What is a guaranteed investment contract?
, also known as GIC, a guaranteed investment agreement is a legally binding agreement that is most commonly used with investment opportunities involving insurance companies. The guaranteed investment agreement introduces the issuer to fulfill the investor of the investor invested amount, and according to the structure of interest rates recorded under the conditions, introduces an issuer that fulfills a function that is somewhat as with the deposit certificate issued by the Komerční banka. This type of guaranteed agreement can carry a fixed interest rate or specify a type of process that is used if a variable or floating interest rate is used.
The guaranteed investment agreement is also somewhat as a problem with the bond in the fact that the terms of the agreement include the due date. In most cases, there are no payouts during their lives. Instead, the investor receives the main investment at the time of maturity and any accumulated interest. Thjsou examples of this type of contract that provide periodic payments of interestThroughout the life of the contract, but they are somewhat less common.
One of the advantages of the guaranteed investment contract is that the risk rate is not more than a bank certificate issued by a bank and offers a higher return. Thanks to this advantage, the contract is an ideal choice for anyone who prefers more conservative forms of investment, but wants to generate the best return. The stability of this type of investment tool is also a popular option with various pension plans, especially 401 (K) plans. If employers offer pension plans that contain the possibilities of how funds are invested on behalf of the employee, it is not uncommon for a guaranteed investment contract to be included along with options such as cash market funds.
How much of any type of investment opportunity is important to understand the exact nature of the guaranteed investment contract. This includes identification to see if the contract comes with a tusNou or movable interest rate, which is required in the path of minimum principle and the duration of the contract. Investors should also consider how interest payments are distributed and ensure that the process is according to their ideas. If something seems to be confusing or not easily grasped by an investor, it is important to consult with experts who can explain what is, according to the clause or provision that the investor has difficulty understanding.