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Cash and Cash Equivalents

This includes money in your bank account and investments that are like cash because they are generally considered less risky and may give you quicker access to your money. They may have relatively low rates of return because they are less risky than other kinds of investments.

Guaranteed Investment Certificates (GICs) are an example of a security found in this asset class. 

Guaranteed Investment Certificates (GICs) or Savings Bonds 

GICs are certificates of deposits at a bank, trust company or credit union for a fixed period of time. Terms typically range from 30 days to 10 years. The end of the term is known as reaching maturity. 

You can choose between two types of GICs: interest-bearing and index-linked. Interest-bearing GICs pay a fixed rate of interest to maturity. The rate of return on index-linked GICs may vary based on the performance of an index, such as a stock market index. Most GICs must be held to maturity, but some may allow you to redeem early. You may have to pay a penalty with early redemptions.

GICs are guaranteed by the issuer (for example, financial institutions). In addition, the principal (your original investment amount) may be insured up to certain limits by a deposit insurance agency, like the New Brunswick Credit Union Deposit Insurance Corporation or the Canadian Deposit Insurance Corporation (CDIC). However, if the GIC’s return is tied to an index, there may be a risk that interest payments will be lower than expected, or there may be no interest payments at all.