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Michael Chen Financial AdvisorMutual Funds Investment Specialist
Financial Advisor
Mutual Funds Investment Specialist
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Finding a balance between growth and security
A market-linked term deposit or GIC is one where the rate of return is linked to the performance of a basket of named equities (stocks),† offering the potential for higher growth than traditional fixed rate term deposits. Your principal deposit is guaranteed, but how much money you'll make at the end of the term is determine by market performance.
This differs from a standard term deposit, where the interest rate is specified at the time of your deposit.
How it works
The rate of return calculation varies depending on the specific market-linked term deposit. However, in general, the rate of return is determined by the average of market performance for the named basket of equities, based on specific evaluation dates. It is then compared to the starting value of the securities to determine the percentage change. When your market-linked term deposit matures, your principal is returned, plus any market-related returns.
Some market-linked products offer a guaranteed minimum return in addition to principal protection. Others may offer an even greater earning potential but do not offer a guaranteed minimum (still with principal protection).
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