# Will GIC rates go higher soon?



## james4beach (Nov 15, 2012)

I've been heavily endorsing GICs lately but I'm actually thinking now that it may be good to hold off on purchasing new GICs, as I think rates may start creeping higher. This is due to market interest rates jumping in the last couple weeks --- I don't mean the Bank of Canada rate. I mean prevailing interest rates like those on 5 year and 10 year bonds.

Obviously this is a kind of market timing/speculation but just sharing my thoughts. I'm now willing to wait in cash as it seems there's a good chance that higher interest rates are coming in the broad market.

Using ING Direct as a benchmark, currently 2013-06-20 it's
1yr 1.35%
2yr 1.75%
3yr 2.00%
4yr 2.00%
5yr 2.25%


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## Emma (May 18, 2013)

I noticed Home Trust ad today 1 year at 2.11. I have been considering laddering some of the MF proceeds. Sitting in HISA 1.27 at the moment. Have been carefully thinking over my risk tolerance and in this market I am happy I have mostly cash (some blue chips in non-registered account). Definitely revising my allocation to more fixed income and less stocks. That said, I'm not jumping into the market with the RRSP money yet.


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## gibor365 (Apr 1, 2011)

james4beach said:


> Using ING Direct as a benchmark, currently 2013-06-20 it's
> 1yr 1.35%
> 2yr 1.75%
> 3yr 2.00%
> ...


In ING I'm enjoying until June 30 very nice in current environment 2.5% interest on new money. I moved all my available Cash into this HISA. And considering that I'm getting 2% in ING on regular basis, don't see much sense to buy GIC now.
BTW, in CIBC Investor Edge the best rates are:
1yr 1.86%
2yr 1.95%
3yr 2.05%
4yr 2.25%
5yr 2.45%


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## My Own Advisor (Sep 24, 2012)

If you want to use the money within next couple of years, HISA, err, I mean a savings account, that might be better:

http://www.highinterestsavings.ca/chart/


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## gibor365 (Apr 1, 2011)

it's not better, in your link max interest (People trust) is 1.9%, I get more with ING


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## james4beach (Nov 15, 2012)

gibor: but if you're just comparing savings accounts, ING Direct at 1.35% is definitely less than some of the others in Canada


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## MoreMiles (Apr 20, 2011)

My Own Advisor said:


> If you want to use the money within next couple of years, HISA, err, I mean a savings account, that might be better:
> 
> http://www.highinterestsavings.ca/chart/


I know, eh? If you call 1.5% "high interest"... what is a 15% interest GIC we saw back in 1980s called? ultra-high-super-duper interest?


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## brad (May 22, 2009)

MoreMiles said:


> I know, eh? If you call 1.5% "high interest"... what is a 15% interest GIC we saw back in 1980s called? ultra-high-super-duper interest?


Actually its effective rate was about the same, because you have to consider inflation at the same time you look at interest rates. Inflation was in the double digits back then, so you weren't actually much better off.


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## Nemo2 (Mar 1, 2012)

brad said:


> Actually its effective rate was about the same, because you have to consider inflation at the same time you look at interest rates. Inflation was in the double digits back then, so you weren't actually much better off.


When we returned from Saudi, early 1989, we were getting 11.5% (or higher) on 5 year GICs......but, not being spenders, inflation wasn't that big a deal (for us).


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## MRT (Apr 8, 2013)

Don't nominal rates mean little without adjusting for inflation, whether you are spending now or later?

Prices don't drop, so when you eventually spend in the future, you're still encountering the same inflated prices (barring future deflation, in which case your savings would indeed put you ahead of the game), no?


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## Nemo2 (Mar 1, 2012)

If you buy used, _Kijiji_ and the like, you can either get the price you want to pay (sans taxes) or not buy it at all......(i.e. don't convince yourself you need something, just because you _want_ it)............it's not perfect but it has its advantages.


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## gibor365 (Apr 1, 2011)

james4beach said:


> gibor: but if you're just comparing savings accounts, ING Direct at 1.35% is definitely less than some of the others in Canada


I comparing what return I can get. Yes, nominal Saving account in ING is 1.35%, but Child saving account is 2% for years...also they have frequently different promotions like 2,5% HISA on new money now


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## brad (May 22, 2009)

Nemo2 said:


> When we returned from Saudi, early 1989, we were getting 11.5% (or higher) on 5 year GICs......but, not being spenders, inflation wasn't that big a deal (for us).


You mean you don't buy gasoline, food, or electricity? Those are areas where it's pretty hard to inflation-proof yourself; you can drive less or drive a fuel-efficient car, grow some/all your own food, and generate your own power, but in general it's not easy to truly insulate yourself from the impacts of inflation. For example, Harold Crump complains all the time about how he's being super-efficient with his energy use but is still paying more for electricity because prices have gone up.

I don't think it's the "spenders" who are hit especially hard by inflation. Many of the non-necessities in life are actually cheaper today than they were 20 or 30 years ago. Cell phones, computers, even jeans and t-shirts, etc., have gotten cheaper over time (it's possible to find jeans today for less than I paid for them in 1985).


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## james4beach (Nov 15, 2012)

I was right... GIC rates are creeping up in response to the bond market (even though ING's rates haven't budged, but their rates haven't been competitive for a while now). I occasionally survey the rates available through TD Waterhouse.

This table shows available GIC rates through the brokerage, Big Five bank issuers, highest rate. You can see from my data below that 3 year GIC rates have gone up +0.20% and 4 year rates are up +0.15%, suggesting that the best deal is probably in the 3 year GIC right now.


```
Date        1 Year  2 Year  3 Year  4 Year
2013-06-05   1.40%   1.70%   1.90%   2.15%
2013-06-24   1.40%   1.75%   2.00%   2.25%
2013-06-28   1.40%   1.75%   2.10%   2.30%
```


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## cannew (Jun 19, 2011)

I got rid of all my gic's years ago, but do keep an Ing account for parking cash at 1.35%. It's not the greatest but higher than the banks and money is easily transferred when needed.


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## gibor365 (Apr 1, 2011)

gibor said:


> BTW, in CIBC Investor Edge the best rates are:
> 1yr 1.86%
> 2yr 1.95%
> 3yr 2.05%
> ...


I compared today's rate vs week ago and current rates are:
1yr 1.75%
2yr 1.85%
3yr 2.11%
4yr 2.31%
5yr 2.56%
So, you can see that 1 and 2yr rates are slightly lower, and 3,4,5 yr are slightly higher...
Does it mean that banks beleive that interest rates will go up only after 3 years from now?


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## Nemo2 (Mar 1, 2012)

gibor said:


> Does it mean that banks beleive that interest rates will go up only after 3 years from now?


Or that they think the rates will rise sooner and are trying to lock you in now? :wink:


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## andrewf (Mar 1, 2010)

Questrade as of today:

1 yr... 1.85%
2 yr... 2.15%
3 yr... 2.2%
4 yr... 2.26%
5 yr... 2.51%

Very little incentive to take anything longer than 2 years.


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## gibor365 (Apr 1, 2011)

andrewf said:


> Questrade as of today:
> 
> 
> Very little incentive to take anything longer than 2 years.


I agree. Over last years I bought 2-3 GICs for 2y term with rate at least more than 2%... don't see much value to lock for 5yr for 2.5%, better I'll buy BCE for 5.8% dividend


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## birdman (Feb 12, 2013)

Rates at financial institutions are a factor of G/C Bond rates and if I knew exactly where they were going I think I would be rich. Its a crap shoot whatever you do. When rates are low, like they are now, I keep my term deposit investments short (under 2 yrs), when they are high or are coming down I invest long. I still have terms paying 5.55 and 4.25% but the first one is just about over and the last only has a year or 2 to go. Historically, term deposit rate were 2 to 3% above inflation but this is no longer the case. My only suggestion is that rates are low so why invest long. Also, watch the yield curve.


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## gibor365 (Apr 1, 2011)

Rates got increased a little bit, but still very low
1yr 1.9%
2yr 2%
3yr 2.2%
4yr 2.35%
5yr 2.62%

I'd buy 2 years with rate about 2.2% or higher....


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## Barwelle (Feb 23, 2011)

gibor, Canadian Direct Financial has a 30-month GIC at 2.55%, for TFSA only.


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## james4beach (Nov 15, 2012)

Just wanted to add a comment that I think Canadian GIC rates have more or less finished responding to that big move in the bond market from a couple months ago. That being said if bonds keep falling, then GIC rates will keep going higher.

Here are the rates I see at my broker, the highest rates from big five bank issuers, along with some rate history


```
Date        1 Year  2 Year  3 Year  4 Year  5 Year
2013-06-05   1.40%   1.70%   1.90%   2.15%
2013-06-28   1.40%   1.75%   2.10%   2.30%   2.55%
2013-07-26   1.40%   1.70%   2.20%   2.30%   2.60%
```


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## Spudd (Oct 11, 2011)

I just locked up my next year's TFSA contribution as well as the savings account I have earmarked for an occasion 4 years hence into ING's 2% 90-day GICs.


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## james4beach (Nov 15, 2012)

Spudd said:


> I just locked up my next year's TFSA contribution as well as the savings account I have earmarked for an occasion 4 years hence into ING's 2% 90-day GICs.


Looking at ING's site, I only see 1.0% on 90 days. How did you get the 2% rate?


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## Spudd (Oct 11, 2011)

There was an ad. I clicked on it. 

