B
C
Cashable (also called redeemable)
A GIC that lets you withdraw your money early but there may be a penalty. For example, CIBC's cashable GICs don't pay interest if you cash out in the first 29 days. After 29 days, there's no interest penalty, so you're paid full interest up to the day you withdraw your money.
Cash out
When you take money out of your GIC account.
Compound interest
A way of growing your money where the interest you earn is added to the original amount you invested. The power of compounding also means you earn interest on your interest.
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D
E
Equities (also called stocks)
Shares of a company that investors can buy on the stock market. Being a shareholder means you own a part of that company.
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F
Fixed rate
An interest rate that doesn't change during your GIC term. This means you'll know in advance how much you'll earn.
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G
GIC (Guaranteed Investment Certificate)
A reliable investment that protects the money you deposit. When you buy a GIC, you choose how long you want to invest your money for, called a term. When the term is over, you get your deposit back, plus the interest you earned.
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H
I
Interest
The return you make when you invest in a GIC.
Index
A group of stocks or bonds that lets youmeasurethe performance of a market or sector of a market. You can use an index to get a sense of how well a market or sector is doing. For example, the S&P/TSX 60 Composite Index tracks the Canadian equities market and is made up of stocks from the 60 largest companies on the Toronto Stock Exchange.
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J
L
Laddering
A strategy that splits your investment intodifferent GICs to maximize your returns.For example, you can divide your money into 5 terms. Eachhas adifferent maturity date, from 1 to 5 years. Every year when a term matures, you can either redeem your money or reinvest it in a new 5-year GIC. Thisletsyou benefit from higher rates that long-term GICs typically offer withoutinvestingall your money in one long-term GIC.
LIF (Life Income Fund)
A locked-in RRIF that holds funds from a pension plan. With a LIF, you only pay taxes on the money you take out. There are minimum and maximum withdrawal limits each year. The purpose of this plan is to give you an on-going source of income when you retire.
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M
Market Linked GIC
A GIC that's tied to the market, as opposed to an advertised rate. Your return from a Market Linked GIC is based on the performance of underlying assets, which may include equities, indices or interest rates. This means you won't know in advance how much you'll earn, but the growth potential is higher than a fixed-rate GIC.
Maturity
The end of your GIC term. For example, a GIC with a 3-year term matures at the end of the 3 years.
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N
Non-cashable
Refer to non-redeemable.
Non-redeemable (also called non-cashable)
A GIC where your money is locked in for the entire term. Non-redeemable GICs typically have higher interest rates than cashable GICs.
Non-registered
An investment account that’s not registered for tax purposes. You pay taxes on what you earn in the account, but not on withdrawals. There are also no contribution limits.
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O
Q
R
Redeemable
Refer to cashable.
Registered
An investment account that's registered for tax purposes and offers tax advantages. Depending on the type of registered account, you can grow your money tax free or defer paying taxes until you make a withdrawal. Some registered accounts have limits on how much you can contribute.
RESP (Registered Education Savings Plan)
An investment account that helps you save for your child’s post-secondary education. You don't get a tax deduction on the money you contribute. But your investment grows tax free until the money is used for post-secondary education. The contribution limit for RESPs is $50,000 per child.
RRSP (Registered Retirement Savings Plan)
Aninvestment account that helps you save for retirement. You won’t pay taxes on the money you deposit or earn in your RRSP until you take your funds out. But there are limits on how much you can contribute each year.
RRIF (Registered Retirement Income Fund)
An investment account that lets you turn your RRSP savings into retirement income. After you transfer your RRSP savings into your fund, you only pay taxes when you withdraw money from your RRIF. This means your investments aren't taxed, so they can grow more while they're in your RRIF. There's a minimum amount you have to withdraw each year, but there's no maximum.
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S
Stocks
Refer to equities.
Simple interest
The money you make on the original amount you invest. Simple interest doesn’t compound, meaning you only earn interest on your initial investment.
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T
Term
How long you're investing your money in a GIC.
TFSA (Tax-Free Savings Account)
Aninvestment account that lets you grow your moneytax free, as long as you stay within your contribution limits.With a TFSA,youdon't get a tax deduction on the money you deposit. Butany incomeyou earn in the account won't be taxed, even if you make a withdrawal.
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V
Variable rate
An interest rate that's tied to abenchmark rateor index. This means the variable rate goes up or down when the market does. CIBC's variable rate is based on the CIBC Prime Rate.
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W
X
Y
