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Email this7:51 pm
August 27, 2026
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mordko said
There are other factors. Like convenience, speed, integration, bribes, lottery, rewards, etc. Depends on specific needs.
So you trade the security of capital for service?
8:57 pm
October 27, 2013
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Freedom said
So you trade the security of capital for service?
It depends on your definition of 'security of capital'. I am not fussed whether there is CIPF or CDIC coverage in my cash equivalents IF such cash equivalents are in products in institutions that are AA/AA+ rated and/or would suffer significant reputational damage, e.g. the big 5 banks and their brokerages. I keep my cash equivalents in my brokerage accounts for simplicity, convenience and to avoid proliferation of accounts.
4:59 am
August 27, 2026
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Capital is less secure if it is not ultimately backed by a government with taxing power. The CIPF is not, nor is the CDIC. The CDIC is a Crown corporation, but there is still significant government involvement with the CDIC—more than there is with the CIPF—so it is less risky.
My observation is that when you move from government bonds to highly rated corporate bonds, you get about 0.25% more in yield.
But when you move from government bonds to a GIC, you get a lot more than that, while giving up absolute government security. So, I see a GIC as offering a good risk-return trade-off.
Capital backed by the CIPF is not as secure.
5:20 am
April 27, 2017
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Different people have different objectives for different pots of money for different reasons. Also, CDIC only covers up to 100K and having numerous accounts with different institutions creates a risk all by itself. GICs remove access to money and ability to rebalance for very little return (I do have some but it's immaterial).
Ultimately, keeping a large proportion of money in cash isn’t a good choice for some of us, so “capital security” for 1% of the assets isn’t on the top of ones list. Convenience becomes priority. And I personally evaluate the risk for this particular account as low enough but to each his own.
9:24 am
August 27, 2026
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mordko said
Different people have different objectives for different pots of money for different reasons. Also, CDIC only covers up to 100K and having numerous accounts with different institutions creates a risk all by itself. GICs remove access to money and ability to rebalance for very little return (I do have some but it's immaterial).Ultimately, keeping a large proportion of money in cash isn’t a good choice for some of us, so “capital security” for 1% of the assets isn’t on the top of ones list. Convenience becomes priority. And I personally evaluate the risk for this particular account as low enough but to each his own.
All that seems like something we could agree on. But putting up a post without any explanation of the risks, as often happens here, is dishonest. The risks need to be highlighted so a person is not deceived, as is often the attempt here.
To pretend there is no risk when there is some risk is misleading. I can recall seeing a statement like, “The stock market has never had a 10-year period where it did not outperform the bond market in any living person’s lifetime.” I am paraphrasing. When I asked AI to check the record, it was untrue.
That was an attempt to make it look like there was zero risk in the stock market. That is deceiving people.
Here, there is little discussion of the additional risk of this account compared with CDIC coverage, and there is some additional risk.
And I very much agree that if people are going to hand out advice, they have to understand a person’s goals and objectives first.
As to the $100,000 limit on CDIC, I use DGCM for unlimited coverage for that. We could compare DGCM to CIPF, although even CIPF coverage is not limitless.
9:53 am
October 27, 2013
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Freedom said
Capital is less secure if it is not ultimately backed by a government with taxing power. The CIPF is not, nor is the CDIC. The CDIC is a Crown corporation, but there is still significant government involvement with the CDIC—more than there is with the CIPF—so it is less risky.My observation is that when you move from government bonds to highly rated corporate bonds, you get about 0.25% more in yield.
But when you move from government bonds to a GIC, you get a lot more than that, while giving up absolute government security. So, I see a GIC as offering a good risk-return trade-off.
Capital backed by the CIPF is not as secure.
Each of us will have our own perspective on this. While I agree CIPF may not be quite as perfect as CDIC insurance, the margin of difference is likely less than the probability of an asteroid hitting earth. I do not believe (not fact checked thoroughly) that any one has ever lost money in a failed CIPF insured institution. That is as good as perfect for me with very substantial amounts in individual brokerages...as would be the case for the 1 percenters in Canada.
FWIW, I think GICs are a heck of a fixed income option for the combination of CDIC coverage and yield relative to other options but with the limitations of being illiquid and the CDIC insurance cap. Clearly many/most members here see CDIC or CU deposit insurance as important features and that is their right and I respect that. However, I don't see GIC features as particularly important to me (whether bank CDIC or CU deposit insurance), so to each their own.
Please don't use AI as factual without validation of its assertions. It is often wrong and I have had 'egg on my face' occasionally for not fact checking AI. Some forums prohibit the posting of AI material and/or require it to be specifically identified as such along with accompanying personal context and commentary.