I don't see it on their general site, but when I'm logged into my accounts, they showed me an ad and when I clicked on it, it let me have the 2%. Here's the link: https://secure.ingdirect.ca/INGDirect.html?command=goToOpenAccount&promoCode=3026


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## Ihatetaxes (May 5, 2010)

5 year GIC offered by Home Trust or HomEquity Bank via RBCD @ 2.65%.


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## youngdad3 (Jun 29, 2013)

there is a 25month non-registered 2% GIC promo at CIBC


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## Ag Driver (Dec 13, 2012)

How do you purchase GIC's at various institutions? I am using Qtrade, but I can not purchase anything for less than 15k (which is out of my reach!). 

Do you use a broker like GICdirect.com? Do you open up an account at each institution? My current bank and credit union appear to be lacking in the rate department in comparison to the rates seen on gic direct.

I am looking at starting a 5 yr ladder with $5000 (5 GIC's @ $1000 each)


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## gibor365 (Apr 1, 2011)

james4beach said:


> Looking at ING's site, I only see 1.0% on 90 days. How did you get the 2% rate?


That's right! I also didn't find 2% for 90 days.
I found that _"From July 1 until August 31, 2013, not only will you get a $25 Bonus when someone you refer becomes a new Client of ING DIRECT, you'll both also enjoy a special Bonus interest rate of 2.50% on all your non-RSP and non-TFSA Investment Savings Accounts for 90 days." _ - better than any GIC, but I don't have a friend 
P.S. I moved almost all my ING Cash into Children saving account for 2%


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## gibor365 (Apr 1, 2011)

Ag Driver said:


> How do you purchase GIC's at various institutions? I am using Qtrade, but I can not purchase anything for less than 15k (which is out of my reach!).
> I am looking at starting a 5 yr ladder with $5000 (5 GIC's @ $1000 each)


In CIBC Investor Edge I can click on 3rd party GIC and buy online. In TDW I can only view rates and in order to buy I need to call.
Generally, the minimum investment into 3rd party GIC is 5K, so for 1K you cannot buy anything


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## gibor365 (Apr 1, 2011)

youngdad3 said:


> there is a 25month non-registered 2% GIC promo at CIBC


as per your nick looks like you have kids, you can just open joint children saving account in ING direct and get 2% without locking your $$$....


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## Itchy54 (Feb 12, 2012)

I moved most of my ING funds to Peoples Trust. Daily interest is 1.9% TFSA daily rate is 3% One year GIC 2.05, two year at 2.20% I believe the minimum is $1000


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## gibor365 (Apr 1, 2011)

Itchy54 said:


> I moved most of my ING funds to Peoples Trust. Daily interest is 1.9% TFSA daily rate is 3% One year GIC 2.05, two year at 2.20% I believe the minimum is $1000


Itchy54, could you please answer several questions:
is 3% TFSA for a long time or it's some kind of current promotion?
Can you transfer money into Peoples Trust and back online (like with ING)?
What is the difference between Peoples Trust and ING (except fees)?


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## leoc2 (Dec 28, 2010)

gibor said:


> Itchy54, could you please answer several questions:
> is 3% TFSA for a long time or it's some kind of current promotion?
> Can you transfer money into Peoples Trust and back online (like with ING)?
> What is the difference between Peoples Trust and ING (except fees)?


 I have both PT and ING. The transfers in and out both equivalent and easy.


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## Itchy54 (Feb 12, 2012)

Peoples Trust Daily interest savings account for TFSA's has been 3% for a very long time. The GIC's for the TFSA are the same as their regular GIC's
Yes, you can link your People's account to your regular bank (mine is CIBC) and transfers are very quick!! Better than ING
No fees
Check out their website, peoples trust dot com (don't know if I am allowed to post the link)
it is covered by CDIC


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## youngdad3 (Jun 29, 2013)

gibor said:


> as per your nick looks like you have kids, you can just open joint children saving account in ING direct and get 2% without locking your $$$....


I do also have a joint children account at ING Direct, but I use it only to put actual savings from my oldest son.
I'm working to learn him the magic of interest compounding, right now it's hard with under 500$ of savings and 2% interest but hey he's only 9years old


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## gibor365 (Apr 1, 2011)

So, no any "catches" with Peoples Trust ?

I want to transfer my mother TFSA from ING to Peoples Trust ... How it can be done?


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## Itchy54 (Feb 12, 2012)

There is a form on PT website for transfers of TFSA accounts. They do not charge a fee BUT ING might.
I have had no issues with PT at all, very pleased!!

On their website click on High interest Accounts at the top of the page. Then look at the left hand side and scroll to the very bottom and click on Banking Forms, you will find what you need there.


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## james4beach (Nov 15, 2012)

gibor said:


> So, no any "catches" with Peoples Trust ?


The catch is that Peoples Trust is a smaller less diversified bank, while ING is a division of Scotiabank, a too-big-to-fail big bank. Peoples Trust is more likely to lose your deposit money.

Personally I prefer the safety of the large too-big-to-fail banks. From a depositor's perspective, they are safer. Yes I know both are eligible for CDIC insurance, but given the choice I would rather go with the one that is less likely to fail.

Peoples Trust deals nearly entirely in mortgages. As far as I can tell, 100% of the mortgage exposure is in Canada, 75% is in Ontario. Their firm's leverage is higher than the big banks. From my perspective, this is quite a risky business with very concentrated exposures.


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## liquidfinance (Jan 28, 2011)

I'm going to be opening a Peoples Trust account very shortly. I didn't like that fact that previously there was no online banking facility for the TFSA but now that is in place I will open an account. 

With regards to the TFSA transfer charges. Depending on the charge and difference in rate you could simply leave it with ING until December and then deposit to peoples trust in the new year.


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## Spudd (Oct 11, 2011)

ING don't charge a fee to transfer TFSAs (at least that was the case 2 years ago when I transferred mine).


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## fraser (May 15, 2010)

We opened three accounts at Peoples Trust and three at Canadian Direct. All funds very easily transferred from our CIBC accounts. All of these accounts are guaranteed by the CDIC limits.

Why? 58 percent higher interest rate on our HISA account. It only took a few keystrokes and some work on the mouse.

I am not at all certain why people are reluctant to deal with the smaller financial institutions. As long as you are aware of the CDIC's rules -$100K per person/account, then you will be fine. 

These rules were quite well spelled out on the ING website. We bolted from both ING and ALLY when they bought by the banks and immediately dropped their rates. Why accept less interest when the risk or lack thereof is identical. 

The big banks depend on Canadians to be so complacent. That is why I buy their stock but do not use very many of their services.


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## fatcat (Nov 11, 2009)

i am in the process of opening at canadian direct
it will replace my ally account which i really liked and which rbc killed


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## gibor365 (Apr 1, 2011)

I'm in processed of opening saving account for my mother in People's Trust .... at ING she gets 1.35%, PT pays 1.9%. Later I will transfer her TFSA 1.4% ING vs PT's 3%. This is pretty significant. She has less than 100K , so should be insured by CDIC... also GIC in PT has better rates. It's pretty significant annual saving for her

For us, I think still keep ING account and open another one in PT.... I still get 2% on childeren saving account in ING, but GIC's rate are much better in PT.... also maybe I'll deposit part on next year TFSA contribution into PT, 3% is pretty good rate.... Also I want to split ING money as we have more than 100K there...

Regarding CDIC insurance..... is it still 100K, didn't they increased it? and if my account joint with my daughter...is it still same 100K?
Another question, if TFSA has 90K and Saving account has 100K, would 190K be insured?


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## Itchy54 (Feb 12, 2012)

CDIC has a good website.
TFSA and regular savings are covered separately, so you can have 100,000 in TFSA and 100000 in a regular account and both are insured. CDIC does not cover mutual funds or stocks, of course.
Joint accounts....up to 100,000. So you can have a joint account with your spouse, one with a child or whatever and each is insured to the max. It is NOT 100,000 for each person on the account, so be careful.


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## james4beach (Nov 15, 2012)

True there is CDIC insurance with these smaller banks but I still feel those like Peoples Trust are too risky to deposit money with. I know that CDIC is backing it, but I don't want to go through the stress/hassle/access delays of a failed bank.


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## leeder (Jan 28, 2012)

Maybe it's just me, but it seems that people are reaching for more and more obscure banks in their quest for a slightly higher interest rate for their HISA. Granted, I'm sure some people have had no issues with obscure banks that pay higher interest. However, I agree with james4beach's sentiments that you don't want the "stress/hassle/access delays of a failed bank" even if there is CDIC. Furthermore, in my opinion, unless people have significant amounts sitting as cash in their bank accounts, the difference between a 1.35% and 1.9% is fairly insignificant (on a 100k, the difference is roughly $560 in a year, assuming no new contributions. Not exactly significant...). If people do have substantial amounts in their HISA and are conservative with their money, they should just take whatever amounts they don't plan to use and build a GIC ladder. Over the course of a 5-year ladder, you would be getting over 2% interest.


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## AltaRed (Jun 8, 2009)

james4beach said:


> True there is CDIC insurance with these smaller banks but I still feel those like Peoples Trust are too risky to deposit money with. I know that CDIC is backing it, but I don't want to go through the stress/hassle/access delays of a failed bank.


