# WARNING: Guaranteed Investment Certificates RBC MarketSmart® GICs (CPG IntelliMarché)



## Tetsujin

I had a bad experience that I want to share with you. I'm a newbie trader. I am not Canadian-born citizen but by naturalization. When I arrived to Canada I didn't know so much about finances in Canada at the beginning. It took me about 8 months to read a lot about TFSA, RRSP, RESP, accounts and brokerages in books, Google, blogs, forums and following specialists in Twitter. It is still a long way to run even when it is not your main occupation, but it is rewarding to learn something new always.

I am RBC client and I talked with 2 agents to invest in a Guaranteed Investment Certificates (GIC) RBC MarketSmart (CPG IntelliMarché in French). This account is offered in a period of 1, 3 and 5 years. They explained me that I will earn the interest at the end of the maturity term. They told me that the GIC RBC MarketSmart is better than the common GIC because MarketSmart gives more interest rate. I REMARKED with these 2 agents (at different times) that I could cancel this plan and use my money anytime. They said "YES, SURE NO PROBLEM, I would lose the interest but not my base capital". 2 months ago I wanted to transfer my money to a DISCOUNT BROKER to start trading. I called to RBC by phone to cancel my GIC and they told me clearly that I signed a contract and my money is locked out for 5 years (3 years left). I went to the branch to proceed with the agent that opened the account with me. These agents always call by phone to confirm with someone else procedures (What makes me think that are just trained to sell). So he told me that I cannot cancel my GIC unless I have an extremely urgency. I told him: "you guaranteed me that I could cancel this GIC no matter when and you (the agent) are telling that my money is locked out for the 3 remaining years?" He apologized but there is a procedure and he is gonna talk with the manager of the branch to know whether he can break or cancel my GIC or not.

This is something nasty for me because I wanna use my money on something else. I already made more money in some weeks performing some trades but I need more buying power now instead to wait 5 years for guaranteed 1500$. Many of you maybe already know these financial vehicles better than me. For someone who is coming to Canada or even if you are Canadian-born citizen but don't know anything about these account types at banks and want to invest your money and take the risk on your own, BE CAREFUL. It is better to study well these plans and look out all the tiny letters of the contract before you sign it. Even if agents assure you that everything is gonna be ok. 

If you feel that you don't have the willing to invest you money on something else maybe these are plans that can work for you. But if not, be warned of my situation where you can feel that the money is not yours.

Hope this can help someone else to make better decisions


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## dotnet_nerd

One day you'll thank me for this...but RBC is doing you a favour. Leave the money in the GIC.

You've a had a taste of what we call _Get Rich Quick™_. Easy money in the stock market. After all this is Canada, right? Everyone gets rich?

Otherwise, here's what's going to happen. You're going to gamble your money in the market, taking bigger and bigger risks, chasing that next hot stock. Until your money is all gone.


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## alingva

Tetsujin said:


> It took me about 8 months to read a lot about TFSA, RRSP, RESP, accounts and brokerages in books, Google, blogs, forums and following specialists in Twitter.


There are plenty of books you can read to understand finance in Canada, Inside Banking for example



Tetsujin said:


> I REMARKED with these 2 agents (at different times) that I could cancel this plan and use my money anytime


You are rushing to invest in stock market the same time you even do not read what RBC has to say about Market Linked GICs, read this (ACCESS TO FUNDS - NO). How do you think you will be successful buying stocks if you do not understand these simple products (i.e. GICs)?
Sorry for being blunt but you should not rush to lose your money
BTW, RBC-broker has a very good practice program to trade stocks


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## carverman

Tetsujin said:


