Bankers View: Guaranteed Investment Certificate vs Mutual Funds

Guaranteed Investment Certificates 

Term Deposits

Money you put in to the GIC is fully secure 100%
The interest rate is fully guaranteed 100%
If the interest rates go down the rate that you were given for the investment stays. 
Your own access to these funds is limited. 

Types of GICs / Term Deposits

Cashable GICs

Rates are lower than non-cashable GIC’s

Might be cashable after 30 days

The interest rate might be guaranteed for 12 months

Example: GIC # 1

Rate = 1.15%

Term = 12 months

Cashable: After the first 30 days

Semi Cashable GICs

Rates are lower than non-cashable GIC’s

Might be cashable after 6 months  

The interest rate might be guaranteed for 12 months or longer

Example: GIC # 1

Rate = 1.50%

Term 18 months

Cashable: After every 6 months

Rate Riser GICs

Sometime give better rates than non-cashable GICs

Usually Cashable every 12 months

Example: GIC # 1

Rate = 1^st Yr 1.55%

            2^nd Yr 2.20%

            3^rd Yr 3.00%

Locked In GICs

No access to your funds until the term has come due

Higher rate usually compared to rising rate GICs

Example:

Rate: 3.99%

Term: 1 to 5 Year locked in GIC