Historically, there has never been hassle or delays with deposits at a failed bank. There is a smooth transition to the purchaser of the deposits of the failed bank. The depositor simply gets a letter indicating who the new owner of the deposit is and from then on, the statements come from that new owner. There may be stress, but certainly no hassle or delays.


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## gibor365 (Apr 1, 2011)

Itchy54 said:


> CDIC has a good website.
> 
> Joint accounts....up to 100,000. So you can have a joint account with your spouse, one with a child or whatever and each is insured to the max. It is NOT 100,000 for each person on the account, so be careful.


Exactly this point I wanted to confirm. So, if I have individual saving account 100K, joint with my wife = 100K and joint with my child = 100K. Would I have all 300K insured by CDIC?


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## gibor365 (Apr 1, 2011)

james4beach said:


> True there is CDIC insurance with these smaller banks but I still feel those like Peoples Trust are too risky to deposit money with. I know that CDIC is backing it, but I don't want to go through the stress/hassle/access delays of a failed bank.


Here is the question. Is it better to hold 200K (in a single account) in ING, or to hold 100K in ING and 100K Peoples Trust? Yes, ING is more secure, but also can go belly up...


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## fraser (May 15, 2010)

gibor....yes, you would have $300K covered by CDIC. This is exactly why we have three accounts opened in each of Peoples and Canadian Direct. 

You do need to break the accounts up using different account holder names in order take advantage of the $100k per account limit. Interesting enough, credit unions appear to have insurance that covers all deposits-with no limit. 

I have no concern with CDIC. I see no difference in the risk level between placing $100K with, say CIBC , or with Peoples. 

The only difference is the extra $700. per year that such a deposit would yield. It is the reason that I buy bank stock but place my HISA business with other institutions that pay competitive rates. 

The large banks count on Canadians tendency to be complacent-just take a close look at the interest rates and the service charges.


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## gibor365 (Apr 1, 2011)

fraser said:


> The only difference is the extra $700. per year that such a deposit would yield. It is the reason that I buy bank stock but place my HISA business with other institutions that pay competitive rates.
> .


I agree with your point. I buy also big telcos stock, but moved to a cheaper small providers.
And I'm pretty sure that 90-95% Canadians have their banking services with 5 big ones and telecom services with 3 big one


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## fraser (May 15, 2010)

I do not understand the comment about failed banks. Has there ever been a bank failure in Canada?


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## OhGreatGuru (May 24, 2009)

Quite a number actually. See the list since 1967 on CDIC's web site. http://en.wikipedia.org/wiki/Canada...ration#List_of_financial_collapses_since_1967

IMHO the CDIC list is a bit misleading. According to this other article in Wiki: _ "According to the Department of Finance, two small regional banks failed in the mid-1980s, the only such failures since 1923, which is the year Home Bank failed. There were no bank failures during the Great Depression compared to 9000+ in the US."_

This confirms my view that the long list of "failures" on the CDIC site is really a list of buyouts of banks that were in financial trouble. I don't think depositors lost any money in these failures. Besides CDIC insurance, I think their remaining assets & liabilities were pretty well all bought up by bigger institutions. Shareholders of the defunct institutions may have lost some.

The collapse of the Home Bank of Canada in 1923 left depositors hanging in the wind. See Wiki article http://en.wikipedia.org/wiki/Home_Bank
It seems this bank was pretty high-risk from Day 1. Sounds like the federal taxpayer ended up paying for part for the depositors' losses.


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## AltaRed (Jun 8, 2009)

At least some of those could no longer meet their obligations.... runs on the bank so to speak. That is essentially 'failure'. I had an RRSP with one of the trusts in that list in the '80s. Basically CDIC shopped the insured deposits (and solvent loans) to other institutions which then purchased them. The transfer was seamless to me. Once that part is done, creditors fight over the remaining scraps.


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## MoreMiles (Apr 20, 2011)

fraser said:


> I do not understand the comment about failed banks. Has there ever been a bank failure in Canada?


Wow... you really believe our Canadian economy is far superior and immune from what is happening in the rest of world, do you?
Our government has obviously done a very good job in public relations to its citizens.

Yes. Banks and businesses do fail in Canada. Also, our last province Newfoundland, did not join the rest of 9 provinces, until 1949... In other words, this country in its present form has a history of only 64 years! You believe that this is enough time to say any business is rock solid? Remember, many businesses with over 100 years old history have failed elsewhere, including USA.

I think we simply do not have enough time to see where our economy will be a few years from now. It's simply too premature. So yes, RBC or TD may look fine... for now...


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## gibor365 (Apr 1, 2011)

In US there is something like CDIC and they insure 250K (as far as I remember). Was wondering if clients of those collapsed banks got their insured money back


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## HaroldCrump (Jun 10, 2009)

MoreMiles said:


> Yes. Banks and businesses do fail in Canada. Also, our last province Newfoundland, did not join the rest of 9 provinces, until 1949... In other words, this country in its present form has a history of only 64 years!


By that standard, we are doing better than the US which has a history of "only" 54 years, according to your theory.
(Hawaii joined in 1959)


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## Barwelle (Feb 23, 2011)

HaroldCrump said:


> By that standard, we are doing better than the US which has a history of "only" 54 years, according to your theory.
> (Hawaii joined in 1959)


Maybe not... Nunavut was only formed in 1999! :stupid:


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## HaroldCrump (Jun 10, 2009)

Barwelle said:


> Maybe not... Nunavut was only formed in 1999!


But Nunavut is a territory, not a province.
You are changing the rules now, 
If you wanna include territories, fine, we still come out ahead of the US since American Samoa became a US territory in 2007. Ha !


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## Barwelle (Feb 23, 2011)

Touché, sir. You've got me there.


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## fraser (May 15, 2010)

My question really should have been has the failure of any chartered bank, trust company, or credit union ever resulted in depositors loosing their money. I think that for the banks and trustco's the answer might be no but I am not certain. 

Not certain about the credit unions, when they fail, typically Credit Union Central steps in and within 24 hours they are amalgamated with another credit union and customers do not see any difference-except perhaps at the management level.

I know that our banking system is no perfect. But I also do not believe that there is merit to be claiming that the sky is falling, or is about to.


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## james4beach (Nov 15, 2012)

I just bought 5 year Bank of Nova Scotia @ 2.65% (through iTrade, but same rate available at TD Waterhouse).

That strikes me as a good rate. Peoples Trust's 5 year is 2.6% and even Outlook Financial's is 2.7%. And compare to say XCB (much riskier) which yields 2.63% after MER.


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## liquidfinance (Jan 28, 2011)

james4beach said:


> I just bought 5 year Bank of Nova Scotia @ 2.65% (through iTrade, but same rate available at TD Waterhouse).
> 
> That strikes me as a good rate. Peoples Trust's 5 year is 2.6% and even Outlook Financial's is 2.7%. And compare to say XCB (much riskier) which yields 2.63% after MER.



Just to add RBC are currently paying 2.6% on the 5 year when you purchase through online banking. 

Just for interest there current online rates are as listed below:

180 days 0.900% 
1 year 1.300% 1.300% 
18 months 1.550% 
2 years 1.900% 
3 years 2.000% 
4 years 2.200% 
5 years 2.600% 
One Year Cashable GIC 0.950%


I only have 1k in the cashable just to get the free banking. Looking at it in that sense it's giving me an effective return of 5.4%. I'm moving to ING but do like the idea of a branch with a large network if I need it so for the time being keeping the RBC account.


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## gibor365 (Apr 1, 2011)

james4beach said:


> I just bought 5 year Bank of Nova Scotia @ 2.65% (through iTrade, but same rate available at TD Waterhouse).
> 
> That strikes me as a good rate. Peoples Trust's 5 year is 2.6% and even Outlook Financial's is 2.7%. And compare to say XCB (much riskier) which yields 2.63% after MER.


Don't you think that 5 years it's too long period for GIC? I'm pretty sure that in 5 years rates will be higher and so GICs...
I like the most 3% TFSA in PeoplesTrust, better than any GIC


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## Jay3 (Jul 16, 2013)

james4beach said:


> I just bought 5 year Bank of Nova Scotia @ 2.65% (through iTrade, but same rate available at TD Waterhouse).
> 
> That strikes me as a good rate. Peoples Trust's 5 year is 2.6% and even Outlook Financial's is 2.7%. And compare to say XCB (much riskier) which yields 2.63% after MER.


Home trust is 2.9 over 5 years. Should've went with that one if you were doing 5 years.

I think GIC rates will go up within a year or two, so I'm holding off on the long term GIC and going with 1 year or 18 month terms for now.


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## AltaRed (Jun 8, 2009)

gibor said:


> Don't you think that 5 years it's too long period for GIC? I'm pretty sure that in 5 years rates will be higher and so GICs...
> I like the most 3% TFSA in PeoplesTrust, better than any GIC


5 years is never too long if you have a GIC ladder that has an overall duration period of 2.5-2.6 years.... much like a ST bond ETF. Each year you renew the maturing GIC from the ladder at the then prevailing interest rates for another 5 years. Additionally, there is no guarantee PT's 3% TFSA will not go down tomorrow.... err, Monday now.


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## james4beach (Nov 15, 2012)

I bought the 5 year GIC within my ladder. Even if rates go up soon, I'll always have amounts maturing that I can reinvest at higher rates.

I've actually got a ladder that stretches out as far as 10 years, a mix of GICs and bonds. However my weighted average maturity is 3.4 years so I really don't have too much interest rate risk.


