Guaranteed Investment Contracts?

[james.hendrickson]

From Wikipedia:

A guaranteed investment contract (GIC) is a contract that guarantees repayment of principal and a fixed or floating interest rate for a predetermined period of time. Guaranteed investment contracts are typically issued by life insurance companies qualified for favorable tax status under the Internal Revenue Code (for example, 401(k) plans). A GIC is used primarily as a vehicle that yields a higher return than a savings account or United States Treasury securities and GICs are often used as investments for stable value funds.[1] GICs are sometimes referred to as funding agreements, although this term is often reserved for contracts sold to non-qualified institutions.

I know this asset class has a bad reputation due to having been involved in AIG's bankruptcy in 2000 and lawsuits in 2010, but I could see someone who is high net worth having a few of these to increase diversity in their portfolio.

Anyone here ever invested in these? How did you make out?

[TexasHusker]

From Wikipedia:



I know this asset class has a bad reputation due to having been involved in AIG's bankruptcy in 2000 and lawsuits in 2010, but I could see someone who is high net worth having a few of these to increase diversity in their portfolio.

Anyone here ever invested in these? How did you make out?

It works just like a bond, except you can always sell your bond. You can't resell one of these, at least that I know of.

[Captain Save]

Does it typically yield higher than the stable value fund in your 401k?