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Coast Capital -- new offer
June 12, 2020
10:00 pm
Norman1
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Loonie said
I am convinced that the only reason any FI makes a GIC interest calculation so complicate is to diminish the return - with the hope that you won't notice.

It is really that complicated to calculate the single rate that would give the same result on maturity as a blend of (a) the original rate for the balance of the original term and (b) 4% for the rest of the extended term, with an additional 30, 100, or 150 days at 4% depending on the extended term.

Wouldn't need the calculation if they had a system, like Hubert's, that can issue a term deposit with four different interest rates during different portions of the term.

June 13, 2020
3:40 am
cruzinalong
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My GIC excel program only takes into account annual GIC term deposits that compound on the anniversary dates. It also works out accrued interest since last anniversary interest date. I do not need something fancy for 30, 60 ... 365 days or 1,2,... 60 month term deposits. The FI offer so many options that they need additional calculations.

July 3, 2020
11:04 pm
Rick
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Got a letter from CC couple weeks ago, still trying to get me to blend. No rates were quoted so I called out of curiosity. This is what I was offered:
3 terms to choose from. 19, 28 or 38 months. Current 4% term would be closed and new terms would start from that date.
For the 19 month term I would get an additional 30 days at 4% (which would give me 4% until Dec 27, then 13 months @ 1.65% PA for a blended rate of 2.6% for the term (their math...not mine)
For the 28 month term, 4% for an additional 100 days and 1.7% for the remainder for a blended rate of 2.67%
38 month term, 4% for 150 days ending with a blended rate of 2.64%

Said I'll think about it.

July 4, 2020
9:59 am
Vatox
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Looking at current rates out there, 2.6 seems pretty good.

July 5, 2020
4:10 pm
Doug
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Rick said
Got a letter from CC couple weeks ago, still trying to get me to blend. No rates were quoted so I called out of curiosity. This is what I was offered:
3 terms to choose from. 19, 28 or 38 months. Current 4% term would be closed and new terms would start from that date.
For the 19 month term I would get an additional 30 days at 4% (which would give me 4% until Dec 27, then 13 months @ 1.65% PA for a blended rate of 2.6% for the term (their math...not mine)
For the 28 month term, 4% for an additional 100 days and 1.7% for the remainder for a blended rate of 2.67%
38 month term, 4% for 150 days ending with a blended rate of 2.64%

Said I'll think about it.  

They keep calling me, too, Rick. I keep ignoring them. Loonie hit the nail on the head. If an FI has to make the calculation methodology so uncomplicated, it can't possibly be more beneficial to the depositor/investor.

For that reason, and for my cash burning a hole in my "wallet" itching to move over to Scotia iTRADE, I'm passing on it. Looking forward to buying opportunities I missed a few years ago and making up for five or so years of lost time. sf-cool

Cheers,
Doug

July 5, 2020
4:13 pm
Doug
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Roberto said
Here are the terms. What is interesting is the calculations, which takes 18 steps to complete. Who knew interest calculations can be this complex!1.png2.png3.png4.png  

Good God! sf-surprised

One shouldn't need to be a calculus major to evaluate a GIC and potentially purchase it.

Cheers,
Doug

July 6, 2020
3:15 pm
Vatox
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Not sure why people are looking at internal complex algorithms. All you need is the rate for term and term length. In these cases it's the blended rates quoted and that's what is applied to your new term. The whole nonsense about 4% extended term months and remainder of the term rate, is just smoke.

July 6, 2020
3:30 pm
Doug
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Vatox said
Not sure why people are looking at internal complex algorithms. All you need is the rate for term and term length. In these cases it's the blended rates quoted and that's what is applied to your new term. The whole nonsense about 4% extended term months and remainder of the term rate, is just smoke.  

It's technically a new term (or terms). They're creating you a new GIC account number (or number(s)), which means that for the purposes of transitional CDIC insurance, by converting, you're giving up early your unlimited CDIC deposit insurance that would normally continue until the GIC normally matured. For most people, this doesn't apply as they're under their CDIC limits, but it's a consideration nonetheless as in CDIC's eyes, it's a new term, based on the methodology for how instrument deposit insurance is established. sf-cool

Cheers,
Doug

July 6, 2020
4:44 pm
Briguy
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Doug said

They keep calling me, too, Rick. I keep ignoring them. Loonie hit the nail on the head. If an FI has to make the calculation methodology so uncomplicated, it can't possibly be more beneficial to the depositor/investor.

For that reason, and for my cash burning a hole in my "wallet" itching to move over to Scotia iTRADE, I'm passing on it. Looking forward to buying opportunities I missed a few years ago and making up for five or so years of lost time. sf-cool

Cheers,
Doug  

Scotiabank Itrade works really well, but the customer service is very bad if you need to get hold of them, and don't want to wait on the phone for an hour.

Interactive Brokers introduced a new plan in USA called IBKR Lite which provides retail clients with $0 commissions on US listed stock and ETF trades, no account minimums and no inactivity fees. You might want to switch to that when the Lite plan is available in Canada.