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## My Own Advisor (Sep 24, 2012)

Hey james4beach, I know you're a fan of fixed income.

If you don't mind me asking, how much is your portfolio is in fixed income? 10% 25% 50% more?


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## mrPPincer (Nov 21, 2011)

AltaRed said:


> there is no guarantee PT's 3% TFSA will not go down


Absolutely true, but there's also no guarantee that as rates in general rise this HISA won't go up as well, unlike with a 5 year gic once you've purchased it; you are guaranteed not to get more than the 2.6-2.7% you've locked in for.


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## james4beach (Nov 15, 2012)

My Own Advisor said:


> Hey james4beach, I know you're a fan of fixed income.
> 
> If you don't mind me asking, how much is your portfolio is in fixed income? 10% 25% 50% more?


My overall fixed income is 83% but excluding "non-investable" funds (capital for RE & business purchase) -
my fixed income allocation in my investable portfolio is *29%*


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## liquidfinance (Jan 28, 2011)

mrPPincer said:


> Absolutely true, but there's also no guarantee that as rates in general rise this HISA won't go up as well, unlike with a 5 year gic once you've purchased it; you are guaranteed not to get more than the 2.6-2.7% you've locked in for.



It's probably more likely that the rate will go up as well. Peoples will need to maintain the competitive rates to keep the deposits coming in.


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## My Own Advisor (Sep 24, 2012)

Thanks james4beach, for some reason, I thought it was higher. (?)

Makes sense why you're a fan of FI when you have businesses and RE exposure. Need to offset risk...


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## Karen (Jul 24, 2010)

Just as a matter of interest (no pun intended!), I just renewed a $25,000 GIC at Scotiabank last week at 2.95% for a 5-year term. That's a special rate that's only in effect until August 9th - I don't know what it will be after that.


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## james4beach (Nov 15, 2012)

Karen said:


> Just as a matter of interest (no pun intended!), I just renewed a $25,000 GIC at Scotiabank last week at 2.95% for a 5-year term. That's a special rate that's only in effect until August 9th - I don't know what it will be after that.


Wow, how did you get that rate?

Did you visit with an investment rep in person, or was this purchased through an online system? I phoned into scotia investments a couple days ago and the 5 year rate wasn't that high.

Perhaps I'm not negotiating hard enough with them.


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## Synergy (Mar 18, 2013)

james4beach said:


> Wow, how did you get that rate?
> 
> Did you visit with an investment rep in person, or was this purchased through an online system? I phoned into scotia investments a couple days ago and the 5 year rate wasn't that high.
> 
> Perhaps I'm not negotiating hard enough with them.


The current rates / specials are posted on their website. However, the 5-year rate appears to be 2.59% (available until Aug 9th). Perhaps Karen got her numbers mixed up, or perhaps she's a good negotiator. 

http://www.scotiabank.com/ca/en/0,,157,00.html?cid=ps_pg_inv_c001_a001_k005&kwid=scotia_gic


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## humble_pie (Jun 7, 2009)

karen never gets her numbers mixed up. In the past, she's explained why & how come she obtains a premium bonus from scotiabank. I can't see any need for her to keep on re-explaining


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## andrewf (Mar 1, 2010)

^ It's not an unreasonable question, given it could have been a transposition error.


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## james4beach (Nov 15, 2012)

That's true, 2.59% (the posted rate) transposes to 2.95%.

It would be good to know though because if it's really 2.95%, that's high above even the best rates seen through broker inventories (TD Waterhouse and iTrade)

_(oooh... post # 1,000 !)_


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## Retired Peasant (Apr 22, 2013)

1. possible transposition and also
2. you assume everyone reading the thread have been here long enough to have read every thread. I haven't seen karen's explanation, but I'm relatively new. Am I expected to have read the 10000+ previous threads?


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## My Own Advisor (Sep 24, 2012)

I was thinking the same thing Retired Peasant, and I'm on here every other day, at least.

Either that, or I have a very bad memory.


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## humble_pie (Jun 7, 2009)

probably no transposition whatsoever.

parties with bad memories should perhaps consider restraining themselves before setting out to offend a matchless lady ...


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## My Own Advisor (Sep 24, 2012)

No disrespect humble, I do have a bad memory!


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## andrewf (Mar 1, 2010)

Karen is a capable woman, I doubt she needs you to defend her from the raving hordes of polite question-askers on CMF.


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## fatcat (Nov 11, 2009)

a google search for "5 year gic promotion ends august scotiabank" returns several hits that show a 5 year rate of 2.59

i think 2.95 would have been getting significantly more publicity


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## Synergy (Mar 18, 2013)

Wow, looks like a struck a nerve. I was just trying to help, I meant no disrespect by my post - sorry. I'm fairly new to this forum and Karen appeared to be informing the community with regards to a current special 5 yr GIC rate "That's a special rate that's only in effect until August 9th - I don't know what it will be after that.". 

It didn't sound like she was referring to a rate that she had to negotiate for herself. I thought she was informing others on the forum of a good rate that currently exists at Scotia. After checking Scotia's website I seen the special rate posted - in effect until August 9th, but it was 2.59% rather than the 2.95% previously quoted by Karen. I figured she either negotiated for a better rate, or there was some sort of transposition error while posting. I will try to be more careful when posting - not to offend anyone.


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## Jay3 (Jul 16, 2013)

Home Trust has a 2.9 percent 5 year GIC.


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## gibor365 (Apr 1, 2011)

Just checked Investor Edge... more than half available 3rd party GIC offer 2.65% for 5 years... interesting that Peoples Trust on Investor Edge offers just 2.05%, but having account at Peoples Trust, I'd get 2.6%


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## My Own Advisor (Sep 24, 2012)

No offending here Synergy....

Geez, if you can get close to 3% for a GIC product nowadays, and that GIC product fits your investing objectives, take it!


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## andrewf (Mar 1, 2010)

Questrade update: 

1 yr ... 2.05%
2 yr ... 2.15%
3 yr ... 2.3%
4 yr ... 2.36%
5 yr ... 2.65%


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## gibor365 (Apr 1, 2011)

My Own Advisor said:


> No offending here Synergy....
> 
> Geez, if you can get close to 3% for a GIC product nowadays, and that GIC product fits your investing objectives, take it!


This is why I want to open TFSA for my mother in Peoples Trust, they give 3% on daily account


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## AltaRed (Jun 8, 2009)

RBC DI has a number of institutions offering 2.65% for a 5 year GIC, including Scotiabank.


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## Karen (Jul 24, 2010)

humble_pie said:


> karen never gets her numbers mixed up. In the past, she's explained why & how come she obtains a premium bonus from scotiabank. I can't see any need for her to keep on re-explaining


I'm glad you have such confidence in me, humble_pie, but I'm afraid it's misplaced - Karen did get her numbers mixed up! I meant to say 2.59% - sorry about that; you'll never believe another word I say!


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## gibor365 (Apr 1, 2011)

Karen said:


> I'm glad you have such confidence in me, humble_pie, but I'm afraid it's misplaced - Karen did get her numbers mixed up! I meant to say 2.59% - sorry about that; you'll never believe another word I say!


Karen, after this post you are the most trusted on CMF


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## andrewf (Mar 1, 2010)

No problem, Karen, it's an easy mistake to make.


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## Karen (Jul 24, 2010)

I'm glad to know I'm forgiven!


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## james4beach (Nov 15, 2012)

No worries. And now I feel better about the 5 year Bank of Nova Scotia @ 2.65% that I just got


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## james4beach (Nov 15, 2012)

Just FYI everyone, slight uptick again. Bank of Nova Scotia 5 year GIC is now @ 2.70% (available through TDW)


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## liquidfinance (Jan 28, 2011)

james4beach said:


> Just FYI everyone, slight uptick again. Bank of Nova Scotia 5 year GIC is now @ 2.70% (available through TDW)


Interesting. It's suprising that ING are still only offering 2.25% on the 5 year.

I also checked RBC and there 5 year is still posted as 2.6% when purchased online.


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## andrewf (Mar 1, 2010)

Why is it surprising? RBC and Scotia acquired ING and Ally in order to eliminate competition.


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## gibor365 (Apr 1, 2011)

james4beach said:


> Just FYI everyone, slight uptick again. Bank of Nova Scotia 5 year GIC is now @ 2.70% (available through TDW)


On Investor Edge Montreal trust, National bank and National trust offer 2.7% for 5 years... still for 1, 2 and 3 years PT offers the best rates


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## liquidfinance (Jan 28, 2011)

andrewf said:


> Why is it surprising? RBC and Scotia acquired ING and Ally in order to eliminate competition.


Because ING have still been offering good promtional rates. $25 for opening a chequing account $100 for transfering you pay. $25 for referring a friend + 2.5% on new deposits and the were recently offering a 2.0% 90 day GIC. 

You can't really compare Scotia / ING to RBC and Ally.


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## gibor365 (Apr 1, 2011)

long term (4 and 5 y) GIC rates litt;e by little climbing up, more than half institutions in CM offer 2.75% for 5 years


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## fatcat (Nov 11, 2009)

home trust is now 3% for 5 ..


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## favelle75 (Feb 6, 2013)

With GICs most assuredly to keep going up and up, how can anyone in their right mind lock in for 5 years at this point? Money to burn?