> I had a bad experience that I want to share with you.
> I am RBC client and I talked with 2 agents to invest in a Guaranteed Investment Certificates (GIC) RBC MarketSmart (CPG IntelliMarché in French). This account is offered in a period of 1, 3 and 5 years. They explained me that I will earn the interest at the end of the maturity term. They told me that the GIC RBC MarketSmart is better than the common GIC because MarketSmart gives more interest rate.
> 
> 
> 
> 
> 
> I REMARKED with these 2 agents (at different times) that I could cancel this plan and use my money anytime. They said "YES, SURE NO PROBLEM, I would lose the interest but not my base capital". 2 months ago I wanted to transfer my money to a DISCOUNT BROKER to start trading. I called to RBC by phone to cancel my GIC and they told me clearly that I signed a contract and my* money is locked out for 5 years (3 years left)*. I went to the branch to proceed with the agent that opened the account with me. These agents always call by phone to confirm with someone else procedures (What makes me think that are just trained to sell). So he told me that I cannot cancel my GIC unless I have an extremely urgency. I told him: "you guaranteed me that I could cancel this GIC no matter when and you (the agent) are telling that my money is locked out for the 3 remaining years?" He apologized but there is a procedure and he is gonna talk with the manager of the branch to know whether he can break or cancel my GIC or not.


If you got the paperwork for the RBC MarketSmart GIC, you should have seen that these are NOT REEDEMABLE until maturity. Most GICs
are structured that way to pay out more interest.



> This is something nasty for me because I wanna use my money on something else. I already made more money in some weeks performing some trades but I need more buying power now instead to wait 5 years for guaranteed 1500$. Many of you maybe already know these financial vehicles better than me. For someone who is coming to Canada or even if you are Canadian-born citizen but don't know anything about these account types at banks and want to invest your money and take the risk on your own, *BE CAREFUL. It is better to study well these plans and look out all the tiny letters of the contract before you sign it. Even if agents assure you that everything is gonna be ok. *


*




With the RBC MarketSmart GICs with Guaranteed Minimum Return, you don't have to choose because you get the best of both worlds in one simple investment solution.

Limited-Time GIC Rate Specials*

Limited Time GIC Specials	Interest Rate
18-Month Non-Redeemable GIC 1.050%
Cashable RateAdvantage GIC® 1st Year – 0.750%
Cashable at each anniversary.
2nd Year – 1.150%
3rd Year – 1.500%
Yield to Maturity – 1.1305%

5-Year Non-Redeemable GIC 1.450%
Five-in-One GIC® 1.300%
Access 20% of principal annually

Benefits of an RBC Royal Bank GIC

Click to expand...

Yes, always good to read the fine print in any contract BUT you need to know the difference between NON-REDEEMABLE and REDEEMABLE, before you commit and lock in your money. 

I bought a 5 year term GICs 2 years ago. These are not redeemable until maturity, each GIC matures after one calendar year has occurred
in the 5 year period invested. Then the bank returns the principle back to me at the day of maturity. However, I get the interest deposited monthly in my savings. 

Although I have 3 more years to go on my INITIAL $50K investment, ($10k invested for each GIC year),
the bank has paid me back $20k (over 2 years) + interest already as promised in the contract. 

Yes, I still have to wait 2+ years to get the rest of my principle invested in GIC back, but for me, not willing to gamble in any kind of investment market.
GICs are a safe bet and I GET all of my money back..including interest earned over 5 years. I just have to wait for two more years.





If you feel that you don't have the willing to invest you money on something else maybe these are plans that can work for you. But if not, be warned of my situation where you can feel that the money is not yours.

Click to expand...

What do you mean "where you can feel that the money is not yours"???? You made a conscious decision to invest in NON REDEEMABLE GICs for (I presume) 5 years? Now you need to be patient and wait for YOUR MONEY to be paid back by RBC AFTER the 5 year term is finished.
That is the price you have to pay for locking up your money. Learn from it. IF RBC decides to refund your principle, the penalty you will
be paying is not earning any interest for the period you invested your money..plus any cancellation fees..as this is a CONTRACT that
you agreed on between yourself and RBC, and they have invested YOUR money on YOUR BEHALF already.




Hope this can help someone else to make better decisions

Click to expand...

Everyone investing makes their decisions based on their needs and the willingness to take a chance on the markets. 
If you prefer to play in the investment market, don't go locking up your money in GICs, 
If you want to be safe with your money for lesser ...but steady returns and willing to wait `1 to 5 years..GICs may be the way to go.
Anyway, it is still better than having your money rot in a savings account these days.*


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## Beaver101

^ 


> Anyway, it is still better than having your money rot in a savings account these days.


