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EQ 1 year GIC is 3.45%
May 24, 2022
4:42 am
savemoresaveoften
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Gradually rolling a 5y ladder is still the best strategy, esp if that is your main source of income.
Those who think otherwise, you are just trying to time the market, while you may be better off this cycle, you can be worse off the next cycle and vice versa.
We are human and what we don’t have / miss out always look more attractive

May 24, 2022
6:26 am
Bill
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Agree, problem is that we're clearly in a quickly rising rate environment at the moment (i.e. an anomalous time, not the usual stability, to some eyes) so why would I lock in my maturing GIC again right today? Rates are being upped quickly due to acute economic stress, geo-political factors, etc, so it's natural to adjust one's approach to suit today's circumstances. Other problem is, as Vatox has indicated, things can reverse suddenly due to unexpected events.

May 24, 2022
10:15 am
AllanB
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savemoresaveoften said
Gradually rolling a 5y ladder is still the best strategy, esp if that is your main source of income.
Those who think otherwise, you are just trying to time the market, while you may be better off this cycle, you can be worse off the next cycle and vice versa.
We are human and what we don’t have / miss out always look more attractive  

You are wrong Bill is right adjust to the times. Rolling over 5yr Gics when rates are rising week to week is not wise. When rates settle you'll have time to get a decent rate plus or minus a quarter point.

May 24, 2022
11:56 am
savemoresaveoften
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AllanB said
You are wrong Bill is right adjust to the times. Rolling over 5yr Gics when rates are rising week to week is not wise. When rates settle you'll have time to get a decent rate plus or minus a quarter point.  

read carefully, rolling a 5y ladder is NOT the same as rolling a 5y GICs...
One need to do the math to work out the break even. Its never as simple as "just wait for higher rates".

May 24, 2022
3:04 pm
frugal lady
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HermanH said
Of course, you could make my blunder. I bought some 2.88% 5-yr GIC from WealthOne when they came out in Sept. Live and learn. (and sob.) sf-cry

Anyone else care to share their blunders?  

I also bought Wealth One in October at 2.88%. However, I contacted them in April and they let me redeem the GIC, forfeiting the interest, if I re-purchased a portion with them, which I did at 4.05%. I figured no harm in asking, all they can do is say No.

May 24, 2022
3:36 pm
Bill
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And you have to factor in waiting for rates to rise costs you by getting lower return during waiting time. Like they say about stocks: it's not timing the market, it's time in the market.

May 25, 2022
4:01 pm
HermanH
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frugal lady said

I also bought Wealth One in October at 2.88%. However, I contacted them in April and they let me redeem the GIC, forfeiting the interest, if I re-purchased a portion with them, which I did at 4.05%. I figured no harm in asking, all they can do is say No.  

Thanks very much for the suggestion. I got it done with today's rate of 4.25% Overall, I lost $7K, but should make up $23K in the full term. Owe you a big steak. sf-cool

May 25, 2022
6:17 pm
MattS
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We’re you dealing with Patrick moon? I also participated in October at 2.88%. How did you frame the conversation or did you just ask and it was no problem?

May 25, 2022
6:38 pm
HermanH
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Patrick is still around, but I think they hired a new guy, Andy Chong, for customer service. I got a hold of Patrick, because he handled the 2.88% transactions. So, I thought (correctly) that it would be easier to explain things to him, before he handed me back to Andy. I reminded him of my purchase and told him that another W1 member had said that they got a cancellation/re-purchase arrangement. I also told him that I acknowledged that the term was for 5-yrs and that I had no legal power to demand early redemption. All I could do was ask and hope for the best. Andy cancelled and re-purchased the new GICs.

Both fellas told me that they had to put it to their Director for approval, but the answer was within the business day. I think that it kinda helped for me to tell them I would re-purchase for the same 5-yr terms with the entire amount. That way, they aren't really 'losing any business.'

