variable rate but immediate access to funds. GICs often offer a better rate in exchange for reduced liquidity.
Secure your capital with a GIC
Whether you want to protect part of your savings, plan a major purchase or diversify your portfolioOur advisors can help you choose the GIC best suited to your situation.
Contact us