Guaranteed Investment Return

Does not hearing the word guaranteed investment return sound sweet to your ears? How nice, you would say to have a guarantee on your investment. Some banks in the country of Canada do exactly the same. They offer you a certified guarantee on your investment, and these certificates are called as GIC or the guaranteed investment certificate.

How do these GIC work? Simple they take your money, a lump sum amount; a minimum amount is $500. The bank takes this $500 from you and you need to sign an agreement in return for the GIC purchased by you. The agreement may entail many terms and conditions. But the basic feature is that the money which you hand over to the bank is going to be invested by the bank in some other financial trading like the utilization of your money to give loans to some other borrower at a comparatively higher rate. The income which is guaranteed on this investment comes from the interest paid out to you by the bank for using your money in their lending business.

The minimum term of investment is 30 days and the maximum is 10 years, with other options like 1 year, 2 years, 3 years and 5 year options also available.

This is an excellent investment option for the people who are afraid to take risks; they can sleep well at night in spite of putting their hard earned money in to the bank's pockets. The guarantee certificate is surely a good method to attract these risk averse investors. The usual types of investors are in the retirement age group, and they find it quite comfortable to park their money in the security of the bank's guaranteed investment returns plan.

But one thing is needed to be recognized, that there can be situations like non payment of any interest if in case you withdraw your principle amount earlier than your term. For instance if you have deposited the principle amount of $500 with the bank for 30 days and you suddenly need your principle back, within 20 days, due to some emergency, then you may not get any interest for the 20 days, and will be given back only your principle. So it would be wise to put only the money which you will not need back soon.

The interest can be opted to be paid in monthly, quarterly, half yearly or annual basis, the choice is entirely yours.