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Mutual Funds
Guaranteed Investment Certificates (GICs)
What is a GIC?
GICs, or Guaranteed Investment Certificates, are secure investments that promise a defined amount at the end of their term. When you buy a GIC investment for one of your accounts, you are loaning money to a financial institution for a certain length of time. Your GIC gives back 100% of your investment plus interest at the published GIC interest rate. You can buy GICs online through WebBroker for any investment account including RSP, TFSA, RIF and more.
Advantages of GICs
How does a GIC work?
While the returns are guaranteed, if inflation occurs in the economy, the returns may not keep pace with inflation and the value of the GIC may be reduced.
Interest rates can vary by financial institution. Even small differences in interest rates can make a big difference in how much you earn on your investment.
GICs provide a guaranteed rate of return for a set term. The end of that term is your maturity date. That’s when your initial investment will be returned to you. While some GICs pay interest monthly, every three months, every six months, or once a year, others only pay interest on the maturity date. Depending on the type of GIC you choose, withdrawals from your GIC before your maturity date may be subject to penalties.
The Canada Deposit Insurance Corporation (CDIC) insures GICs offered by CDIC members. However, GICs provided by provincial credit unions and insurance providers are not insured by the CDIC.
GICs with longer terms tend to offer higher interest rates. If you don’t need the money you’re investing back quickly, consider investing in a GIC with a longer term to benefit from higher rates.
Learn more about GIC rates and GIC laddering strategies in this article.
Who might consider investing in GICs?
Depending on your investment goals, GICs may be considered for an investment portfolio that includes market-sensitive investments. GICs can offer a degree of diversification and help balance against volatility.
- GICs provide a guaranteed return that can help protect an investment portfolio by remaining stable and steady
- While investment diversification is based on an investor's risk level, GICs can help to balance an investment portfolio
Types of GICs
Frequently asked questions about GICs
GICs can be held within investment accounts such as RRSPs and TFSAs and non-registered savings accounts. Holding a GIC and other investments within a single account can be more convenient than trying to manage multiple accounts.
Bonds and GICs offer similar benefits. Both are fixed-income investments that offer a fixed rate of return over a set term. They can also be considered lower risk compared to other types of investments.
However, there are some important differences. Bonds are debt securities issued by governments, municipalities and corporations to raise money. GICs, on the other hand, are deposit issued by banks and other financial institutions. While some bonds are guaranteed by the government i.e., those offered federally, or by a province or municipality, others can be high risk depending on the issuer's ability to repay the bond at maturity. When you invest in a GIC, your principal investment is guaranteed and is typically protected by Canada Deposit Insurance Corporation (CDIC).
You can hold a GIC in every type of registered investment account.
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Life Income Funds (LIF)
You can also hold a GIC in the following non-registered investment accounts:
Once you are a TD Direct Investing client and open an account, you can find GIC rates in WebBroker.
Start investing in GICs with TD Direct Investing
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1
Open an account
Select the TD Direct Investing account you want to open online or book an appointment.
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2
Fund your account
Transfer funds into your account with the online bill payment or funds transfer feature – or set up recurring deposits.
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3
Start investing toward your goals
Build your portfolio using ETFs, stocks, options, mutual funds, GICs, and more.
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