For example, if you invested $50,000 into a two-year GIC with 1.5% interest, you’d receive a return of $750 each year. Simple interest is paid on the initial principal only. There are two types of interest associated with GICs - simple interest and compound interest. Interest on GICs is typically paid out either monthly, biannually, annually, at their maturity or on a predetermined date set by the provider. These are perfect for investors with long-range savings goals (such as a downpayment on a house) or a desire to use their GIC as passive monthly income. Long-term GICs, on the other hand, have terms of one year or longer and typically carry higher interest rates than their short-term counterparts. They take less than a year to mature, and the principal is guaranteed with an advertised rate of interest. Short-term GICs are a great option for those who have a short-term savings goal and want to prioritize liquidity. The answer to this question will largely depend on your financial goals. One of the first things you should think about when shopping for a GIC (aside from the rate itself) is whether you’re interested in a short or long-term investment. GIC terms can vary anywhere from as little as 30 days up to ten years, and typically, the longer you’re willing to invest your money, the higher the interest rate you’ll receive. With a GIC, you deposit your money at a bank or other financial institution for a specific period of time (known as the “term”), and they will guarantee you a return of the principal (the initial amount you invested) plus pay you in the form of interest. It is deemed to be a safe and extremely low-risk type of investment. What is a GIC?Ī GIC, guaranteed investment certificate, is an investment product that has a guaranteed rate of return for a specified duration of time. ![]() There are many things to consider when shopping around for GICs - and we have broken it all down for you. ![]() Canadian’s interest in GICs have been on the rise in recent years as they are considered to be safe investments.
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