Instead, they made $7K for shuffling and re-issuing some papers. That's gotta be a good day for them. It's a matter of perspective. sf-wink

May 25, 2022
7:25 pm
Loonie
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Maybe they liked you because you were so willing to deposit over CDIC limits? - or so it appears to me anyway.

Just wondering... Did you buy a new five year or a new four year? a new five year extends your investment with them.

What is your strategy for six months down the road if rates are ~6%? Are you going to try the same manoeuvre again and forfeit the whole year's interest?

I bought one of those 2.88's also, but not too concerned as it was quite a small percentage of my funds. I was hesitant last year due to fear of rising rates, so put in less than usual in my ladder. I will probably just let it run its course.

May 25, 2022
11:48 pm
HermanH
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I'm not over CDIC limits.
I bought new 5-yr terms. That might have been another enticement since, as you say, it extends the life of the investment.

I thought about a possible 6% increase. I don't think I'll do it again, but it might be worthwhile if it goes 7%+

I did my calc's. I sacrificed $6800 accrued interest to get an additional $16K. It was worthwhile.

May 26, 2022
4:22 am
savemoresaveoften
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HermanH said
I'm not over CDIC limits.
I bought new 5-yr terms. That might have been another enticement since, as you say, it extends the life of the investment.

I thought about a possible 6% increase. I don't think I'll do it again, but it might be worthwhile if it goes 7%+

I did my calc's. I sacrificed $6800 accrued interest to get an additional $16K. It was worthwhile.  

Check ur math again. If you are NOT over limit, which means max $100k, I dont see how moving up from 2.88% to 4.25% net made u additional $16k...

May 26, 2022
8:27 am
Alexandra
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HermanH said
I'm not over CDIC limits.
I bought new 5-yr terms. That might have been another enticement since, as you say, it extends the life of the investment.

I thought about a possible 6% increase. I don't think I'll do it again, but it might be worthwhile if it goes 7%+

I did my calc's. I sacrificed $6800 accrued interest to get an additional $16K. It was worthwhile.  

If one bought a $100K GIC @2.88% over 5yrs you would have $115,253.63 @ maturity. If you bought it @ 4.25%, you would have $123,134.64. So after 5yrs you would have made $7881.01 more with the 4.25% vs the 2.88%.

May 26, 2022
9:00 am
frugal lady
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MattS said
We’re you dealing with Patrick moon? I also participated in October at 2.88%. How did you frame the conversation or did you just ask and it was no problem?  

In my case I just asked whoever took the call if I could redeem a GIC early if I forfeited the interest and immediately repurchased a new GIC with them. He said he had to check with his Manager and I got a call back within an hour saying they would. I never mentioned the amount or time I would reinvest and they didn't say I had to go with same term and amount. In my case I went from a 5 year term to a 3 year term and for a lesser amount under CDIC limit.

HermanH said
Thanks very much for the suggestion. I got it done with today's rate of 4.25% Overall, I lost $7K, but should make up $23K in the full term. Owe you a big steak. sf-cool  

Glad it worked out for you. But as suggested above I would check your math.

May 26, 2022
9:08 am
GR
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Seems like HermanH likely bought more than one GIC in different names, as he stated "new 5 year TERMS....".

May 26, 2022
9:16 am
Bill
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HermanH's calculation should factor in that the funds earned zero interest from October to April, i.e. the return is made over a period of 5 1/2 years or so.

May 26, 2022
9:37 am
savemoresaveoften
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Alexandra said

If one bought a $100K GIC @2.88% over 5yrs you would have $115,253.63 @ maturity. If you bought it @ 4.25%, you would have $123,134.64. So after 5yrs you would have made $7881.01 more with the 4.25% vs the 2.88%.  

and thats before the forgone interest....

May 26, 2022
9:57 am
HermanH
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My math is correct. I was including TFSA accounts for myself and a family member, as well as a GIC held jointly.

May 26, 2022
6:56 pm
hwyc
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EQ 1-yr rate also reached 3.55% today ... 4th increase in this month (every week) sf-smile

... 15-month 3.70%

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