A Guaranteed Investment Certificate (GIC) is a type of financial product sold by Canadian banks and trust companies. It is a low-risk investment that provides a guaranteed return. When you buy a GIC, you agree to lend money to a financial institution for a fixed period of time at a fixed interest rate. The bank or credit union will pay you a higher interest rate if you’re willing to let them keep your money for a longer time. The longer the term, the more interest you earn. When you buy a GIC, you are essentially creating a contract with the borrower (the financial institution) that says you will be paid a certain amount of interest once the term is over. GICs can be held in non-registered and registered accounts (RSP, RESP, RIF, and TFSA) . GICs held in registered accounts allow you to grow your savings tax-free, while non-registered GICs are taxed by the government, and the interest earned is considered taxable interest income.

Key features of GICs include:

• Guaranteed return: GICs generally provide a guaranteed return.
• Fixed interest rate: GICs have a fixed interest rate for a fixed period of time.
• Low risk: GICs are considered low-risk investments.
• Insured: Financial institutions that sell GICs are legally obligated to return investors principal and interest, and investors are insured for up to 100,000 Canadian dollars by the Canadian Deposit Insurance Corporation (GDIC) .
• Different types: There are different types of GICs, such as long-term GICs, foreign currency GICs, and market growth GICs.

To summarize, a GIC is a type of investment product that provides a guaranteed return for a fixed period of time at a fixed interest rate. It is a low-risk investment that can be held in registered and non-registered accounts.