FWIW, I agree there were a few 10 year rolling periods of the US market indices which had negative return over the past 100 years, with most of them in the Great Depression period, and a few during the GFC (periods ending 2008 and 2009 I believe that included the dotcom bust AND the GFC). That did not necessarily apply to other global market indices that didn't have the same exposure to both events as did US companies. However, it is really neither here nor there in the context of the past 70 years of investing that 99% of us still alive have been investing.
11:57 am
April 27, 2017
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Freedom said
All that seems like something we could agree on. But putting up a post without any explanation of the risks, as often happens here, is dishonest. The risks need to be highlighted so a person is not deceived, as is often the attempt here.
To pretend there is no risk when there is some risk is misleading. I can recall seeing a statement like, “The stock market has never had a 10-year period where it did not outperform the bond market in any living person’s lifetime.” I am paraphrasing. When I asked AI to check the record, it was untrue.
That was an attempt to make it look like there was zero risk in the stock market. That is deceiving people.
Here, there is little discussion of the additional risk of this account compared with CDIC coverage, and there is some additional risk.
And I very much agree that if people are going to hand out advice, they have to understand a person’s goals and objectives first.
As to the $100,000 limit on CDIC, I use DGCM for unlimited coverage for that. We could compare DGCM to CIPF, although even CIPF coverage is not limitless.
1. Here is what I wrote:
Over several decades diversified stock portfolios translate to capital gains overwhelming losses by a huge margin. This is true for anyone alive, assuming they persevered through comparatively short term periods of losses.
This statement is correct and does not align with the one you put in quotes.
2. You are welcome to put a statement on all categories of risk after every sentence. Keep in mind, that multiple risks are present regardless of where we put our money. Long term risks from inflation for fixed income products are particularly important and the likelihood that they will erode purchasing power is much higher than from the type of risks that are covered by either CDIC or CIPF.
3. Of course Manitoba’s risk is higher than CDIC, thats not even a question.
2:11 pm
August 27, 2026
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What I was more interested in is the Deposit Guarantee Corporation of Manitoba (DGCM) versus the Canadian Investor Protection Fund (CIPF).
Both have high levels of coverage—one is $1 million, while the other is unlimited.
So, if you have larger sums of money and want deposit insurance or protection on all of it, these are good options to consider. However, the structure is different between the two.
I believe the DGCM is structured more like the CDIC, whereas the CIPF is structured differently from both of them.
The DGCM and CDIC are essentially deposit-guarantee systems. They have dedicated protection funds that are built up through assessments or premiums paid by the financial institutions they cover. The DGCM, for example, maintains a Guarantee Fund that is funded through assessments on Manitoba credit unions.
AI answer to the structure of these funds
How they differ
CDIC: It has an ex-ante deposit protection fund that is built up from premiums paid by member institutions. CDIC has historically targeted a fund size around 1% of insured deposits. CCDIC+1
DGCM: Manitoba's system also maintains a Guarantee Fund, funded through assessments on Manitoba credit unions. The current DGCM annual report shows assessments calculated as a percentage of system deposits; in 2025 the assessment rate was 8 basis points (0.08%) of average system deposits, and the Guarantee Fund's equity was about 1.403% of system deposits at year-end. DDGCM
CIPF: No, CIPF does not simply take 1% of client deposits and put it into a fund. CIPF is funded by its member investment and mutual-fund dealers, and its assessment system is based on its funding requirements and risk. For investment dealers, CIPF uses a risk-based model that considers things such as client assets and the firm's risk characteristics. DDefault+1
CIPF also has two separate segregated funds—an Investment Dealer Fund and a Mutual Fund Dealer Fund—and supplements those resources with lines of credit and insurance.
2:38 pm
April 27, 2017
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I would start by carefully reading the terms and understanding what each “insurance” actually covers. That's the key step you haven’t taken yet.
Then identify each event which could lead to loss of funds. Then build all scenarios and an event tree (eg both your credit union and Manitoba would go bankrupt, credit union goes bankrupt and the province refuses to pay up, etc). Then assign annual probability of exceedance to each event and run the model. Then you’ll have your answer.
Good luck. I see this as an interesting but hypothetical exercise because it deals with a small portion of the overall portfolio and a small portion of the total risk for this portion.
Best way of handling actual meaningful risks is to diversify ones asset classes and holdings.
4:25 pm
August 27, 2026
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mordko said
I would start by carefully reading the terms and understanding what each “insurance” actually covers. That's the key step you haven’t taken yet.Then identify each event which could lead to loss of funds. Then build all scenarios and an event tree (eg both your credit union and Manitoba would go bankrupt, credit union goes bankrupt and the province refuses to pay up, etc). Then assign annual probability of exceedance to each event and run the model. Then you’ll have your answer.
Good luck. I see this as an interesting but hypothetical exercise because it deals with a small portion of the overall portfolio and a small portion of the total risk for this portion.