I also believe there is going to be another downturn to the markets, you may not want to hop in yet. Trust the Oracle of Omaha, Warren Buffett, he's still in cash waiting for the market to crash.

July 6, 2020
5:07 pm
rqs
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Vatox said
Looking at current rates out there, 2.6 seems pretty good.  

Yes ..2.6 does seem pretty good! However that is not what you are getting. Deceptively the calculation takes into account the 4% to maturity which you are already getting. A proper calculation would be from maturity to the end of their promotion extension . That would bring the average rate to well below 2%.

July 6, 2020
7:07 pm
Vatox
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rqs said

Yes ..2.6 does seem pretty good! However that is not what you are getting. Deceptively the calculation takes into account the 4% to maturity which you are already getting. A proper calculation would be from maturity to the end of their promotion extension . That would bring the average rate to well below 2%.  

Not true that's why I said it's smoke. They are giving you a good rate for long time instead of the rest of your 4% term. The interest accrued to date is paid out, that's 27 months or so at 4%. You want the full 33 months at 4% and and 2.6% for 3 years. You can't have both. I'm quite sure you won't get any rates of 2% and higher, come December. That's why the 2.6% is a great deal if you take the 38 months and only deal in guarantees, not stocks.

At this point in the 33 month term, you have hauled in good gains from that 4% rate, you should worry about what's coming and not about the lost months of the remaining 4%

July 7, 2020
4:27 am
Briguy
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@Doug , spoke too soon, the Oracle just purchased shares in Dominion Energy to the tune of 9.7 Billion USD.

July 7, 2020
2:17 pm
rqs
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Vatox said

Not true that's why I said it's smoke. They are giving you a good rate for long time instead of the rest of your 4% term. The interest accrued to date is paid out, that's 27 months or so at 4%. You want the full 33 months at 4% and and 2.6% for 3 years. You can't have both. I'm quite sure you won't get any rates of 2% and higher, come December. That's why the 2.6% is a great deal if you take the 38 months and only deal in guarantees, not stocks.

At this point in the 33 month term, you have hauled in good gains from that 4% rate, you should worry about what's coming and not about the lost months of the remaining 4%  

Spoken like true non-accountant! What has been earned so far (4%) is history. And the remainder of 4% until maturity is money in the bank (literally) It's like saying that if you're 50 years old, your average age is 25! So what! A valid comparison is to compare C.C.s offers to what you can expect by cashing out at maturity and re-investing at that time.

July 7, 2020
3:20 pm
Doug
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rqs said

Spoken like true non-accountant! What has been earned so far (4%) is history. And the remainder of 4% until maturity is money in the bank (literally) It's like saying that if you're 50 years old, your average age is 25! So what! A valid comparison is to compare C.C.s offers to what you can expect by cashing out at maturity and re-investing at that time.  

I like Vatox a lot, especially his contributions to these forums, but I just wanted to say +1 to your post above, rqs! Very true! You made me chuckle and smile. sf-cool

Cheers,
Doug

July 7, 2020
3:27 pm
Doug
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Briguy said

Scotiabank Itrade works really well, but the customer service is very bad if you need to get hold of them, and don't want to wait on the phone for an hour.

Interactive Brokers introduced a new plan in USA called IBKR Lite which provides retail clients with $0 commissions on US listed stock and ETF trades, no account minimums and no inactivity fees. You might want to switch to that when the Lite plan is available in Canada.

I also believe there is going to be another downturn to the markets, you may not want to hop in yet. Trust the Oracle of Omaha, Warren Buffett, he's still in cash waiting for the market to crash.  

Maybe...I've looked at Interactive Brokers in Canada in the past, but they always tend to nickle and dime you with administrative fees and per-share stock exchange/regulatory fees normally included within the trading commission. They're by no means alone in this, but also Virtual Brokers is rebranding as CI Direct Investing later this year, and Jitneytrade just rebranded as Canaccord Genuity Direct Investing. The latter has an impressive platform and customer service, but no fee waivers on registered plan annual fees otherwise I'd switch to them. sf-cool

Morgan Stanley is also in the process of winding down their Solium Financial Ltd. carrying broker and custodianship business, as they've just signed a deal with Canaccord Genuity to be their back-office carrying broker for their Shareworks by Morgan Stanley group employee savings plan business (used to be Shareworks by Solium Capital, until Morgan Stanley bought them a few years ago). Morgan Stanley Wealth Management also announced it's coming to Canada for individual, retail investors and, presumably, will use Canaccord Genuity as the back-office service provider as well. So, lots of changes in brokerage firms in Canada.

Cheers,
Doug

July 8, 2020
1:35 pm
Vatox
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rqs said

Spoken like true non-accountant! What has been earned so far (4%) is history. And the remainder of 4% until maturity is money in the bank (literally) It's like saying that if you're 50 years old, your average age is 25! So what! A valid comparison is to compare C.C.s offers to what you can expect by cashing out at maturity and re-investing at that time.  