 ... how can the money be rotting? You're helping the banks make money who in turn supposedly be helping shareholders make money, isn't it?


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## carverman

Beaver101 said:


> ^
> ... how can the money be rotting? You're helping the banks make money who in turn supposedly be helping shareholders make money, isn't it?


not concerned on how many billions of profit the banks make from squeezing their customers in TFSA and savings accounts, 
just what little growth I realize from my savings vs the real inflation rate..not the BS the gov't feeds us. 

Unless your savings are TFSA (limited to $5500 max contribution per year), you get 0.8% per year and then taxed on the interest.

IE: 
$1000 @ 0.8% per annum (simple interest) is: $8.00 maybe enough to buy that special latte at Starbucks with tax included?:grumpy:


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## newuser

dotnet_nerd said:


> One day you'll thank me for this...but RBC is doing you a favour. Leave the money in the GIC.
> 
> You've a had a taste of what we call _Get Rich Quick™_. Easy money in the stock market. After all this is Canada, right? Everyone gets rich?
> 
> Otherwise, here's what's going to happen. You're going to gamble your money in the market, taking bigger and bigger risks, chasing that next hot stock. Until your money is all gone.


Yep. Consider that a lesson learned. Can't trust the GIC and Mutual Fund pushers at the banks. Always read the fine print.

OP was lucky. The price for this financial lesson is very cheap -- in fact, OP will likely still get a return from the GIC.

I'm sure many of us paid a much higher price before buying into the stories of other pushers. My wall of shame includes: junior resource stocks, Nortel, AIC Mutual Funds, Labour-Sponsored Funds. Easily adds up to 5 figures.


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## carverman

newuser said:


> Yep. Consider that a lesson learned. Can't trust the GIC and Mutual Fund pushers at the banks. Always read the fine print.


Problem is that to read the fine print, you have to commit your money. Asking the right questions ahead of time can save a lot of headache later on if you change your mind. 

Most if not all, banks offer non-redeemable GIC at a higher interest rate because they know those funds are locked in for a specific period of time and unless it a hardship situation, you have to wait until the GIC matures before you get the principle and interest back. 
If they have redeemable GICs, those pay a lot less interest for the same amount of time...like Canada Savings bonds..which are 
redeemable/cashable but pay diddlys squat in interest these days. Even those you have to wait for a certain period of time before
they will become cashable. 
The banks take that GIC money to lend out as mortgages, so they don't want customers changing their minds just because they see some other form of investment returning more.

The OP should have done his homework first, and asked the right questions. 
Bank staff may not be knowledgeable at the time. They could tell you something that isn't exactly true, but maybe not because they are trying to push the sale..they may not know about contract cancellations.


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## MrsPartridge

Perhaps you can put the GICs into your RRSP *in kind*? If you have room to contribute and will do so anyway, then you would get money back. 

The big lesson here is the banks are not out to help us. They are all salespeople boosting their numbers to keep their jobs.


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## Beaver101

MrsPartridge said:


> Perhaps you can put the GICs into your RRSP *in kind*? If you have room to contribute and will do so anyway, then you would get money back.
> 
> *The big lesson here is the banks are not out to help us.* *They are all salespeople boosting their numbers to keep their jobs*.


 ... +2


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## OhGreatGuru

If OP's recollection of his conversation with the bank clerk is accurate, there certainly seems to have been either miss-communication or miss-representation, regardless of what he 'ought" to have known about the nature of GIC's. It was the clerk's job to make sure he understood what he was buying.

Just checked RBC's web site, and it's pretty clear you don't have "access to funds" with a Market-Smart GIC. http://www.rbcroyalbank.com/products/gic/canadian-market-linked-gics.html You would have to have a "cashable" GIC for that. So, who's mistake was this?


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## Tetsujin

Hi everyone. Thanks for your opinions. I accept the blame for my decisions. I didn't read at the beginning about all of these account types. Here in Canada there are a diversity of accounts whilst in other countries they are so much simpler. 