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## fatcat (Nov 11, 2009)

some people are committed to their ladders ... if you have a 5-year ladder and money coming in you pretty much have to buy at the prevailing rate

i wouldn't go any longer than about 18 months
you can get 2.3 for 18 months
compared to 3 for 60 months
it's not a compelling choice
to me anyway


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## AltaRed (Jun 8, 2009)

I stick with my 5 year ladder. Everything else is market timing.


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## fatcat (Nov 11, 2009)

AltaRed said:


> I stick with my 5 year ladder. Everything else is market timing.


nothing wrong with that ... it's a good strategy


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## lonewolf (Jun 12, 2012)

icici bank RRSP 5yr GIC 3.15 %


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## lonewolf (Jun 12, 2012)

fatcat said:


> home trust is now 3% for 5 ..


fatcat

To get those rates I think it has to be done through a third party "ratesupermarket.ca"

Anyone ever use ratesupermarket.ca for GICs.


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## fatcat (Nov 11, 2009)

lonewolf said:


> fatcat
> 
> To get those rates I think it has to be done through a third party "ratesupermarket.ca"
> 
> Anyone ever use ratesupermarket.ca for GICs.


nope ... go here http://hometrustdeposits.com/

5 year is 2.75 and they are offering a .25 bonus through the end of november (or october)


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## james4beach (Nov 15, 2012)

gibor said:


> On Investor Edge Montreal trust, National bank and National trust offer 2.7% for 5 years... still for 1, 2 and 3 years PT offers the best rates


Still ticking upwards. Scotia 5 yr now 2.80% (just a couple weeks ago was 2.70%)


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## Jay3 (Jul 16, 2013)

If it gets anywhere near 4 percent for a 5 year I'm all in.


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## Jay3 (Jul 16, 2013)

3.1 percent for 5 years at home trust now


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## Jay3 (Jul 16, 2013)

Also, I don't think many would consider it an option but nonetheless there is 3.3 percent for a 10 year at dundee.


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## J Watts (Jul 19, 2012)

james4beach said:


> Scotia 5 yr now 2.80% (just a couple weeks ago was 2.70%)


Where?


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## james4beach (Nov 15, 2012)

Personally I stick to big five bank issuers because they are officially too big to fail. Home Trust and Peoples Trust are purely mortgage outfits and that's too dangerous for my taste, even though they're CDIC insured. That's just me.



J Watts said:


> Where?


Through discount brokers, for example see TD Waterhouse's GIC inventory here. On Friday, both TD Waterhouse and Scotia iTrade were offering *5 year Scotia GICs at 2.85%*

I don't know why I can get so much higher rates through the discount brokers, compared to the banks directly. Is there any downside to purchasing them through the broker?


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## Jay3 (Jul 16, 2013)

If you're protected through CDIC, what's the downside? Meanwhile the upside is a clearly superior percentage.


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## gibor365 (Apr 1, 2011)

Jay3 said:


> If it gets anywhere near 4 percent for a 5 year I'm all in.


me 2  won'r be surprised to see near 4% in couple of years, for now I'm buying GIC for a 1-2 years max, bought 2 year GIC at Peoples Trust for 2.2%


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## fatcat (Nov 11, 2009)

james4beach said:


> Personally I stick to big five bank issuers because they are officially too big to fail. Home Trust and Peoples Trust are purely mortgage outfits and that's too dangerous for my taste, even though they're CDIC insured. That's just me.
> 
> 
> 
> ...


both banks and brokers are not worth the trouble ... you need to do your own detective work, which isn't very hard since there are several places that list all current gic rates like cannex for example


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## liquidfinance (Jan 28, 2011)

Questrade showing

BNS 5 year 2.95
Royal Bank 5 year 2.9


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## MoreMiles (Apr 20, 2011)

liquidfinance said:


> Questrade showing
> 
> BNS 5 year 2.95
> Royal Bank 5 year 2.9
> ...


updated almost daily
https://www.bmoinvestorline.com/home/rates-and-fees/il/rates/gic

2.97% for five years... come on, just give us the 3% already


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## My Own Advisor (Sep 24, 2012)

People would want to lock-in at 3% for 6 years?


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## liquidfinance (Jan 28, 2011)

Personally I would want at least 5% for 5 years. Which why I don't have any money locked up in GICS.


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## MoreMiles (Apr 20, 2011)

If there is 5% guaranteed year after year for five years, nobody needs to buy stocks any more. You will get 25% minus taxes when your investment matures.


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## HaroldCrump (Jun 10, 2009)

MoreMiles said:


> If there is 5% guaranteed year after year for five years, nobody needs to buy stocks any more. You will get 25% minus taxes when your investment matures.


Well, there was a time not too long ago, in a galaxy not too far away, when 5% for 5 years was a pretty normal rate for a GIC.
Go a few years more back, and 6% to 7% was available.
Apparently, people did buy stocks at that time...and lots of them.

Go back another 20 years and GICs paid double digit %, and people were _still_ buying stocks.
Bleedin' mystery, wouldn't you say :rolleyes2:


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## My Own Advisor (Sep 24, 2012)

Huge mystery Harold.

I only wish fixed-income paid double-digit returns today. I can't see that happening for a very long time.


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## james4beach (Nov 15, 2012)

Normal interest rates = normal healthy economy = capitalism chugging along well = stocks do well

Zero interest rates (current) = economy on life support = emergency stimulus and dysfunctional capitalism = stocks do badly, I think


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## fatcat (Nov 11, 2009)

home trust 5 year 3.2%


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## gibor365 (Apr 1, 2011)

liquidfinance said:


> Personally I would want at least 5% for 5 years. Which why I don't have any money locked up in GICS.


This why last couple of years I bought several GIC but only for 2years. The last one 2.2% for 2 years


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## james4beach (Nov 15, 2012)

Predicting interest rates is notoriously difficult. This is what a ladder strategy is supposed to get around... the fact that you never know where interest rates are going


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## Hawkdog (Oct 26, 2012)

an interesting article related to interest rates, doesn't really spell out anything profound but worth a look. Is there a good thread started on preparing your investments for rising interest rates on the site?

http://qz.com/126875/the-economist-...r-alarm-it-would-be-wise-to-listen-this-time/


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## fatcat (Nov 11, 2009)

home trust 1-year = 2.21
5 year = 3.15

slight upticks from last week i think


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## BlackThursday (Apr 25, 2011)

gibor said:


> This why last couple of years I bought several GIC but only for 2years. The last one 2.2% for 2 years


The last time I got a 5% GIC was the end of 2008 and it was not CDIC insured. I know because it comes due at the end of this year.
There were no 5% 5 year GICs available in Canada since that I could see.

...but buying 2 year GICs over the intervening five years would have made no sense at all.
You should consider a GIC ladder.


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## gibor365 (Apr 1, 2011)

BlackThursday said:


> The last time I got a 5% GIC was the end of 2008 and it was not CDIC insured. I know because it comes due at the end of this year.
> There were no 5% 5 year GICs available in Canada since that I could see.
> 
> ...but buying 2 year GICs over the intervening five years would have made no sense at all.
> You should consider a GIC ladder.


Why not?! And why 5 years ladder, and not for example 3 years?

If difference in interest between HISA and 5 years GIC is less than 1%, I would prefer shorter ladder, if more - longer.


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## james4beach (Nov 15, 2012)

I think a shorter ladder is still a valid strategy. It's not set in stone that a ladder has to be 5 years out.


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## gibor365 (Apr 1, 2011)

james4beach said:


> I think a shorter ladder is still a valid strategy. It's not set in stone that a ladder has to be 5 years out.


This is exactly my point! Why 5 years?! Only because up to 5 years GICs insured by CDIC?!
It's difficult to backtrack all possible rates, but i just wondering if,(let's say for last 15 years) 5 years ladder was better
than 3 or even 2 years ladder?

On different account we have 2 GIC that will be matured in fall 2013, 4 in 2014 and 2 in 2015, All used to be 2-3 years GIC, I didn't decide yet for how long to lock next term .... but considering current HISA interest 2%, I doubt that will be locking for 5 years unless interest will be close to 4%


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## BlackThursday (Apr 25, 2011)

gibor said:


> Why not?! And why 5 years ladder, and not for example 3 years?


Because only a fool thinks he can predict interest rate trends so you might as well get the maximum rate possible when each ladder rung matures.

Do the math to determine how many basis points you are losing (or have lost already) simply because you "think" interest rates might go up significantly in 3 years and
keep in mind that with a 5 year ladder each year 20% of your funds would be maturing anyway permitting you take advantage of those rates that are "obviously" going to rise.

Hence: what you are doing makes no sense to me. 

But to each his own.


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## james4beach (Nov 15, 2012)

Well personally my ladder goes out even further than 5 years, using government bonds. I posted recently about how I bought the 2021 bond and that's a 7.5 year spot on my ladder.


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## gibor365 (Apr 1, 2011)

BlackThursday said:


> Because only a fool thinks he can predict interest rate trends so you might as well get the maximum rate possible when each ladder rung matures.
> 
> Do the math to determine how many basis points you are losing (or have lost already) simply because you "think" interest rates might go up significantly in 3 years
> 
> But to each his own.