Best way of handling actual meaningful risks is to diversify ones asset classes and holdings.
If a credit union were to go bankrupt, the DGCM would refund the depositors and then sell off the assets of the bankrupt credit union to recover some of the money. That is essentially how the system works. No credit union has ever gone bankrupt in Manitoba; they usually arrange a merger or another solution. If you were to call the DGCM and speak with them, as I have, they would tell you that.
If the fund were exhausted, the government might or might not step in. That would depend on the politics and circumstances at the time. I noticed that the Ontario insurance fund used to state on its website that the guarantee was limited to the size of the fund—I am paraphrasing.
This is also where doing your due diligence matters. If you actually investigate how the DGCM and CDIC work, read their terms, and speak directly with the organizations, you can find out how the coverage and resolution process actually works instead of building hypothetical scenarios based on assumptions.
Before you invest in something, do you do your due diligence? If you had done that research, you might have discovered some of this information yourself by speaking with the DGCM or CDIC. That is what due diligence is for. It would bring all of this to light, as it has for me.
As for diversification, when it comes to government agencies or government guarantees, I don’t need to go into riskier things just to get security. The government is the best security.
8:55 pm
November 18, 2017
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Freedom: Were you talking about me? (Not getting angry, just trying to straighten things out because you didn't refer comprehensibly)
To pretend there is no risk when there is some risk is misleading. I can recall seeing a statement like, “The stock market has never had a 10-year period where it did not outperform the bond market in any living person’s lifetime.” I am paraphrasing. When I asked AI to check the record, it was untrue.
I never said that. Look back in the appropriate forum. In fact, your 'paraphrase' is almost the reverse of my initial statement, which I THINK you were trying to cite:
It's not true that equities always beat fixed earnings over ten-year windows; in the last fifty years, half the sliding ten-year windows - and several longer periods - have seen equities fall behind. It's true that overall, equities do make more than fixed deposits, but that's not true for most investors.
95% of retail investors in Canada lose money on their equities and cash out with less than they invested. While the market makes more, that is concentrated in a small segment of the investment population.
And I agree with others who say please don't post AI slop in the forum. If AI finds something, ask for the sources and check them, then post those originals.
RetirEd
4:37 am
August 30, 2023
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mordko said
Different people have different objectives for different pots of money for different reasons. Also, CDIC only covers up to 100K and having numerous accounts with different institutions creates a risk all by itself. GICs remove access to money and ability to rebalance for very little return (I do have some but it's immaterial).Ultimately, keeping a large proportion of money in cash isn’t a good choice for some of us, so “capital security” for 1% of the assets isn’t on the top of ones list. Convenience becomes priority. And I personally evaluate the risk for this particular account as low enough but to each his own.
@mordko:
One can have many GICs with RBC Direct Investing each with 100k total with each separate CDIC member institution? What is the risk in that?
6:05 am
April 27, 2017
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zgic said
@mordko:
One can have many GICs with RBC Direct Investing each with 100k total with each separate CDIC member institution? What is the risk in that?
The main and most obvious risk is that you lose purchasing power.
A 2021 MoneySense article discussing GICs available through RBC Direct Investing reported 5-year rates mostly in the 0.8%–1.36% range. https://www.moneysense.ca/save.....gic-rates/
If you bought a 1% $1M GIC from RBC, then in December 2026 you will get $1,000,000 plus $51,000 interest in 2026 dollars or $885,000 in 2021 dollars. That’s a real loss of about $115,000, or 11.5%, despite receiving $51,000 of nominal interest. And that's before the income tax.
I would estimate the risk of losing purchasing power on buying a 5-year RBC GIC today at 50%. Ok, that's just a guess but it's in the ballpark. Ignoring this while focusing on events with the likelihood of occurrence which is several orders of mag less is a mistake.
Apart from that, I also see a risk in having numerous 100K GICs. Yes, one could have a large spreadsheet but it's still a pain. Things get lost or forgotten over the years, and if you pass away it becomes a bit of a nightmare to the poor sod who has to deal with it.
And then there is risk that you actually need that money. Unexpected things do happen. If most of your net worth is stuck when you need it then it's a major problem, what was the point of saving all that money if you can’t use it in time of need?
And then there is risk of RBC or an issuer going bankrupt and CDIC not being honoured. The probability is non-zero but tiny compared to all the other risks.
7:41 am
August 27, 2026
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@mordko:
“Can one have many GICs with RBC Direct Investing, with $100K at each separate CDIC member institution? What is the risk in doing that? “
The problem here is the rate. They all have different rates, so if you have, say, $5 million, you buy many GICs and average the rates. The average rate can get quite low.
That is why unlimited deposit protection is appealing: you get one rate on all the money.
