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4% 1yr GIC - should I lock in or wait some more?
July 8, 2022
12:57 pm
phrank
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HermanH said
What would trigger your willingness to lock in for more than a few years?  

A notification from Oaken that they are lowering their rates sf-laugh

Also, like canada.100 said, people confirming a recession is happening would catch my attention.

July 9, 2022
7:13 am
savemoresaveoften
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canadian.100 said

I think that once the leadership advises we are in a recession (and that does seem to be on the horizon), rates may stabilize fairly quickly and it may be time to lock in - I would lock in for various terms (the ladder) not all my funds in just long term.  

yeah thats the way to do it. Once rates appears to be close to peak, its better to ladder it. Optically it will not look good as the term structure or 1-5y will be flat like a pancake. However for reinvestment risk management, its wise to ladder than just lock in shorter term only.

July 11, 2022
6:35 am
Alexandre
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Bill said
To lock my money for more than (at the very most) a year where I actually can't get at it at all would take a lot more political, social and economic stability. So higher bar for me, personally.  

I have same concerns with locking my money for more than a year.

I am considering 3 and 5 year Escalator GIC from FIs such as motusbank and Meridian CU. At these FIs Escalator GIC is cashable in whole or in part on its anniversary date and 30 days thereafter.

This locks funds for 1 year, at most, and with increasing rates. In case of recession Escalator GIC will benefit its holder greatly, and if inflation makes BoC keep rising rates, GIC can be redeemed at anniversary and renewed at even better terms.

July 11, 2022
7:20 am
phrank
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One thing I just noted for those concerned about losing money if they don't lock in and wait for a better rate. I am not getting .05% more interest in the HISA than the rate I would have got on a 5 year GIC if I had locked in on March 11th.

July 14, 2022
11:15 pm
Greedy Guy
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New GIC rates, https://www.eqbank.ca/personal-banking/investments/gics :

1yr 4.30%
2yr 4.60%
3yr 4.70%
4yr 4.75%
5yr 5.00%

July 28, 2022
12:17 pm
Alexandre
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savemoresaveoften said Even 4.5-4.75% is a stretch in my mind, my 2 cents.  

Stretch.jpg

Told you not to lower my expectations. I wonder what August will bring us.

July 28, 2022
6:14 pm
savemoresaveoften
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Alexandre said

Stretch.jpg

Told you not to lower my expectations. I wonder what August will bring us.  

it still aint 5% yet. But if it does hit that rate, I will be happy too 🙂

July 29, 2022
7:37 am
mechone
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Look we are at the same fed rate as the US ,traditionally Canada is .5 % over US rate to support our dollar . I would go out on a limb we will go to 3% Sept 7th

July 29, 2022
8:54 am
canadian.100
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mechone said
Look we are at the same fed rate as the US ,traditionally Canada is .5 % over US rate to support our dollar . I would go out on a limb we will go to 3% Sept 7th  

Remember, if you make the Canadian $ too strong, then exports become more expensive to our foreign buyers - which would not be positive for Canadian exporters.
With the economic news out today (read the Globe) not so sure that rates will go up a lot in the fall. It appears that things might be levelling a bit as far as economic growth, which might take some pressure off price increases/inflation.

July 29, 2022
9:03 am
HermanH
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I am doing the same and waiting for Sept. I predict a 0.5% bump by BoC.

July 29, 2022
9:57 am
rodeworthy
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HermanH said
I am doing the same and waiting for Sept. I predict a 0.5% bump by BoC.  

Wait just a tad longer to September 7 for BOC interest rate announcement.

July 29, 2022
10:36 am
Loonie
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The five year GIC rate has not budged since the most recent BoC increase of 1%, so I see no reason to think it will do any better after an increase of half that amount in Sept, should it happen. It appears the GoC bond rate is holding it back but I am not sure what determines that rate.
The only rates that are moving up are at the short end, and they are moving slowly.

I think there is a good possibility that, for five year rates, this is as good a time as any for 2022.

July 29, 2022
11:28 am
Dean
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.
What Loonie said (Post #32)

Those 5Yr GICs (@ ~5%) appear to have hit a wall.

I wouldn't bet the farm just yet, but it's looking like it may be time to start
buying in. But be sure to hold back a Good Chunk O' Moolah for after the BoC's next announcement in September.

My two centavos,

    Dean

sf-cool " Live Long And Prosper " sf-cool

July 29, 2022
2:43 pm
HermanH
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Loonie said I think there is a good possibility that, for five year rates, this is as good a time as any for 2022.  

I think that you are probably correct. However, I do not feel that I am losing out on very much by waiting until the Sept BoC announcements. I thought about locking in rates, but then remembered how I was burned when I did the same last Sept and again in May.

July 29, 2022
2:58 pm
mechone
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canadian.100 said

Remember, if you make the Canadian $ too strong, then exports become more expensive to our foreign buyers - which would not be positive for Canadian exporters.
With the economic news out today (read the Globe) not so sure that rates will go up a lot in the fall. It appears that things might be levelling a bit as far as economic growth, which might take some pressure off price increases/inflation.  

Yes however let the dollar fall you upset our trading partners and get accused of currency manipulation , and upset those who travel to Florida. Being .5% over US fed rate will not drive our dollar it will hold it at current levels. Who knows they may just go .25% and risk the US going over us like last time and then get forced into catch up

July 29, 2022
3:34 pm
Bill
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Current Central Bank rate increases are telegraphed leading up to the announcement, can't always assume GIC rate increases for any fi will happen after an announcement because often they've already adjusted before with their knowledge/guess of what upcoming announcement will be.

July 29, 2022
3:42 pm
mechone
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Bill said
Current Central Bank rate increases are telegraphed leading up to the announcement, can't always assume GIC rate increases for any fi will happen after an announcement because often they've already adjusted before with their knowledge/guess of what upcoming announcement will be.  

Then you should explain that to EQ and their 1.65% rate , I don't think even the BOC knows what the next rate will be . I can tell you they are focused on what the US is doing , not how things appear at home . If the US goes up we follow and you can take that to the bank. Its always been that way . And many rates went up after the last rate hike ,not before.We were at .5% when the US was at 0 like I said .5% above

July 29, 2022
3:58 pm
Bill
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Seems to me EQ has made it very clear for a while they're not really interested in HISA money right now. They remain in the top tier for 1 - 5 year GICs, that's what they seem to be interested in these days, as far as deposits are concerned.

July 29, 2022
3:59 pm
Dean
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.
By the time we fully realize that the GIC rates have already peaked ... it will be in our rear-view mirrors, and we'll have missed it.

As most of us are aware, trying to time the market(s) almost Never works.

Probably starting now (if not, soon) wouldn't it be better to implement a 'Dollar Cost Averaging' plan ... No ❓

    Dean

sf-cool " Live Long And Prosper " sf-cool

July 29, 2022
4:53 pm
canadian.100
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Dean said
.
By the time we fully realize that the GIC rates have already peaked ... it will be in our rear-view mirrors, and we'll have missed it.

As most of us are aware, trying to time the market(s) almost Never works.

Probably starting now (if not, soon) wouldn't it be better to implement a 'Dollar Cost Averaging' plan ... No ❓

    Dean

  

So are you now doing "GIC "timing speculation"? - I thought stock pickers were considered the guilty ones who try to time the market. (Actually happy to see the markets do well this week - perhaps giving us a signal that many believe that inflation and interest rates may be starting to level off.) I tend to think that inflation and interest rates are about to level off - and perhaps for GIC lovers it is time to start building your ladder. (or as u suggest implement Dollar Cost Averaging) - you may be right....

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