It depends  when interest rates historically low , there is a better chance that they will go up (and we see it now). Another thing... when your $$ locked they are locked and if other possibilities comes up - you cannot do anything. Just can tell you on my own example: when about 3 years ago I locked some GIC in ING and TD, I didn't have discount brokerage account, and good thing that I bought only 2 and 3 years GICs, as now interest rates are higher and TDW and Investor Edge offer 3rd party GICs with much higher interest rate. 
Another example , until couple of months ago , i didn't even know that TFSA in PT offers 3% on just saving account.... good thing that I bought GIC for a short term and not 5 years, because even now there is no GIC that offers 3%! 
So in January when GIC will mature, I'll just leave in 3% saving account and if 5 years GIC will raise let's say to 4%, I'll think of buying it.


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## james4beach (Nov 15, 2012)

Unless you're in Japan, and we are increasingly looking like Japan (namely: ZIRP)

People always forget about Japan... nobody likes my Japanese stocks example either. 30 years with no stock gains.


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## james4beach (Nov 15, 2012)

gibor said:


> So in January when GIC will mature, I'll just leave in 3% saving account and if 5 years GIC will raise let's say to 4%, I'll think of buying it.


It's possible that the Bank of Canada will cut the overnight rate, so the rate on high interest savings goes down.
And maybe GICs go down too... then you may have wished you had bought current 5 year GIC at 3%

Who knows?

I think it's much more likely the BoC is going to cut rates, than raise them. GDP is weak and the official inflation is low, so there's virtually no reason to raise rates. And once housing starts cooling they will pretty much have to cut rates. We'll end up in the same situation as the USA with zero interest rates.


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## andrewf (Mar 1, 2010)

james4beach said:


> Unless you're in Japan, and we are increasingly looking like Japan (namely: ZIRP)
> 
> People always forget about Japan... nobody likes my Japanese stocks example either. 30 years with no stock gains.


But Japanese equities also had a peak CAPE of 80+. That takes a while to work off.


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## james4beach (Nov 15, 2012)

I would argue that American and European equities have vastly over-stated earnings, due to government stimulus.

As far as I know, Japan wasn't providing that kind of artificial stimulus (or nothing on the American & European scale)


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## gibor365 (Apr 1, 2011)

james4beach said:


> It's possible that the Bank of Canada will cut the overnight rate, so the rate on high interest savings goes down.
> And maybe GICs go down too... then you may have wished you had bought current 5 year GIC at 3%
> 
> Who knows?


It's possible, but not likely  

imho you cannot compare to Japan... the weight of stockmarket in japanese people life much less than in NA where almost everyone have at least some MF


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## HaroldCrump (Jun 10, 2009)

Scotiabank is offering a 5 yr. GIC @ *3%*.
Non redeemable and available only until Monday, 30th Sep.

This is the highest I have seen in recent times from the major banking institutions.

http://www.scotiabank.com/ca/en/0,,157,00.html


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## james4beach (Nov 15, 2012)

That's true, that is the highest standard posted rate a big bank has had in a while.

Kind of sad how excited we get about a pitiful 3%. Thanks Bank of Canada, you've made fools of us all


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## james4beach (Nov 15, 2012)

I put some money in the 5 year scotia GIC @ 3.0% today -- this is the last day of the promotion.

The good news is that now in my ladder, the maturing GICs (two this month) are actually being replaced at higher interest rates which is really nice to see.


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## gibor365 (Apr 1, 2011)

The hoghest in CM is 2.91% from Manulife


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## heyjude (May 16, 2009)

HaroldCrump said:


> Scotiabank is offering a 5 yr. GIC @ *3%*.
> Non redeemable and available only until Monday, 30th Sep.
> 
> This is the highest I have seen in recent times from the major banking institutions.
> ...


Thanks for the heads up Harold! I was able to get this promotional rate for corporate funds, much better than the 2.65% I was offered two months ago.


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## james4beach (Nov 15, 2012)

james4beach said:


> I put some money in the 5 year scotia GIC @ 3.0% today -- this is the last day of the promotion.


Man have these rates plummeted in the last month (as bonds have rallied)

That 5 year rate has dropped from 3.0% at the time I bought, down to 2.65% now


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## Worm (Nov 18, 2012)

Anyone have experience with ICIC bank? I see they have a promotion on adding .15% to the posted GIC rates until Dec 31, brings the 5yr rate to 3.00% in registered accounts. Rates seem good, but to be honest I've heard service isn't great.


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## gibor365 (Apr 1, 2011)

CIBC has now promotion 2.25% for 30months


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## Ag Driver (Dec 13, 2012)

Deleted.


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## Kim (Jan 10, 2011)

I would have said there is no way to go but up ( as I wait to reinvest my RESP funds ) but from reading the headlines this morning the powers that be are thinking the government is going to rescue the economy but until it does a rate cut is the next best thing????


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## birdman (Feb 12, 2013)

http://www.investingforme.com/historical-yield-curves

As you are probably aware GIC rates follow the Gov of Canada Bond Yields and suggest you look at these to perhaps get an indication of what the market is saying about the future of interest rates. The shape of the curve is also interesting as sometime the curve is inverse and sometimes up and down. You may find the above link interesting and I suggest you scroll down to see the shape of the curve in years gone buy. I am a heavy investor in GIC's and generally agree with a ladder approach but I use a modified approach depending on rates and where I think they are going. For example, interest rates are generally at their historic low and I shorten my duration and when they are what I feel are high levels I lengthen my duration. Right now I am mostly in the 18 -30 month area but still have some at 3.50% booked earlier. Also, sometimes institutions post special rates for a specific term, presumably to help them with an asset/liability management issue.


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## Ag Driver (Dec 13, 2012)

Deleted.


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## birdman (Feb 12, 2013)

Sorry but I can't really suggest what term to go out other than I am for the most part looking around 2-3 yrs. When I was in the business (banking including asset/liability mgmt) we did not take positions on interest rates but matched our asset terms to liability terms and made money on the spread. In other words, we would buy 2 yr deposits at 2% and lend it out at 3.25% and pocket the 1.25%, the margin. Derivatives and other tools were used to keep our matching within policy guidelines. However, from a personal perspective I saw the rates falling 15 years ago and up until a few years ago was investing for the longer term, usually 5 years. It seems to me rates are at their lower end as opposed to their upper end and thus staying shorter would be my choice. Mind you, I have been wrong before.


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## OnlyMyOpinion (Sep 1, 2013)

OMO but I'd choose, _A) Buy a 5yr at 2.6%, and a 4yr at 2.11%_
The beauty of your ladder is that you can't get 'caught' with everything locked in if rates to go up.
I assume you are working towards 5yr terms that mature each year. Not sure where/when you would plan to fill yr 1 and 3. You may be planning to save from now until 2017 and then pick up the 5yr rate then?


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## Ag Driver (Dec 13, 2012)

Deleted.


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## AltaRed (Jun 8, 2009)

If one is looking at starting a 5 year ladder, you can't get there without buying 5 year GICs. No second guessing interest rates. You have to start sometime so bite the bullet and get it started. I would split the funds into equal amounts of 5 year and 4 year to get the show on the road so to speak. Next year buy another 5 year GIC and the year after that, another 5 year GIC and so on. 

I have operated a 5 year Fixed Income ladder for perhaps 20 years now. I say fixed income rather than GIC because I have a sprinkling of corporate bonds/non-convertible debentures instead of GICs in some instances. The best 5 year fixed income ladder has 10 or 15 entries maturing at 6 month (or 4 month) intervals rather than 5 entries at one year intervals. That way, one smooths out interest rate changes by something maturing every 6 or 4 (or if one is impulusive 3) month intervals.


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## james4beach (Nov 15, 2012)

AltaRed said:


> If one is looking at starting a 5 year ladder, you can't get there without buying 5 year GICs. No second guessing interest rates.


Right. This is the key magic to a GIC ladder. Once it's established, from then on, *you only buy 5 year GICs*.

Like AltaRed, my ladder matures ever 6 months or so. You will always get a chance to buy more at those "higher rates" you think are coming. But I always buy 5 year GICs. They offer you the highest interest rates and that's why this method works so well.


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## gibor365 (Apr 1, 2011)

> Right. This is the key magic to a GIC ladder. Once it's established, from then on, you only buy 5 year GICs


Just a question .... when it's time for you to buy 5y GIC, the best rate is 2.3% , but you can get 3% on HISA for 6 months.... would you break/postpone your ladder?


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## Ag Driver (Dec 13, 2012)

gibor said:


> Just a question .... when it's time for you to buy 5y GIC, the best rate is 2.3% , but you can get 3% on HISA for 6 months.... would you break/postpone your ladder?


I see where you are coming from. That being said, there is some value in simplicity. Opening and closing various accounts to chase specialty rates is something I'm personally not terribly interested as of yet. In my particular case, the difference would be $7.

A couple years back I closed a few bank accounts and another brokerage account. I merged into one credit union and one brokerage account. I enjoy the simplicity. I do however see your point, and the up side of putting in a little leg work!


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## OnlyMyOpinion (Sep 1, 2013)

gibor said:


> Just a question .... when it's time for you to buy 5y GIC, the best rate is 2.3% , but you can get 3% on HISA for 6 months.... would you break/postpone your ladder?


Is the plan to have a 5yr FI ladder, or to chase around for the best rate you can find at the time?
Or perhaps you have both - a long term FI ladder for a certain %, and another % dedicated to rate-chasing for (shorter term?) savings?


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## james4beach (Nov 15, 2012)

Good question gibor. That's a tough one. I would do a mix, still buy a 5 year GIC to keep the ladder going but also throw some into the specialty rate (if it's worth the effort).


