FREE 10+ Bank Investment Contract Samples in MS Word | Google Docs | Apple Pages | PDF

You may need an investment contract as a small-business owner to bring in outside investors or to make routine investments in other businesses. An investment contract is a simple agreement that outlines the parameters of an investment as well as when and how the investor can anticipate a return. Many comparable clauses will be found in most simple investment contracts. The names and addresses of the parties, the main aim of the investment, the date the agreement is being formed, the basic structure of the investment, and the signatures of the relevant parties should all be included in an investment contract.

10+ Bank Investment Contract Samples

A bank investment contract (BIC), also known as a Bank Deposit Agreement, is a contract between a bank and an investor in which the bank guarantees a rate of return in exchange for the investor retaining a deposit for a set length of time (several months to several years). Guaranteed investment contracts (GICs) are similar to BICs, however, GICs are issued by insurance firms, whereas BICs are issued by banks. The issuer (the bank) guarantees the return of the investor’s money and pays a set or variable rate of interest until the contract expires. Meanwhile, the bank tries to gain a bigger return on the investment than the investor has committed to pay.

1. Bank Investment Contract Template

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7. Company Bank Investment Contract

8. Guaranteed Bank Investment Contract

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10. Bank Value Investment Contract

11. Bank Program Investment Contract

Understanding Bank Investment Contract

Guaranteed investment contracts (GICs), which are provided by insurance firms, are comparable to bank investment contracts. Despite the fact that these contracts typically contain low-risk securities, they are extremely illiquid, meaning they cannot be easily sold or exchanged for cash. Investors who purchase these contracts are typically expected to keep the funds invested for the term of the contract.

BICs have the advantage that, unlike certificates of deposit (CDs), they generally allow for further incremental contributions, all of which earn the same guaranteed rate.

Advantage of Bank Investment Contract

BICs are secured by the assets of the issuing bank or financial organization. BICs are widely used by pension plans as part of a diversified portfolio that comprises a mix of low-, medium-, and high-risk investments. BIC investors get a guaranteed rate of return that tries to beat fixed-income investments like CDs, savings accounts, and Treasury notes. Other benefits of BICs include the possibility for investors to invest over time rather than in a single lump sum. Many BICs include a few-month deposit window during which the investor can invest in the BIC and get the guaranteed interest rate for the length of the contract.

The disadvantage of Bank Investment Contract

BICs have a number of drawbacks that make them less appealing to some investors. Interest rate risk, inflation risk, and liquidity risk are the three main risks that BICs face. Even if interest rates climb throughout the holding period, the BIC investor will only get the lesser rate set in their contract. Increased inflation reduces the purchasing power of a BIC, lowering its returns. Because BICs are illiquid, they can’t be sold on the secondary market if the investor needs cash immediately. BICs are neither FDIC-insured nor backed by the government. If the issuing bank or financial institution fails to meet its obligations to investors, a BIC holder may lose money.

FAQs

If you want to see more samples and formats, check out some bank investment contract samples and templates provided in the article for your reference.