You have this problem with deposit brokers as well. They might have one high rate, but do they have many financial institutions offering high rates?
“A 2021 MoneySense article discussing GICs available through RBC Direct Investing reported 5-year rates mostly in the 0.8%–1.36% range.”
There are a lot of assumptions in this example.
First, RBC rates are not necessarily the highest rates offered by CDIC-covered institutions.
Second, it uses a five-year rate. Sometimes a five-year GIC might be the right choice, but sometimes it may not be, depending on your goals and the situation over time.
Today, for example, a 1-year GIC paying 3.80% with inflation at about 3.0% gives you a real return of approximately 0.78% before tax.
The calculation is:
Real return = (1.038 / 1.030) - 1
Real return = 0.776%
So, before tax, you are earning about 0.78% after inflation.
But again, it depends on your goals and situation. If you are using the GIC income to live on, you don't necessarily have to spend all of the interest. And can set aside some to compensate for inflation
This is where inflation-protected government bonds get interesting, like:
Government of Canada 4.00% — 1 Dec 2031 — 135087 HK
With these bonds, the government takes the risk of inflation. But I find it hard to get a quote on them or know how much I might get from the bond plus inflation.
8:18 am
April 27, 2017
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If you want to invest $1M into CDiC covered GICs then your average rate of “return” goes down to 3.6% nominal or nothing after tax and inflation, assuming it stays the same. But that’s a risk. Inflation might increase. And then you are losing your own money for the privilege of having no access for 12 months. What’s not to like?
What’s more, you are very unlikely to end up with a sizeable pot if that's your main/only method of investing and you are in the accumulation phase. That's the real risk of not meeting your financial objectives vs hypotheticals like CDIC vs CIPF.
That's why asset diversification comes before getting into the details of insurance.
12:27 pm
August 30, 2023
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mordko said
The main and most obvious risk is that you lose purchasing power.
A 2021 MoneySense article discussing GICs available through RBC Direct Investing reported 5-year rates mostly in the 0.8%–1.36% range. https://www.moneysense.ca/save.....gic-rates/
If you bought a 1% $1M GIC from RBC, then in December 2026 you will get $1,000,000 plus $51,000 interest in 2026 dollars or $885,000 in 2021 dollars. That’s a real loss of about $115,000, or 11.5%, despite receiving $51,000 of nominal interest. And that's before the income tax.
I would estimate the risk of losing purchasing power on buying a 5-year RBC GIC today at 50%. Ok, that's just a guess but it's in the ballpark. Ignoring this while focusing on events with the likelihood of occurrence which is several orders of mag less is a mistake.
Apart from that, I also see a risk in having numerous 100K GICs. Yes, one could have a large spreadsheet but it's still a pain. Things get lost or forgotten over the years, and if you pass away it becomes a bit of a nightmare to the poor sod who has to deal with it.
And then there is risk that you actually need that money. Unexpected things do happen. If most of your net worth is stuck when you need it then it's a major problem, what was the point of saving all that money if you can’t use it in time of need?
And then there is risk of RBC or an issuer going bankrupt and CDIC not being honoured. The probability is non-zero but tiny compared to all the other risks.
@mordko:
I can get a 2 year GIC for 3.90% from RBC Direct Investing. 5 years still higher. What is this 0.8%–1.36%??
1:05 pm
April 27, 2017
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zgic said
@mordko:
I can get a 2 year GIC for 3.90% from RBC Direct Investing. 5 years still higher. What is this 0.8%–1.36%??
Please see post 33 from which you are quoting.
2:02 pm
November 18, 2017
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Freedom: You may want to check out the functions of some text codes that will help us understand each other. They're shown in a row at the top of the message composition window. Highlight the text you want styled, then click on the style you want. Check out the effects in preview before posting.
Peter, I thought of making this a private message, but this topic is already so confused I thought I'd share with the participants this once.
The most important for you is probably [b-quote], which creates the shaded box like this line.
Also:
[b] is bold
[i] is italic
[u] is underline
You can stack them, too.
RetirEd
3:37 pm
August 27, 2026
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I put what others have said in quotation marks (" "), if that is what you see as the problem. But maybe it doesn't matter anyway. I'm tired of the discussion and would rather talk about the cost of acquiring a real, return-inflation-protected bond—the one:
Government of Canada 4.00% 1 Dec 2031, 135087 HK 0.
It solves the inflation problem you speak of with GIC by passing the risk off to the government. But it is hard to get a quote from a broker as to what the yield would be at retail.
4:12 pm
August 30, 2023
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mordko said
Please see post 33 from which you are quoting.
I saw that and I am saying that I am getting today:
2 year GIC for 3.90% from RBC Direct Investing. 5 years still higher. So your numbers are not relevant today.
