DEFINITION of 'Guaranteed Investment (Interest) Certificate - GIC'

A deposit investment security 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.

BREAKING DOWN 'Guaranteed Investment (Interest) Certificate - GIC'

The bank's profit is the difference between mortgage rates and GIC rates. If mortgages are at 8% and GICs are at 5%, then the bank makes 3%.

GICs offer a return that is slightly higher than T-bills.

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