Anyway, I just remember when I went to the branch to open my High Interest Saving Account which was at 1.1% variable interest rate at that moment and a mutual fund in a RRSP, the bank's representative saw the amount of money that I had in my checking saving account and he advised me to invest it in a smart way. So I admit that I trusted him blindly. However in that moment I asked him clearly if I can use my money at anytime and he assured me face to face that I could cancel the GIC without any issue. If he would have answered that the money would be not-redeemable from the beginning (even if the info was in the web site) I wouldn't have not invested in 5 years but in 1 year maybe. That is my complaint and what I learned from this decision.


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## mordko

Tetsujin received a lot of flak for not reading the smallprint, as if everyone else does (not!)

The point to note is that the product is not kosher to start with. It's a marketing gimmick aimed at gullible. A trustworthy salesman wouldn't have recommended it in the first place.

Let's take their RBC US Marketsmart GIC. They give you between a paltry 3% and 10% after 5 years AND they lock up you money. At the very best you will earn CAGR of 1.92% (!) Alternatively they may be generous enough to award you 0.59% per year. 

So, at the very best you will get around what a good savings account would pay (and they let you have the money when you want it). At worst your real return will be below zero. 

If that's not taking a piss, I do not know what is.


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## Eclectic12

^^^^

Agreed.


Though were the blind trust placed in the friendly CRA rep calling to collect the money that was "owed" - there'd be a lot more angst than losing access to one's money for a while (i.e. total loss of the $$$).


Cheers


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## carverman

OhGreatGuru said:


> If OP's recollection of his conversation with the bank clerk is accurate, there certainly seems to have been either miss-communication or miss-representation, regardless of what he 'ought" to have known about the nature of GIC's. It was the clerk's job to make sure he understood what he was buying.
> 
> Just checked RBC's web site, and it's pretty clear you don't have "access to funds" with a Market-Smart GIC. You would have to have a "cashable" GIC for that. So, who's mistake was this?


 Hmmm?..good question. *Is the onus on the customer to know he is buying NON-REEDEMABLE GIC or a cashable GIC.*

IF you don't ask that question to the bank clerk and that part is omitted, AND you enter the contract (buy the GIC),
I would think you are stuck with that decision until maturity..UNLESS there is a HARDSHIP situation or death of the owner.

In case of Hardship needing those funds for emergency financial problems for the owner (or whatever), the bank MAY decide to refund the principle invested..but not the accrued interest.

However, if the bank clerk deliberately misled the purchaser into thinking that the GICs were redeemable any time, then it's the purchaser's word against the banks..and if it was all verbal (on the phone) at time of purchase...the bank will still give him a hard time to redeem the money from the GIC(s) prematurely.

here's some info on the kind of GICs and what one's options may be:
http://www.ratehub.ca/gics/penalty-early-withdrawal-gic


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## carverman

Tetsujin said:


> Hi everyone. Thanks for your opinions. I accept the blame for my decisions. I didn't read at the beginning about all of these account types. Here in Canada there are a diversity of accounts whilst in other countries they are so much simpler.
> 
> Anyway, I just remember when I went to the branch to open my High Interest Saving Account which was at 1.1% variable interest rate at that moment and a mutual fund in a RRSP, the bank's representative saw the amount of money that I had in my checking saving account and he advised me to invest it in a smart way. So I admit that I trusted him blindly.
> 
> *However in that moment I asked him clearly if I can use my money at anytime and he assured me face to face that I could cancel the GIC without any issue. *If he would have answered that the money would be not-redeemable from the beginning (even if the info was in the web site) I wouldn't have not invested in 5 years but in 1 year maybe.
> 
> That is my complaint and what I learned from this decision.


You are saying then, that you were *misinformed verbally by a RBC banking representative*, about redeeming a non redeemable GIC before you purchased the GIC ? 

Do you still remember who in bank sold you the GICs and told you that? 
If you do and know his name, you could talk to the branch manager to see if RBC can do anything for
you. 
At time of purchase, the GIC you were interested in (or told to buy) should have been identified CLEARLY as NON-REDEEMABLE and that should have been explained to you.


