Short answer: a GIC gives you a guaranteed but modest return, a bond gives you tradable income with interest-rate risk, and a MIC targets a higher income stream — commonly 6–10% in Canada — backed by mortgages on real estate, in exchange for less liquidity and no guarantee. Here is the side-by-side.
| GIC | Government / corporate bond | MIC | |
|---|---|---|---|
| Typical yield | ~3–5% | ~3–6% | ~6–10% (target, not guaranteed) |
| Guaranteed? | Yes (CDIC up to limits) | Government bonds very high quality; corporates vary | No — capital at risk |
| Backed by | The issuing bank | The issuer’s credit | Registered mortgages on real estate |
| Income paid | At maturity or periodically | Semi-annual coupons | Monthly or quarterly distributions |
| Liquidity | Low (locked to term) | High (trades daily) | Low (closed period + notice) |
| Interest-rate sensitivity | Low (held to maturity) | High (price falls when rates rise) | Low (short mortgage terms) |
| Registered-account eligible | Yes | Yes | Often yes (RRSP/TFSA/RRIF/LIRA) |
| Best for | Capital you cannot risk | Liquidity + a rate view | Higher income, comfortable with the terms |
What is a GIC, and what is the trade-off?
A Guaranteed Investment Certificate pays a fixed, CDIC-insured return if you lock your money in for a set term. It is the safest of the three — and usually the lowest-yielding. The trade-off is opportunity cost: in exchange for a guarantee, you accept a return that may barely beat inflation, and your money is tied up until maturity.
What about bonds?
A bond is a loan to a government or company that pays periodic interest (coupons) and returns principal at maturity. Bonds are liquid — you can sell them any day — but that liquidity comes with interest-rate risk: when rates rise, the market price of existing bonds falls. Government bonds are very high quality; corporate bonds pay more but carry credit risk.
Where does a MIC fit?
A MIC sits further along the risk-and-reward line. It pools investor capital and lends it out as mortgages secured by real estate, passing the interest income back as regular distributions. Because the loans are short and secured, a MIC is relatively insensitive to interest-rate swings — but it is not guaranteed or insured, and it is the least liquid of the three. As an illustration, the Morex Fund’s Class A shares have averaged 8.06% a year since 2012 (net of fees, past performance is not indicative of future results), paid quarterly, secured by mortgages at an average LTV around 69%.
So which should you choose?
It depends on the job the money has to do:
- Capital you cannot afford to lose, or need soon — a GIC’s guarantee is hard to beat.
- You want daily liquidity or have a view on interest rates — bonds give you that flexibility.
- You want a higher, real-estate-backed income and can accept a fixed term and limited liquidity — a MIC is built for exactly that.
Many investors use all three in different sleeves of a portfolio. The right mix is a personal decision best made with a qualified advisor.
- GIC = guaranteed, low yield, locked in. Bond = liquid, rate-sensitive. MIC = higher target income, secured by real estate, not guaranteed.
- MICs typically target 6–10% in Canada versus roughly 3–5% for GICs.
- All three can usually be held in registered accounts (RRSP, TFSA, RRIF).
- Higher income always comes with a trade-off — usually liquidity and the loss of a guarantee.
Curious how the MIC side works in practice? Read are MICs safe?, see how to hold one in a TFSA or RRSP, or request investor information.
