Gic

Tax Glossary Definition

Gic

Guaranteed Investment Certificates (GICs) are fixed-income securities that provide investors with a guaranteed return on their investment and protect their principal. Despite their reputation for safety and stability, GICs have limitations. This article explores the full form and features of GICs, the various types, their benefits, and considerations for potential investors.

Example of a GIC Investment

Scenario:

Investment: ₹1,00,000 in a 3-year fixed-rate GIC
Interest Rate: 5% per annum, compounded annually

Return at maturity:

$Amount=1,00,000×(1+0.05)3≈₹1,15,762\text{Maturity Amount} = 1,00,000 \times (1 + 0.05)^3 \approx ₹1,15,762$

Principal = ₹1,00,000
Interest earned = ₹15,762

The investor knows exactly how much they will earn at the end of the term, making GIC a safe and predictable investment option

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