| Guaranteed
Investment (Interest) Certificate - GIC |
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A
deposit investment security that is sold by Canadian banks and trust
companies. They are often bought for retirement plans because they
provide a low risk fixed rate of return. The principal is at risk
only if the bank defaults.
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The
difference between mortgage rates and GIC rates is the profit that
the bank makes. If mortgages are at 8% and GIC's are at 5% the bank
makes 3%.
GIC's offer a return that is slightly higher than T-bills. |
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