Asked by StuartV  |  Submitted July 15, 2014

What are Guaranteed Insurance Contracts (GICs) and can they be used to lend money?

The offer presented is to make deposit equal to 10% of the loan amount, which prepays interest of 7% over about 7 years. So for $1 million deposit you can get $10 million backed by a "GIC".

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  Answers  |  1

July 16, 2014

My answer is simple: avoid complexity in investing. If you don't understand it, don't do it. Most financial products like GICs involve a lot of complexity that is designed to favor the issuer, along with very high fees and risk that is hard to really understand. Stick with low fee stock and bond index mutual funds and you will be much happier in the long run.

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