Investing

GICs for Safe and Secure Investing

A Guaranteed Investment Certificate (GIC) is a secure investment that is guaranteed to preserve your money. With a GIC, your investment earns interest at a fixed rate, variable rate, or based on a market-linked formula. For many people, GICs (or other conservative fixed-income investments) are a good investment choice for an investment portfolio as a measure of security.

How GICs Work

GICs allow you to invest a lump sum of money for a specific period of time depending on the GIC that you choose. When that time period is up, the GIC reaches “maturity” and you can then access your investment and the interest it has earned.

Some GICs specify that your money must remain “locked in” for a minimum period of time (such as one month) but you can then access your money before it matures. Others, like the RBC Building Block GIC^®, provide even greater flexibility by allowing you to make additional contributions on a weekly, biweekly or monthly basis.

Length of time your money will be invested. Your GIC investment earns its guaranteed interest for a specified term. Terms are flexible and range from one day to five years, seven years and ten years. Generally, the longer the term, the higher the interest rate.

GICs can be redeemable or non-redeemable:

• Redeemable GICs allow you to cash-in or withdraw your money before the maturity date. With some redeemable GICs, you will earn less interest if you cash them in early.
• Non-redeemable GICs may offer you a higher interest rate but do not allow you to cash-in before the maturity date. Your money is “locked in” for the entire term.

The interest rate you’ll earn. GICs can offer interest that is fixed or variable (such as those that are linked to interest rates or the market).

• Fixed rate. With a GIC that offers a fixed or set rate, the interest you earn is consistent for the term of your GIC; you can predict exactly how much it should be worth at maturity.
• Interest-rate linked. With a variable-rate GIC, the interest you earn is linked to the RBC Royal Bank Canadian prime interest rate. With these, you are guaranteed that your money will grow but you don’t know the exact value of your GIC until the maturity date; however, you will earn more with an interest-rate linked GIC than with a fixed rate GIC should interest rates increase.
• Market-linked. This is a variable-rate GIC whose growth is affected by stock-market performance. Market-linked GICs come with the possibility of higher earnings while retaining a guarantee on your initial investment.

GICs Offer Many Benefits

GICs are popular investment choices and offer specific advantages over other types of investments.

• Safety and security. Your original investment is guaranteed.
• Guaranteed growth. The interest you earn is guaranteed with fixed-rate GICs, so you can predict exactly how much it should be worth at maturity.
• Excellent interest rates. GICs offer competitive interest rates.
• Flexible terms. Different types of GICs have different options, so you can choose the term that works best for you; for example, one day to five years, seven years or ten years.
• Flexible payments. With some GICs, you can choose how you collect the interest you earn, such as monthly, annually or at maturity.
• Can be part of your registered plan. If you choose to include GICs in your Registered Retirement Savings Plan (RRSP) or Registered Education Savings Plan (RESP) you can enjoy the benefits of tax-deferred growth.

The Right Choice with RBC Royal Bank GICs

RBC Royal Bank offers a variety of GICs to match your needs and give you all the advantages GICs have to offer.

Guaranteed-Return (or fixed-rate) GICs:

• Non-Redeemable and Redeemable — both the amount you invest and the interest you receive are guaranteed.
• Building Block GIC — you decide an amount that will be contributed to your GIC regularly and automatically (weekly, biweekly or monthly) so that your investment keeps growing.
• Five-in-One GIC — divides the money you invest into five equal parts, each with their own maturity date of one to five years so that you’ll have options every year, a strategy known as “laddering”.
• One-Year Cashable GIC — after 30 days, this GIC is cashable without penalty.
• Rate Advantage GIC — the amount of interest you earn increases every year. You can also invest in a cashable version so that you have the option of cashing it in at each investment anniversary.
• U.S. Dollar Term Deposits — if you are investing U.S. dollars, this GIC is non-redeemable but comes with a variety of terms to suit your needs.

Interest-Linked GICs:

• Prime-Linked Cashable GIC — one-year GIC that is linked to changes in the RBC Canadian prime interest rate. With this GIC, you can cash it in without penalty after 30 days.

Market-Linked GICs:

• Canadian Market-Linked GIC^® — the interest you earn increases as the S&P/TSX 60 Index increases.
• Global Market-Linked GIC^® — the interest you earn increases as a weighted basket of international stock-market indices increase.

Get the Right Advice

You have many options and choices (some more complicated than others) when it comes to choosing a GIC that’s right for you. To make the right choice, get the advice you can trust by contacting an RBC representative.

	Contact an RBC Investment representative by phone, email or in person
	Find out more about RBC Royal Bank GICs
	Use the RBC Royal Bank GIC Selector tool

The content of this website is provided for the general guidance and benefit of our clients. This website is for informational purposes only and is not intended to provide specific advice. See full disclaimer.

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