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## Tetsujin

carverman said:


> Hmmm?..good question. *Is the onus on the customer to know he is buying NON-REEDEMABLE GIC or a cashable GIC.*
> 
> IF you don't ask that question to the bank clerk and that part is omitted, AND you enter the contract (buy the GIC),
> I would think you are stuck with that decision until maturity..UNLESS there is a HARDSHIP situation or death of the owner.
> 
> In case of Hardship needing those funds for emergency financial problems for the owner (or whatever), the bank MAY decide to refund the principle invested..but not the accrued interest.
> 
> However, if the bank clerk deliberately misled the purchaser into thinking that the GICs were redeemable any time, then it's the purchaser's word against the banks..and if it was all verbal (on the phone) at time of purchase...the bank will still give him a hard time to redeem the money from the GIC(s) prematurely.
> 
> here's some info on the kind of GICs and what one's options may be:
> http://www.ratehub.ca/gics/penalty-early-withdrawal-gic


Effectively, I should know about the bank's products before acquiring them. We (agent and I) clearly distinguished between the GIC and the MarketSmart GIC which this last one is non-redeemable, but I didn't know it in that moment because he focused on the interest rate. As you said, it is my word against the bank even when my wife was present in both appointments as a witness. When I defy the bank clerk, he gathers his hands and assumes a lawyer position to apologize first and then disclaim any guilt. All the disclaimers are in the web site even in the CRA's web site. The responsibility relies on the particular.

Thank you so much for the link. Very very appreciated. This is why this forum is great and all its knowledge shared here. I understand the risks about the cancellation now. I am not in a urgent situation, so I won't fight anymore for my account until maturity.

But I leave this situation here for further newbies like me and people who want to start doing a DIY investment. I won't let anyone to manage my money anymore. The guilt is less painful when I lose my money myself when someone else was responsible for that.


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## Beaver101

Tetsujin said:


> Effectively, I should know about the bank's products before acquiring them. We (agent and I) clearly distinguished between the GIC and the MarketSmart GIC which this last one is non-redeemable, but I didn't know it in that moment because he focused on the interest rate. As you said, it is my word against the bank even when my wife was present in both appointments as a witness. When I defy the bank clerk, he gathers his hands and assumes a lawyer position to apologize first and then disclaim any guilt. All the disclaimers are in the web site even in the CRA's web site. The responsibility relies on the particular.
> 
> Thank you so much for the link. Very very appreciated. This is why this forum is great and all its knowledge shared here. I understand the risks about the cancellation now. I am not in a urgent situation, so I won't fight anymore for my account until maturity.
> 
> But I leave this situation here for further newbies like me and people who want to start doing a DIY investment. I won't let anyone to manage my money anymore.* The guilt is less painful when I lose my money myself when someone else was responsible for that*.


 ... you didn't lose any money so to speak but lost on using the money for other opportunities. 

You were misled by the RBC snakeoil rep. and you have every right to file a complaint, especially in light of current bragging RBC Named "Highest Customer Satisfaction among the 5 Big Retail Banks" ** really? hack, and choking **


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## Tetsujin

Beaver101 said:


> ... you didn't lose any money so to speak but lost on using the money for other opportunities.
> 
> You were misled by the RBC snakeoil rep. and you have every right to file a complaint, especially in light of current bragging RBC Named "Highest Customer Satisfaction among the 5 Big Retail Banks" ** really? hack, and choking **


You are right and I agree with you.

It is true that I didn't lose my money for the GIC. What I wanted to say in the last line is that I prefer to lose my money on my own hands for my own decisions in the market share that trust again in banks (i.e. Mutual Funds, or any other active managed financial vehicle). In that way I won't blame anyone for bad decisions. Just myself.


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## lonewolf :)

Biggest mistake dealing with a bank (conflict of interest) deal with a credit union


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## MrMatt

lonewolf :) said:


> Biggest mistake dealing with a bank (conflict of interest) deal with a credit union


Credit unions would have the EXACT same conflict of interest.
I don't understand this credit union love, they're basically the same as banks, just some successful marketting, and they're not as big as the big banks.


