A guaranteed investment contract (GIC) promises at least a guaranteed minimum return on an investment over a certain period. GICs are similar to certificates of deposit offered by banks, but GICs are found in employer retirement plans and they’re sold by insurance companies.
Guaranteed Investment Contract
Also called: GIC
What is a guaranteed investment contract?
GICs are usually extremely safe but low-earning investments, similar to bank CDs or T-Bills but with a higher yield. That higher yield comes with risk, though, because your principal investment is not “guaranteed”; only the minimum return of the GIC is. In the unlikely event that the insurance company issuing the GIC becomes insolvent, you could lose money. Bank CDs, on the other hand, are covered by the Federal Deposit Insurance Corporation, or FDIC, and Treasuries are backed by the full faith and credit of the U.S. government.