What is a guaranteed investment certificate?
A guaranteed investment certificate, or GIC, is a way of saving money available in Canada. The warranty concerns the fact that the return rate is solid, although in some versions it can be variable and are simply conditions that are solid. The warranty does not apply to the certainty that the investor will receive his money back, although the warranty investment certificate will usually be supported by the government regime if the bank issues the certificate fails.
The concept covered by a guaranteed investment certificate is known in other countries as a term or time deposit. This means that the money is stored for a fixed period of time and then returns with the addition of the agreed interest rate. The person who has taken the guaranteed investment certificate lends his money to the bank. Generally, the interest rate will be more than in the deposit account, which reflects the fact that the money is tied, but less than investment products such as supplies where there is a greater risk.
Most GICS simply offers a fixed return speed. This will be agreed if the certificate is discarded and will usually differ on the basis of the amount invested, the duration of the fixed period and the predominant interest rate for other forms of lending and investing. Some forms of GIC pay a variable interest rate based on the performance of the designated stock market during the certificate duration. In most cases it will be limited, so there will be maximum interest payment, even if the specified performance overcomes this rate. Meanwhile, if the market has a negative return level, the savior will still get its money back in full, but of course it will not be interested.
Banks will be shown whether a specific guaranteed investment certificate is registered or unregistered. This applies to his tax status concerning Saving for retirement. With the registered GIC, the saver will be able to deduct the amount that he pays to the system from his taxable income, except for fixed limits. Nor will they have to PLAtit tax on the money growth he put into the system until he took money. Many savings simply invest money from every GIC in the new GIC and then pay the retirement tax.
Most banks issued by GIC are covered by Canada for deposit insurance. This means that if the bank fails, the saver will restore the money he has invested but does not necessarily have to obtain any interest payments. This protection only covers a GIC with a fixed duration of five or less.