Business and Personal Finance Dictionary

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• GUARANTEED INVESTMENT CONTRACT (GIC)
  
  A GIC (pronounced gick) is a promise to preserve your principal and to provide a fixed rate of return when you begin to withdraw from the contract, typically after you retire. You can invest in a GIC through a salary-reduction plan, such as a 401(k) or 403(b) sponsored by your employer, provided that investment option is offered. Because of their fixed rates, GICs are vulnerable to inflation. And you may have to pay a penalty if you decide to change from a GIC to a different investment. Insurance companies that offer GICs assume the risk that the rate they earn on their investments will outperform the rates they've guaranteed on the GICs.
  
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