What is GIC?
A GIC is a fixed income term investment. The principal and the return (interest) are guaranteed. The rate of return will vary pending on the length of the maturity. For instance a five-year GIC will give a higher return than a one-year GIC. The drawback to the guarantee is the low rate of return the investor will receive.
Interest Earn Report For Tax Purpose
Interest earned from a GIC cannot be reinvested back into the same GIC and must be claimed as income earned that same year and taxed accordingly.
Why GIC?
Despite the current low return and the taxes associated with interest income, a GIC should still be a part of a well-diversified investment portfolio. For the investor with a shorter timeline to retirement, a GIC is highly recommended as a part of an investment strategy, in order to preserve capital.
Meeting Your Needs with GIC from CITY Finance
CITY Finance Advisor can help you begin planning today.
