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What are GICs?*
GICs (Guaranteed Investment Certificates) are a type of deposit investment that investors often purchase to provide low-risk fixed income. When you purchase a GIC you are agreeing to keep those funds allocated to the GIC for a certain period of time (one year, two years etc...) and in exchange the funds you invest earn interest. Generally GICs are seen as a very low risk investment since they are insured by the Canadian Deposit Insurance Corporation (CDIC) for terms of five years or less on Canadian funds.
Early Withdrawals & Penalties
If you require you money back before the maturity date of the GIC you may be charged a penalty. Some GICs are non-redeemable and are generally locked in until the maturity date; however, some GICs also are also cashable or redeemable before their maturity date, but pay lower interest. Your advisor at The Wright Brothers can help you decide which GIC features are suitable for your individual financial needs.
Taxes on GICs
Taxes on GICs are assessed as interest income when they are not held in registered accounts. Investors should consult a tax professional to see how interest payments from GICs will impact their taxes in the year that interest is earned.
GICs In Registered Accounts
If you're looking to shield the interest you earn on GICs from taxes they can be held in registered accounts like TFSAs, RRSPs and RRIFs.
Curious About Your Financial Needs In Retirement?
Get a professional opinion. The Wright Brothers offer a complimentary financial needs analysis tool. To take advantage of this please download the tool and follow the provided instructions.
*Guaranteed Investment Certificates (GICs) are offered through Investia Financial Services Inc. and/or multiple carriers.