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EQ GIC rates up
October 29, 2022
11:18 am
Alexandra
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EQ GIC rate increases

1yr @4.85%
2yr @4.9%
27mo. @4.9%
3yr @4.9%
4 & 5 yrs @ 4.75%

Not bad, I'll probably go some for the 27month & the 3yr.....just in case things go badly. sf-kiss

October 29, 2022
11:46 am
HermanH
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Alexandra said Not bad, I'll probably go some for the 27month & the 3yr.....just in case things go badly. sf-kiss  

How do you define 'things going badly'? What are your decision factors?

October 29, 2022
12:37 pm
cgouimet
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Alexandra said
EQ GIC rate increases

1yr @4.85%
2yr @4.9%
27mo. @4.9%
3yr @4.9%
4 & 5 yrs @ 4.75%

Not bad, I'll probably go some for the 27month & the 3yr.....just in case things go badly. sf-kiss  

Not bad but still no joint GIC's ...

CGO
October 29, 2022
1:15 pm
Alexandra
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HermanH said

How do you define 'things going badly'? What are your decision factors?  

Pretty well got the max under CDIC in all the banks I wish to deal with right now. Because of my age, don't want to put any more into 5yrs-10yrs so up to 4 right now. But no more 1yr and 18 month GICs for awhile as I have sufficient there. I don't yet have the max with EQ or Motive yet. So that is where I want to go. For the most part now, I am getting interest paid out annually on all GICs for monthly cash flow.

I'm gradually leaving the on-line credit unions as GICs mature except Hubert & Achieva in order to make banking easier and more condensed.

If we fall into a recession in 2023, I'd like to be receiving some decent guaranteed rates for 2023 through 2026.

Also, want to leave some room in Oaken & Tangerine for HISA.

October 29, 2022
2:01 pm
Alexandra
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Alexandra said

Pretty well got the max under CDIC in all the banks I wish to deal with right now. Because of my age, don't want to put any more into 5yrs-10yrs so up to 4 right now. But no more 1yr and 18 month GICs for awhile as I have sufficient there. I don't yet have the max with EQ or Motive yet. So that is where I want to go. For the most part now, I am getting interest paid out annually on all GICs for monthly cash flow.

I'm gradually leaving the on-line credit unions as GICs mature except Hubert & Achieva in order to make banking easier and more condensed.

If we fall into a recession in 2023, I'd like to be receiving some decent guaranteed rates for 2023 through 2026.

Also, want to leave some room in Oaken & Tangerine for HISA.  

Sorry, don't have the max under CDIC with EQ or Motus (not Motive). Not that it matters, I suppose.

October 29, 2022
2:19 pm
canadian.100
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HermanH said

How do you define 'things going badly'? What are your decision factors?  

I suspect she is trying to "time the market" and buy her GICs at peak interest rates - she is worried if the rates suddenly drop she will be very unhappy that she "missed the peak" and has to buy at lower interest rates in 2023. I think chances are that rates will not be higher in 2023 - recession could start anytime - in fact maybe it has already started but economists only confirm that after a few quarters of negative growth.

October 29, 2022
3:40 pm
pooreva
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With all these great rates, don't you guys worry about tax time?
I doubt anybody here lives from interest only?!
Is 10% tax rate high when reporting total income including interest?

October 29, 2022
7:19 pm
savemoresaveoften
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I wish my tax rate is only 10% lol

October 29, 2022
7:34 pm
Vatox
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pooreva said
With all these great rates, don't you guys worry about tax time?
I doubt anybody here lives from interest only?!
Is 10% tax rate high when reporting total income including interest?  

Nobody should ever worry about tax time, with regards to investments. Because those gains are unearned and whatever the tax rate, it’s still free money. Remember that a higher tax bracket doesn’t change the taxes on your other income, it’s just on the income above and beyond. If it’s earned, that’s different because you have to consider how hard your working and stress for that higher taxed money.

October 30, 2022
6:56 am
Koogie
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Vatox said
Nobody should ever worry about tax time, with regards to investments.   

Either this is poorly written or I just don't understand the intent but it is completely and utterly wrong.

After tax returns matter. Full stop.

It's the money you end up with in your pocket at the end of the day that matters. To think otherwise is foolish.

You must think about tax implications when investing every bit as much as any other consideration.

October 30, 2022
7:20 am
canadian.100
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Koogie said

After tax returns matter. Full stop.

It's the money you end up with in your pocket at the end of the day that matters. To think otherwise is foolish.

You must think about tax implications when investing every bit as much as any other consideration.  

For the poster who pays 10% income tax, perhaps income tax is not a consideration but for some of us who pay more than 10% in income tax, after-tax returns is a very important consideration in our investments.

October 30, 2022
7:45 am
AltaRed
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Post #7 is poorly written since to my knowledge, there is no such thing as a 10% income marginal tax rate., i.e. the lowest federal tax rate is 15% alone, never mind lowest provincial rate. The poster must be taking about blended 'average' tax rate of his/hers tax return and that is not what matters for the next dollar of income. It is always the marginal tax rate that one must consider with incremental investment income.

As Koogie says, one can only spend and live off after tax income, so it is the after tax income that ultimately matters. Regardless, I would rather pay taxes on $50k of taxable income than on $20k of taxable income and for that reason alone, seeking higher HISA and GIC rates has a net after tax benefit.

