Guaranteed Investments

GIC’s are issued in your name and can’t be sold except to the institution that issued them. You agree to keep the money in the GIC for a set period in return for a set rate of interest. Compound GIC’s pay you interest on your interest. Instead of paying the interest to you outside the GIC, the interest is added to your original deposit. This means you’ll get more money in subsequent interest periods. A $1,000 deposit in a three-year compound GIC that pays interest of 5% per year will earn you $50 (5% of $1,000) the first year, $52.50 the next year (5% of $1,050) and $55.13 in year three. At the end of the term your money will have grown to $1,158. If you need to get your money before the end of the GIC’s term, you will likely be penalized by getting less interest on your money than was initially agreed.