When we think of asset classes, there are 2 types: stocks and bonds. Where does an investment like a GIC fit in? It is not a bond, nor is it a stock.

  • There are more than 2 types of asset classes. You're only mentioning perhaps the top 2 that come to mind. Cash, commodities, real estate, etc. are examples of some others. – Chris W. Rea May 17 '11 at 3:44

There is a third type of asset that a GIC falls into: Cash.

So while it does share some characteristics of a bond, such as (often) having a fixed interest rate, and having the ability to ladder their maturities, they would generally be considered part of your Cash component of your portfolio.

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    in my opinion, cash implies liquidity, and GICs are not necessarily liquid. Certainly cashable GICs are essentially cash-equivalent, but not when there's an early withdrawal penalty. – Jason B May 13 '11 at 6:02
  • IMHO, I would tend to look at either cashable or short-term GICs (less than 1 year to maturity) as cash-equivalent, and consider the rest as fixed-income. – Chris W. Rea May 17 '11 at 3:47

Instead of "stocks" I would refer to that asset class as "equity." Instead of bonds, I would refer to that asset class as "fixed income." Given that more general terminology, GICs would fit into fixed income.

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