October 30, 2022
8:14 am
canadian.100
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So back to the topic EQ. Rate for EQ TFSA HISA is 2.5% and they have lowered the GIC rates for under 1 year. On Weds my EQ TFSA GIC matures. Should I leave it at 2.5% in EQ TFSA HISA or cash it out ie move to non registered and try my luck elsewhere on January 2 when I can re contribute the whole amount plus 2023 contribution?
I don’t want to buy any I year or longer GICs. EQ offers relatively lower rates for under 1 year GICs - but in 2 months rates could be generally lower….

October 30, 2022
8:53 am
Alexandre
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AltaRed said
I would rather pay taxes on $50k of taxable income than on $20k of taxable income

Funny you said that. I slowed down my RRSP withdrawals to keep me under $20K-$30K annual taxable income. With the Canadian government that can't stop giving money and more money to low-income population, makes sense to stay that way. I'll get my extra GST credit in November.

Back to the topic EQ. I am concerned interest rates might go down next year, so on January 1st I will be buying one and a half year GIC for all my TFSA at top rate available at that day. Currently, it is Tangerine with 5%, but if EQ beats it - I'll go with EQ.

As for cashing or not TFSA that sits at 2.5%, that depends of your anticipated income tax rate. If, for example, your marginal tax rate expected to be 20%, you must find at least 3.125% HISA for cashing out to make financial sense.
This is considering that new HISA interest income won't move you to higher tax bracket, otherwise HISA interest must be even higher.

October 30, 2022
9:09 am
Alexandra
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canadian.100 said
So back to the topic EQ. Rate for EQ TFSA HISA is 2.5% and they have lowered the GIC rates for under 1 year. On Weds my EQ TFSA GIC matures. Should I leave it at 2.5% in EQ TFSA HISA or cash it out ie move to non registered and try my luck elsewhere on January 2 when I can re contribute the whole amount plus 2023 contribution?
I don’t want to buy any I year or longer GICs. EQ offers relatively lower rates for under 1 year GICs - but in 2 months rates could be generally lower….  

Why is it that you don't want to buy 1yr or longer TFSA GIC? Because you are going to be needing funds within a year or you think the rates will go up a fair amount on long term GICs in 2023? Just wondering.

October 30, 2022
10:01 am
canadian.100
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Alexandra said

Why is it that you don't want to buy 1yr or longer TFSA GIC? Because you are going to be needing funds within a year or you think the rates will go up a fair amount on long term GICs in 2023? Just wondering.  

With the current rate of inflation @ 6.9%, the locked-in inaccessibility of GICs and income tax considerations, I am not attracted to a one year GIC @ say even the high 4.85%. I realize by keeping my funds in HISAs I am earning less (and paying a cost i.e. lower interest) but I am achieving a flexible position if some other investment comes up. So basically I have answered my own question - I will keep my funds in HISA or under one year GICs to maintain maximum flexibility. Perhaps the new Canada-backed Ukraine bonds which Trudeau just announced will have a competitive interest rate. (although I personally have my doubts.)

October 30, 2022
2:32 pm
Loonie
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Koogie said

Either this is poorly written or I just don't understand the intent but it is completely and utterly wrong.

After tax returns matter. Full stop.

It's the money you end up with in your pocket at the end of the day that matters. To think otherwise is foolish.

You must think about tax

implications when investing every bit as much as any other consideration.  

What Vatox actually said was that one shouldn't WORRY about tax on investments, not that it didn't exist or wasn't significant.

Food for thought.

October 30, 2022
3:34 pm
Norman1
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One shouldn't worry too much about taxes on investments. Worrying too much can lead to some really bad investment decisions.

One accountant wrote about a client who had a huge gain in his Nortel shares. Client asked how much the capital gain taxes would be if he sold. Apparently, his broker had asked him to consider selling and diversifying.

Accountant calculated the capital gains taxes would be over $100,000! Client refused to sell and thought his broker was out of his mind to trigger such a large tax liability.

Client no longer has that capital gains tax issue. But, client also no longer has a $400,000+ capital gain on his Nortel shares.

Those labour-sponsored venture capital corporation funds are another example.

October 30, 2022
4:33 pm
Bill
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Vatox elaborates. He sees a distinction between money from investments ("unearned", free money) and money obtained via working ("earned"). It's only the latter, because unlike the former it involves effort and stress, that needs to be considered whether or not it's worth it, after tax. That's my take on the meaning.

I think it's stating the obvious that whatever the sources of our money it makes sense to consider the tax effect, as one of several considerations, when considering our options.

October 30, 2022
5:04 pm
savemoresaveoften
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canadian.100 said

With the current rate of inflation @ 6.9%, the locked-in inaccessibility of GICs and income tax considerations, I am not attracted to a one year GIC @ say even the high 4.85%. I realize by keeping my funds in HISAs I am earning less (and paying a cost i.e. lower interest) but I am achieving a flexible position if some other investment comes up. So basically I have answered my own question - I will keep my funds in HISA or under one year GICs to maintain maximum flexibility. Perhaps the new Canada-backed Ukraine bonds which Trudeau just announced will have a competitive interest rate. (although I personally have my doubts.)  

2.5% HISA vs 4.85% 1y, the cost of flexibility of 230bps loss is huge and not worth it if the main reason is to wait for raupte to go higher. U need a 7.2% 6 month rate in 6 months time to equate to a 1y 4.85%, ignoring compounding or day count just to keep it simple.

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