As I stated, my view is for guarantees and not investing the maturing GIC in stocks. That 4% to December is not in your hands today to invest in a longer term decent rate, but you must wait to maturity to get your hands on it. I’m quite sure rates won’t be higher than today and most likely will be lower. Getting 2% for 3 years will likely be tough.

July 8, 2020
2:14 pm
Doug
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Vatox said

As I stated, my view is for guarantees and not investing the maturing GIC in stocks. That 4% to December is not in your hands today to invest in a longer term decent rate, but you must wait to maturity to get your hands on it. I’m quite sure rates won’t be higher than today and most likely will be lower. Getting 2% for 3 years will likely be tough.  

Sorry, what, are you trying to say here, Vatox? Yes, one has not earned the 4% for the preceding year that is payable in or before December of this year, but it's essentially a guaranteed payment as long as one holds it until maturity.

Yes, there's a good chance 2% for a 2-3 year GIC may be hard to come by (especially 2 years) by December of this year, but my own personal interest rate forecast is for there still be a few 2-2.25% 3-5 year GIC rates available by the end of 2020, so it won't be impossible by any stretch. For clarity, my forecast for 1-2 year GIC rates at year end is to top out at somewhere between 1.5-2.0%. Again, there will be few players offering these rates at year end for 1-2 years, but there will be a handful (or so). For HISAs, it's really a crap shoot; they could top out at 1.25% (a full 0.80% below the current leader) or they could top out at 1.75% at year end (a 0.30% drop from current levels). Once we get to these levels, I think we're more or less tread water for a few years.

At any rate, my funds will be moving, fully, into risk assets—finally! sf-cool

Cheers,
Doug

July 8, 2020
3:41 pm
Vatox
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Doug said

Sorry, what, are you trying to say here, Vatox? Yes, one has not earned the 4% for the preceding year that is payable in or before December of this year, but it's essentially a guaranteed payment as long as one holds it until maturity.

Yes, there's a good chance 2% for a 2-3 year GIC may be hard to come by (especially 2 years) by December of this year, but my own personal interest rate forecast is for there still be a few 2-2.25% 3-5 year GIC rates available by the end of 2020, so it won't be impossible by any stretch. For clarity, my forecast for 1-2 year GIC rates at year end is to top out at somewhere between 1.5-2.0%. Again, there will be few players offering these rates at year end for 1-2 years, but there will be a handful (or so). For HISAs, it's really a crap shoot; they could top out at 1.25% (a full 0.80% below the current leader) or they could top out at 1.75% at year end (a 0.30% drop from current levels). Once we get to these levels, I think we're more or less tread water for a few years.

At any rate, my funds will be moving, fully, into risk assets—finally! sf-cool

Cheers,
Doug  

There’s no problem Doug. I’m simply pointing out my ultra conservative views. That means I’m very happy to get 38 months at 2.6% versus 6 months at 4%. I like guarantees and don’t want to take a chance that rates will stink in December. I also hate opening new accounts at new FIs just to get the top rates, which means I’m limited to the list of FIs I’m already with. Having said that, I am thinking of opening an account at Peoples Trust.

July 8, 2020
4:00 pm
Doug
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Vatox said

There’s no problem Doug. I’m simply pointing out my ultra conservative views. That means I’m very happy to get 38 months at 2.6% versus 6 months at 4%. I like guarantees and don’t want to take a chance that rates will stink in December. I also hate opening new accounts at new FIs just to get the top rates, which means I’m limited to the list of FIs I’m already with. Having said that, I am thinking of opening an account at Peoples Trust.  

Ah, okay, thanks for clarifying. True, depends on the amount you're in at 4% for. I can appreciate that, but certainly you can probably get 2.5% or so for at least three years elsewhere besides this Coast GIC offer, maybe?

I also hate opening new accounts with FIs, but Peoples Trust, one I've long avoided, is one I'm increasingly warming to because they do seem to have exceptional customer service (like Hubert). So they're one I wouldn't mind dealing with.

Right now, I have:
- two 4.0% GICs with Coast that mature December 1st that together represent ~30% of my total deposits and investments;
- one 1.75% 1-year GIC with Coast that matures March 1st, 2021. It is securing my $5,000 LOC with Coast on a one-to-one security basis so I could have secured borrowing rates (Prime+0.50%, or 2.95% currently); and,
- one 3.02% 18-month GIC with Concentra Bank maturing August 1st, 2021, representing ~10%-ish of my total deposits and investments.

The rest is mostly invested in risk assets, if you or anyone is curious.

Cheers,
Doug

July 8, 2020
5:06 pm
Rick
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Didn't find PT's Customer Service all that great. Rates seemed stable, but they lost me when they were knocked off top spot and went from 3.6 to 2.1 in 4 months. Closed all my accounts in 02/16 when they were paying 1.65% while EQ was at 3% and Motive was 1.7. I am still feeling the repercussions of their flag on my credit rating from the breach. Since I am already using 3 of the top 5 FIs in the HISA list, don't see the point of going back. IF they would even have me after closing my accounts with them.

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