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Which CU to add to current stable?
July 17, 2022
3:50 pm
ExtraSauce
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AltaRed said

I think you have it wrong. The commission is behind the scenes between issuer and broker. What is advertised for a GIC interest rate is what you get.  

Got it, thanks.

July 17, 2022
4:11 pm
Loonie
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gicjunkie has made some excellent points.
I am not familiar with deposit brokers in BC, and I have never asked if the Ontario ones will serve BC.
Be aware that Ontario CUs are generally not available to
BC, at least not directly. They may or may not be available indirectly through deposit brokers.

There is no fee etc for using a deposit broker. They are paid by the issuer. The issuer will often give them a better rate because the broker can bring in a lot of money for them. The issuer is essentially off-loading the work of signing up individual buyers to the broker who can do it more efficiently.

There is always going to be a trade-off between convenience, rate of return and perceptions of security/insurance. Everyone has different priorities.

July 17, 2022
5:09 pm
want8tracks
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Loonie said
I would advise you to avoid Steinbach. It's a pain in the rear with their peculiar way of dealing with interest. payment and calculation I gave up my membership there this year.

What is this peculiar pain you are referring too? I am guessing it is in reference to the fact that their HISA and their TFSA HISA only pay interest annually, preventing monthly compounding, and they go by lowest monthly balance each month to calculate interest accrued for each month.

July 17, 2022
5:10 pm
suburbs4life
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This is likely a stupid question. IF using a deposit broker vs signing up for a GIC myself.with the issuer where do the funds come from? Would I have send the funds to the deposit broker to disburse to the Selected GIC Or can I fund the GIC that they arranged for me by myself?

July 17, 2022
6:19 pm
Loonie
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want8tracks said

Loonie said
I would advise you to avoid Steinbach. It's a pain in the rear with their peculiar way of dealing with interest. payment and calculation I gave up my membership there this year.

What is this peculiar pain you are referring too? I am guessing it is in reference to the fact that their HISA and their TFSA HISA only pay interest annually, preventing monthly compounding, and they go by lowest monthly balance each month to calculate interest accrued for each month.

  

Yes, all that and more. I posted a review earlier which you can read if interested. The kicker is that nobody there can tell you how much interest you have accumulated during the year; also they don't notify you when the rate changes mid-month. And the arrogance displayed by CEO and chair of board at AGM was unacceptable to me.

July 17, 2022
6:21 pm
Loonie
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suburbs4life said
This is likely a stupid question. IF using a deposit broker vs signing up for a GIC myself.with the issuer where do the funds come from? Would I have send the funds to the deposit broker to disburse to the Selected GIC Or can I fund the GIC that they arranged for me by myself?  

the money goes to the broker for deposit. You do not deal directly with the issuer.

July 17, 2022
10:05 pm
Norman1
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The deposit broker workflow usually involves providing a cheque to the deposit broker that is payable to the GIC issuer.

The commission paid by the issuer to the deposit broker is customarily ¼% upfront for each year of the GIC's term. Deposit broker will receive on a five-year GIC, for example, a 1¼% commission.

Part of the commission can be assigned to GIC buyer to increase the GIC rate. But, there has to be an incentive for the deposit broker to do so.

$5,000 one-year GIC will pay the broker $12.50. Broker will likely not agree to assign any part of the $12.50.

$100,000 of five-year GIC's will pay the broker $1,250. Lots more room to negotiate.

July 18, 2022
9:39 am
gicjunkie
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Loonie said

the money goes to the broker for deposit. You do not deal directly with the issuer.  

To be clear, if you decide to deal with a broker, the cheque for principal amount of the investment is payable to either yourself, if they let you, or to the FI, but NOT to the broker.

July 18, 2022
10:12 am
Loonie
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Yes, but you hand the cheque to the broker, not to the FI.

July 19, 2022
8:56 am
Nehpets
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Norman1 said
........$100,000 of five-year GIC's will pay the broker $1,250. Lots more room to negotiate.  

Norman,

How realistic is it to expect a deposit broker to be receptive to negotiate and sweeten the deal by paying back some of their commission to the GIC buyer?

Stephen

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