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## gibor365 (Apr 1, 2011)

james4beach said:


> Good question gibor. That's a tough one. I would do a mix, still buy a 5 year GIC to keep the ladder going but also throw some into the specialty rate (if it's worth the effort).


Actually this is a real example  , I have 2-3 GIC ladders in PT (didn't do 5 y as it's a long period for me - I'm turning 50 amd there is very small difference in rates between 2-3y and 5 y GIC). however, i broke my ladder when Tangerine offered 3% on HISA, as best rate I could've get in PT GIC was 2.45%.



> Is the plan to have a 5yr FI ladder, or to chase around for the best rate you can find at the time?


 my plan is to chase  and still I have plenty of GICs for longer term....

Another example, assume you plan to buy 5 y GIC every 6 months, but what if GIC offer now a good rate and nothing for HISA and you got big bonus 1 months after you already bought GIC?! Would you rather be in cash and wait 5 months for your ladder or buy new GIC right away?


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## Rysto (Nov 22, 2010)

gibor said:


> Just a question .... when it's time for you to buy 5y GIC, the best rate is 2.3% , but you can get 3% on HISA for 6 months.... would you break/postpone your ladder?


No, I wouldn't. The problem is that after those 6 months are up, you're stuck. What do you do next? Probably invest in a 4-year GIC, and that will likely have an even worse rate than 2.3%, and overall you end up losing.


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## gibor365 (Apr 1, 2011)

Rysto said:


> No, I wouldn't. The problem is that after those 6 months are up, you're stuck. What do you do next? Probably invest in a 4-year GIC, and that will likely have an even worse rate than 2.3%, and overall you end up losing.


Why likely worse?! With same likelihood it can be better  , you cannot predict. I'd consider the rate gonna stay the same ... Currently , probably the best GICs in PT 4 year - 2.400 and 5 year - 2.450 , so difference is minimal (for comparison the best 5y rate in my discount brokerage is 2.35%).
My ladder is very flexible  , as I explained in the previous post, I will buy GIC when I have cash allocated to GICs, so sometimes I have 3 GIC mature in 1 month and sometimes 7-8 months no GIC is matured.
My point that I go for best rate RIGHT NOW w/o speculating what will be rate in 3 or 6 months


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## OnlyMyOpinion (Sep 1, 2013)

gibor said:


> ... my plan is to chase  and still I have plenty of GICs for longer term....


Sounds like a plan then. I think the main thing is that you are saving, and that you have a % dedicated to FI that you keep invested. There are different ways to do that.


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## gibor365 (Apr 1, 2011)

OnlyMyOpinion said:


> Sounds like a plan then. I think the main thing is that you are saving, and that you have a % dedicated to FI that you keep invested. There are different ways to do that.


My major plan to keep 40-50% (excluding GRRSP and ESP) in FI , mostly Cash and GIC ...  . I have a bit problem when Tangerine, PCF or CIBC don't have promotional rates, as I'm scared to keep in Peoples Trust more than 100K on account and we have already my individual, my wife individual and our joint account. So max we can put in PT is 300K


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## birdman (Feb 12, 2013)

james4beach said:


> Right. This is the key magic to a GIC ladder. Once it's established, from then on, *you only buy 5 year GICs*.
> 
> Like AltaRed, my ladder matures ever 6 months or so. You will always get a chance to buy more at those "higher rates" you think are coming. But I always buy 5 year GICs. They offer you the highest interest rates and that's why this method works so well.


5 year rates do not always offer you the highest rates. Normally yes, but sometimes rates are flat, sometimes inverse, sometimes lower , and sometimes even up and down over the 5 years.


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## Ag Driver (Dec 13, 2012)

Deleted


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## Rysto (Nov 22, 2010)

gibor said:


> Why likely worse?! With same likelihood it can be better


Because shorter maturities tend to offer lower rates. The 4-year rate would have to go up significantly in order to beat the 5-year rate that you are getting now.


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## gibor365 (Apr 1, 2011)

> Currently , probably the best GICs in PT 4 year - 2.400 and 5 year - 2.450





> The 4-year rate would have to go up significantly in order to beat the 5-year rate


Really?!


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## james4beach (Nov 15, 2012)

frase said:


> 5 year rates do not always offer you the highest rates


You're right. Normally they do, but that's not a hard and fast rule.

Today I bought a 5 year CIBC gic at 2.25%.

In case anyone is curious, I don't go for the Peoples Trust GICs even if the rates are higher, because I don't want the added risk of a non-big bank. Same thing for the credit unions. Outlook Financial's 5 year GIC yield is only 15 basis points higher, not enough to tempt me. So I'm sticking with CDIC from big banks.


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## xcvq (Dec 12, 2015)

james4beach said:


> You're right. Normally they do, but that's not a hard and fast rule.
> 
> Today I bought a 5 year CIBC gic at 2.25%.
> 
> In case anyone is curious, I don't go for the Peoples Trust GICs even if the rates are higher, because I don't want the added risk of a non-big bank. Same thing for the credit unions. Outlook Financial's 5 year GIC yield is only 15 basis points higher, not enough to tempt me. So I'm sticking with CDIC from big banks.


What's the difference between CDIC insurance in places like People's Trust vs. the big banks? Is it not the same?


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## james4beach (Nov 15, 2012)

The CDIC insurance is still good. But I'd rather not encounter a scenario where I need the CDIC to pay me out and Peoples Trust (all the Trusts, actually) strike me as too risky.

When I buy a big bank GIC, I have two backstops:

1. It's a too-big-to-fail bank
2. CDIC

There's a certain threshold at which I can overlook #1. But the Peoples Trust 5 year GIC only offers 20 basis points more yield, and for me that's not enough to replace the benefit of #1


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## xcvq (Dec 12, 2015)

james4beach said:


> The CDIC insurance is still good. But I'd rather not encounter a scenario where I need the CDIC to pay me out and Peoples Trust (all the Trusts, actually) strike me as too risky.
> 
> When I buy a big bank GIC, I have two backstops:
> 
> ...


If People's Trust is CDIC insured then don't you only have one backstop?

That's interesting that you can get a GIC at CIBC for 2.25%. I haven't seen that on their website - although I haven't sifted through every kind of GIC they offer.


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## james4beach (Nov 15, 2012)

The CDIC is a great backstop, I'm just saying that given the choice, I prefer two safeties  Personal taste, perhaps.

I bought the GIC through a discount brokerage -- Scotia iTrade. They have a large GIC inventory from other issuers. I think that all discount brokerages will sell you GICs at higher yields than you can get directly at those banks.

If you ask around this forum, brokerages are a popular way to buy GICs


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## spirit (May 9, 2009)

Buying Gic's from a brokerage is a good idea that we will have to explore further....we have been buying them from our bank...the best rate for a 5 year from BMO was 1.5 so 2.5 is interesting. And we have a fairly large portion of 5 year laddered Gic's to leverage. Thanks for the idea


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## GreatLaker (Mar 23, 2014)

TDDI is currently offering 5 year GICs at 2.25% from ScotiaBank, B2B, Equitable Bank and HSBC. It's really sad how low the big 5 retail bank rates are for GICs relative to what is available at online brokers and online banks.


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## AltaRed (Jun 8, 2009)

spirit said:


> Buying Gic's from a brokerage is a good idea that we will have to explore further....we have been buying them from our bank...the best rate for a 5 year from BMO was 1.5 so 2.5 is interesting. And we have a fairly large portion of 5 year laddered Gic's to leverage. Thanks for the idea


There is a general trend that GIC rates at discount brokerages are better than those offered directly at the big brick and mortar banks....and that is because brick and mortar banks are successful at attracting the in-store (non-online) savvy customer. OTOH, most online banks, including People's Trust, Oaken Trust, etc. offer better GIC rates directly via their online channel than one can get them through discount brokerages.

Contrary to James, I have no issue putting money into any CDIC insured institution. I know of no instance where bankruptcy of an issuer caused anything more than a ripple once CDIC stepped in. Indeed, back in the early '80s, Principal Trust went bankrupt. CDIC simply had the deposits taken over by someone else (I forget who) but the only difference I saw was my next monthly statement was from a different company than Principal Trust.


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## GreatLaker (Mar 23, 2014)

AltaRed said:


> OTOH, most online banks, including People's Trust, Oaken Trust, etc. offer better GIC rates directly via their online channel than one can get them through discount brokerages.


Good Point AR.