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## Nerd Investor

Tetsujin said:


> Effectively, I should know about the bank's products before acquiring them. *We (agent and I) clearly distinguished between the GIC and the MarketSmart GIC which this last one is non-redeemable, but I didn't know it in that moment because he focused on the interest rate.* As you said, it is my word against the bank even when my wife was present in both appointments as a witness. When I defy the bank clerk, he gathers his hands and assumes a lawyer position to apologize first and then disclaim any guilt. All the disclaimers are in the web site even in the CRA's web site. The responsibility relies on the particular.
> 
> Thank you so much for the link. Very very appreciated. This is why this forum is great and all its knowledge shared here. I understand the risks about the cancellation now. I am not in a urgent situation, so I won't fight anymore for my account until maturity.
> 
> But I leave this situation here for further newbies like me and people who want to start doing a DIY investment. I won't let anyone to manage my money anymore. The guilt is less painful when I lose my money myself when someone else was responsible for that.


To be clear, the regular GIC would be non-redeemable as well, that isn't a special feature of this MarketSmart product. Just want to make sure you don't unintentionally lock up money again in the future.


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## Eclectic12

^^^^

While most GICs are non-redeemable, the range offered these days seems to include redeemable GICs (at a lower interest rate, of course) on a broad basis. One can easily have the higher interest rates obscure this important distinction though so it is a good point to be asking about.


Cheers


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## Beaver101

Tetsujin said:


> You are right and I agree with you.
> 
> It is true that I didn't lose my money for the GIC. What I wanted to say in the last line is that I prefer to lose my money on my own hands for my own decisions in the market share that trust again in banks (i.e. Mutual Funds, or any other active managed financial vehicle). In that way I won't blame anyone for bad decisions. Just myself.


 ... in a way, there is something learned here, never to trust bank reps, managers, etc. which are the likes of salespeople. (Those free-financial planning sessions offered ain't for your interest.) Do your research, ask questions twice (and elsewhere, like this board. Or even your neighbor can give you a better objective answer), and once you're absolutely sure you're agreeable to the terms, get it in writing. This is the way you do business with jerks like ones you met.


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## Tetsujin

Beaver101 said:


> ... in a way, there is something learned here, never to trust bank reps, managers, etc. which are the likes of salespeople. (Those free-financial planning sessions offered ain't for your interest.) Do your research, ask questions twice (and elsewhere, like this board. Or even your neighbor can give you a better objective answer), and once you're absolutely sure you're agreeable to the terms, get it in writing. This is the way you do business with jerks like ones you met.


Good advice. Thanks!


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## lonewolf :)

MrMatt said:


> Credit unions would have the EXACT same conflict of interest.
> I don't understand this credit union love, they're basically the same as banks, just some successful marketting, and they're not as big as the big banks.


 Big difference credit union your a member profits are shared amongst the members or used to expand. Banks, profits are not shared when you loan money to the banks. 

Opening an account @ a bank to buy GICs is not good. Stay stay stay away from banks their goal is to make billions & billions off their customers.

Credit unions are more sound then banks. Members want to make sure their money on loan will return to them it is the members money.


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## Tetsujin

Hi guys, 

*WARNING:* Worths sharing it. 3 years passed already. My RBC GIC maturity date ended. My $15k investment became $16k aprox (3 years in 3 diversified aggressive portfolios).

Since I started investing by myself a couple of years ago from a completely newbie (zero, nothing, nada of knowledge - and I am still learning), I transformed other $15k into $20k in the first 3 months aprox (as a reference). TAX-FREE. 

I think I made better myself than relying on banks. I hope that you can learn from this foolish experience and start doing investments on your own at your own risk. Take some courses of Risk Management before.

I won't look behind again. It is not only RBC... any bank in Canada. Don't be fooled!

Cheers.


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## OnlyMyOpinion

Thanks for the update tetsujin.

The warning is really 'make sure you understand what you are buying with your money and don't believe or trust verbal assurances from bank advisors/staff'. They are there primarily to make money for the bank while assisting customers. If you know and insist on the investment you want, that is what they will accomodate. If you don't, they will suggest a product. 

Also, in my experience, some banks automatically roll over maturing GIC's into their paltry 1 year GIC. If you don't give clear instructions just before maturity (that you want it left in cash), you run the risk of it being locked up for another year.


