What is the difference between Term Deposit and GIC?

Term deposits and GIC are necessary and secure financial instruments. Term deposit refers to an investment that an individual deposits for a fixed period. GIC stands for Guaranteed Investment Certificate.

It is a type of investment that guarantees a return on investment over a specified period. The significant difference between these two investment instruments is that term deposits are cashable even before the investment reaches the maturity period. GIC investment is locked in and cannot be redeemed until it reaches the maturity period.

Also, term deposit has a short investment period usually within days to 1 year but GIC for at least a period of 1 year or even up to 5 years. The interest rest in GIC is also high than the interest offered for a term deposit.

As a retirement savings plan, you contribute to it from your salary, and your contributions are free from tax. The result is savings for you. The money multiplies earning interest and remains tax-free until you withdraw at the time of retirement.

The primary purposes are to encourage a person to save for retirement as a pension from the government might not lead to secure living. GIC stands for Guaranteed Income Certificates, or GIC is saving instruments issued by banks and trust companies.

They hold certain interests, which is often higher than the typical savings account. RSP is a retirement plan, while GIC is a term- based certificate. RSP can be opened at any time, and the contribution to RSP and the interest earned are tax-deferred. If your ambition is to earn tax benefits, go with RSP.