Discount broker users get the convenience of buying GICs from many different institutions all in one place, and having all your reporting in one application and set of statements. Especially for a 5 year ladder. That convenience has a cost, currently around 0.25%. It would be a PITA for me to move registered funds from TDDI to an online bank, especially since I would have to use more than one institution, and the transfers would take 5 years for a full ladder. :stupid:


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## fatcat (Nov 11, 2009)

AltaRed said:


> *There is a general trend that GIC rates at discount brokerages are better than those offered directly at the big brick and mortar banks....and that is because brick and mortar banks are successful at attracting the in-store (non-online) savvy customer. OTOH, most online banks, including People's Trust, Oaken Trust, etc. offer better GIC rates directly via their online channel than one can get them through discount brokerages.*
> 
> Contrary to James, I have no issue putting money into any CDIC insured institution. I know of no instance where bankruptcy of an issuer caused anything more than a ripple once CDIC stepped in. Indeed, back in the early '80s, Principal Trust went bankrupt. CDIC simply had the deposits taken over by someone else (I forget who) but the only difference I saw was my next monthly statement was from a different company than Principal Trust.


this is it ... there are huge numbers of people that really don't like or know how to manage their money ... they know they don't want to lose it but they are stymied by understanding the options available for making more with it ... they trust their local branch and go with what the rep (who they probably know by first name as i do my guy) and just trust him to sell them a good product

james's well known paranoia is showing on cdic ... i had money in a failed bank in the usa, i walked in one morning and there was a small sign that the bank had failed and was being operated by the fdic, i just went to the teller and did my business, it was bought within a week and the name changed and basically was a non-event

if peoples trust were to fail, the cdic would be in there in a nanosecond and i suspect you wouldn't even notice an interruption to daily operations


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## AltaRed (Jun 8, 2009)

GreatLaker said:


> Discount broker users get the convenience of buying GICs from many different institutions all in one place, and having all your reporting in one application and set of statements. Especially for a 5 year ladder. That convenience has a cost, currently around 0.25%. It would be a PITA for me to move registered funds from TDDI to an online bank, especially since I would have to use more than one institution, and the transfers would take 5 years for a full ladder. :stupid:


I agree. I never buy GICs except via discount brokerages. I don't care if I leave a bit on the table. I do not want to be chasing all over the country juggling numerous accounts, especially registered accounts.


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## Beaver101 (Nov 14, 2011)

fatcat said:


> this is it ... there are huge numbers of people that really don't like or know how to manage their money ... they know they don't want to lose it but they are stymied by understanding the options available for making more with it ... they trust their local branch and go with what the rep (who they probably know by first name as i do my guy) and just trust him to sell them a good product ...


 ... to be fair, the banks are pushy along with their RRSP seasonal ad bombardments ... even the unlicensed tellers have been brainwashed to try to sell you mutual funds at the counter or aske that "you see one of our financial planner" for financial needs - for free of course. :rolleyes2:


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## fatcat (Nov 11, 2009)

Beaver101 said:


> ... to be fair, the banks are pushy along with their RRSP seasonal ad bombardments ... even the unlicensed tellers have been brainwashed to try to sell you mutual funds at the counter or aske that "you see one of our financial planner" for financial needs - for free of course. :rolleyes2:


yes, i agree, they do push hard ... thats why i own their stock :biggrin:


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## james4beach (Nov 15, 2012)

fatcat said:


> james's well known paranoia is showing on cdic ... i had money in a failed bank in the usa, i walked in one morning and there was a small sign that the bank had failed and was being operated by the fdic, i just went to the teller and did my business, it was bought within a week and the name changed and basically was a non-event


As usual, fatcat is confusing "informed" with "paranoid". To someone who is ignorant of risks, these kinds of fears seem like paranoia.

In fact, some Americans had problems getting their FDIC payouts on "brokered CDs". For those not familiar with US terminology, this is basically a GIC through a brokerage ... so it's what we're talking about here.

Here is a newspaper article about one investor's experience with his GIC purchased through a brokerage
http://www.grandforksherald.com/content/your-money-are-brokered-cds-too-good-be-true-look-closer



> It seemed like a low-risk move -- until the bank that issued the CD failed. Then Katker had to get in line with other former customers of California-based IndyMac Bank to recover his cash. It took him nearly a month.


fatcat has an established history of dismissing risks. Read the news article: this guy had to wait nearly a month to get his money back.



fatcat said:


> if peoples trust were to fail, the cdic would be in there in a nanosecond and i suspect you wouldn't even notice an interruption to daily operations


Maybe, maybe not. The FDIC insured deposits at Indymac bank, but it still took this guy nearly a month to get his money on his brokerage-based GIC.


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## fatcat (Nov 11, 2009)

james4beach said:


> As usual, fatcat is confusing "informed" with "paranoid". To someone who is ignorant of risks, these kinds of fears seem like paranoia.
> 
> *In fact, some Americans had problems getting their FDIC payouts on "brokered CDs".* For those not familiar with US terminology, this is basically a GIC through a brokerage ... so it's what we're talking about here.
> 
> ...


this place was getting boring, thank god i get to fight with james

james, i don't consider waiting a month to be anything like a real problem and yes, you might lose interest and have some service fees but you will get your principal back and i suspect most of your accrued interest

the fdic acted in a nanosecond with my bank in california ... i suspect the cdic would react even quicker given our smaller, tighter banking universe

the "risk" we are talking about is miniscule, it would be aggravating and might be costly in some small ways but i suspect the cdic would jump up and down to show people how quickly they took over and how seamlessly they made depositors and investors whole

this is their very precious brand we are talking about, they would not be wanting to mess it up

not to mention that bank failures in canada are relatively rare events

but sure, buy your gic's from institutions that you feel good about, maybe pass on canadian western and go for scotia/ry/bmo/td if you need that extra peace of mind


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## james4beach (Nov 15, 2012)

I agree, it was getting too boring around here, LOL

Well yet again I think we can come to an agreement of sorts, fatcat. We both agree that one would get their money back after a bit of a wait, let's say it's a month. I'm not saying I fear I'd lose my money, just think there would be delays getting it back.

Whether or not that delay is a problem depends on your tastes. I could easily be convinced that waiting a month is not a big deal. That's more or less the worst case scenario.


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## fatcat (Nov 11, 2009)

as i say, i walked up to my bank one morning many years ago and there was a small sign on the front door which i read and then walked in to the bank ... the sign said something like " this institution is unable to meet its financial obligations and as a member of the fdic has been taken over by the fdic, blah blah blah"

i walked in and did my banking (just banking no investing)

i assume there was an fdic officer there somewhere but the whole thing was a non-event, no lines, the tellers were relaxed

if you missed the sign you would have no idea that the bank had failed, i mean zero idea that it had gone under


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## james4beach (Nov 15, 2012)

You're right, many of those takeovers are seamless. Still, people did line up at Indymac... the lines went for miles.

Did I mention I shorted Indymac to zero? I held the short for 5 months, took home 76% profit. The best (unleveraged) trade of my life.


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## Moneytoo (Mar 26, 2014)

james4beach said:


> Did I mention I shorted Indymac to zero? I held the short for 5 months, took home 76% profit. The best (unleveraged) trade of my life.


Cool!  So what happened to you, why are you not trading anymore? Sorry if you explained it somewhere, I just remember you saying that you were successfully shorting in 2008 - and now are soooo super-careful that it's hard not to tease you...


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## james4beach (Nov 15, 2012)

Moneytoo said:


> Cool!  So what happened to you, why are you not trading anymore? Sorry if you explained it somewhere, I just remember you saying that you were successfully shorting in 2008 - and now are soooo super-careful that it's hard not to tease you...


It took a lot of time and energy. I would have made far more money working at a regular job! Or another way to put it, the $/hour of income was ridiculously low. I think I was obsessed with market movements.


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## Moneytoo (Mar 26, 2014)

james4beach said:


> Or another way to put it, the $/hour of income was ridiculously low. I think I was obsessed with market movements.


Oh so I'm just one bear market behind you - as I'm fascinated by it now  It's funny that my husband keeps encouraging me to open a separate trading account - and I've been trying to convince him to start a GIC ladder (we agreed that we'll start it when GICs start yielding 5% or we turn 50 - whichever comes first - I bet the latter :biggrin


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## Moneytoo (Mar 26, 2014)

Something new: 3% Flex80 GIC from Duca


Stay invested until maturity (80 months) and you’ll earn more with an outstanding 3% interest rate.
Cashable anytime after 12 months at equally remarkable 2% interest rate.
RRSP, TFSA and RRIF-eligible

* Limited-time offer. Offer may be changed or withdrawn at any time without notice. Rate subject to change. All deposits made to RRSP, TFSA and RRIF plans are fully insured with no limit on the maximum amount. Interest rates are per annum. Minimum $500 investment required. Interest paid at maturity is compounded annually. Offer not available for US funds. Not offered in conjunction with any other rate bonus or promotion. Only available in Registered Plans.


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## gibor365 (Apr 1, 2011)

From what I understand DUCA is insured by Deposit Insurance Corporation of Ontario.....to tell the truth I trust this much less than CDIC...
Nevertheless, 80 months are abour 6.6 years, so CDIC wouldn't insure it... what about DICO?
I also don't get where is the catch?! Regular redeemable GIC for 7 Year 2.1%, non-reddemablr 2.25% , why Flex for 6.6 years give you 3%?


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## Moneytoo (Mar 26, 2014)

Dunno, we're members of DUCA 'cause we have their partner's Zenbanx accounts (for USD), I just saw the promo while googling something else, then found an RFD thread - and left it at that


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## humble_pie (Jun 7, 2009)

my takeaway: this is actually only a 2% deal, with a special bonus of the difference between 2% & 3% compounded that will be payable only at the end of the 6.5 years.

although i wasn't able to see, on a quick read-by, whether they are committing themselves to paying any interest at all, every 12 months.

rating: not a truffle


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## lonewolf (Jun 12, 2012)

Oftencycle in interest rates number of years up will = number of years down


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## lonewolf (Jun 12, 2012)

US 30 year bond daily sentiment trade futures.com 97% bulls. yield could drop a little further to 2.61% which would be a fib .618 retracement of the rally from the record low yields of 2.223% to the 3.239% high in yields. A double zig zag from 3.239% would have 2 equal legs @ 2.61% a common relationship is for a double zig zag to have 2 equal legs or a fib ratio of.


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