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## Tetsujin

Exactly.

Comparison:

Capital gains 3 years at the bank = ~$500 
vs 
Capital gains one quarter of the year when I made my first trade = ~$5000. 

It has been a long journey and it still will be. 

I had an alarm to call the bank and request to leave the money in cash. They wanted to offer me a rollover or an agent to invest my money 'efficiently'. Hell no. I will transfer that to my brokerage and have more buying power.

Thanks.


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## gardner

Tetsujin said:


> Capital gains 3 years at the bank = ~$500


A nitpick, but the interest income from your GIC is plain old income, not a capital gain.

I'm not sure what it was that yielded 33% in 1Q for you, but I can tell you that it was risky without knowing exactly what it was.


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## Eclectic12

gardner said:


> Tetsujin said:
> 
> 
> 
> ... Comparison:
> 
> Capital gains 3 years at the bank = ~$500
> vs
> Capital gains one quarter of the year when I made my first trade = ~$5000.
> 
> 
> 
> A nitpick, but the interest income from your GIC is plain old income, not a capital gain ...
Click to expand...

If both are in a TFSA, Canadian taxes won't apply and it won't matter.

If in a taxable account, this is another reason to dislike a market linked GIC. 

The underlying source may be capital gains but because it is a GIC, it is reported as interest income.
https://www.ratehub.ca/blog/how-to-claim-gic-income-on-your-taxes/

Interest income is taxed heavily similar to employment income while CG is at 50% of the amount. 

To illustrate, if $500 was made by the market linked GIC - the full $500 will be taxed. As a CG of $500 in a taxable brokerage account, the CG of $500 is reduced to a taxable CG of $250. Should one have a $250 capital loss that one can apply against it, the CL will cancel out the CG.



Cheers


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## Tetsujin

Eclectic12 said:


> If both are in a TFSA, Canadian taxes won't apply and it won't matter.
> 
> If in a taxable account, this is another reason to dislike a market linked GIC.
> 
> The underlying source may be capital gains but because it is a GIC, it is reported as interest income.
> https://www.ratehub.ca/blog/how-to-claim-gic-income-on-your-taxes/
> 
> Interest income is taxed heavily similar to employment income while CG is at 50% of the amount.
> 
> To illustrate, if $500 was made by the market linked GIC - the full $500 will be taxed. As a CG of $500 in a taxable brokerage account, the CG of $500 is reduced to a taxable CG of $250. Should one have a $250 capital loss that one can apply against it, the CL will cancel out the CG.
> 
> 
> 
> Cheers


Great link. Thank you to clarify and share that.

I am not telling people what to do. I just shared my experience just to maybe avoid others to do the same about GIC's. If people are confortable buying GIC's, mutual funds or high interest accounts, that's fine. If they want to keep their money in their saving accounts with no growth at all or not having savings at all. That's up to them too. 

I took a different approach since then and I have been learning on my own to quickly get in a industry that was hot at the moment (and it was an specific example only to make a comparison). I must confess that I spent one month gathering data, learning technical and fundamental facts, googling and reading books in a fast pace before to hit the button, and I was right when I did the trades on the right moment, but don't lose focus on that. It is all about the process and building your own strategy.

I think my point is .... don't be gullished by bankers and their products and invest your money everywhere else if you want to. Prepare yourself and take care of charlatans who sell their courses online with their charts (past data) and their promises to make you rich quickly too. 

Giving $15k to the bank to receive ~$500 in 3 years... it like going nowhere in my humble opinion. 

Thank you guys.


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## Eclectic12

Back before the 2000's when the market linked GICs has easier formulas with a much smaller cap, it worked out for me, on a three year basis.

Even then, though - my renter rued not asking the question I did - what limited the return. Where I was paid 24%, his GIC was capped at 10% ... so that he took the same risk to made 14% less.


Your changed approach is a good one as learning is a main way to make sure what you are getting into is a good idea or not artificially limited. For some reason, people who would learn a bit at a time for other hobbies consider finances too complicated or think they should be masters after a few weeks.


Cheers


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