Guaranteed Investment Certificates (GICs) are deposit investment securities sold by Canadian banks and trust companies. They are often bought for retirement plans because they provide a low-risk, fixed rate of return. Your original investment value is 100% guaranteed, and depending on what type of GIC you choose, you may earn a guaranteed rate of return for a certain time period. The principal is at risk only if the bank defaults. GICs offer a return that is slightly higher than T-bills.

Term Deposits

Term deposits are held at a financial institution for a fixed term. These investments are generally short-term with maturities ranging anywhere from a month to a few years. When you purchase a term deposit, you (the lender) can only make withdrawals after the term has ended or by giving a predetermined number of days notice. Term deposits are safe investments, and are appealing to conservative, low-risk investors. By having the money tied up, you’ll generally get a higher rate with a term deposit compared with a demand deposit.

Treasury Bill (T-Bill)

T-bills are short-term debt obligations backed by the Canadian government with a maturity of less than one year. T-bills are sold in denominations of $1,000 up to a maximum purchase of $5 million. They commonly have maturities of one month, three months, or six months. T-bills are issued through a competitive bidding process at a discount from par, which means that rather than paying fixed interest payments like conventional bonds, the appreciation of the bond provides the return to the holder.