Perhaps the greatest benefit of GICs is that they are straight forward and predictable. When you make an investment decision, you know exactly what to expect.

Investment size: The minimum investment in a GIC is fairly low (typically $1,000), and any amount in excess of the minimum can usually be invested. Bonds often require a large initial commitment, and additional amounts might be in relatively large increments, so that you are unable to invest exactly the amount that you have available. Bond funds are as flexible as GICs.

Maturity: GICs of one to five years in length, measured to the year, are always available and intermediate and longer maturities can often be arranged. Maturities of less than one year are offered but the minimum investment is higher (typically $5,000). The available maturities on bonds depend on market conditions therefore you may or may not find what you want. Bond funds do not mature per se.

Maturity Value: At maturity, you receive the principal of the GIC, which is equal to your original investment. A bond also repays the principal at maturity, but it is unlikely to equal your original investment because bonds trade at prices above and below the principal. Bond funds do not have a principal, and the value at the time of sale will not equal the initial investment.

Payments: Most GICs pay interest annually, or allow interest to be compounded (calculated but not paid) until maturity. More frequent payments can often be arranged. The interest paid always depends on the quoted rate. Bonds typically pay interest semi-annually. The payment depends on the coupon rate, which is not the same as the yield quoted at the time of purchase. Repackaged bonds, know as strips, are designed to provide compounding. Bond funds distribute payments monthly or quarterly and the amounts are not known in advance. You can also arrange to invest automatically in additional units.

Sources: GICs are issued by banks and other financial institutions, and can be purchased directly from the issuer and from specialists known as deposit brokers. Bonds are issued by governments and corporations, and a bought through stock brokers. Bond funds are set up by financial institutions and mutual fund companies and are available through stock brokers, mutual fund dealers, and some fund companies and institutions directly.