3yr is the new 5yr, escape hatch | GIC discussions | Discussion forum

Please consider registering
guest

sp_LogInOut Log In sp_Registration Register

Register | Lost password?
Advanced Search

— Forum Scope —




— Match —





— Forum Options —





Minimum search word length is 3 characters - maximum search word length is 84 characters

sp_Feed Topic RSS sp_TopicIcon
3yr is the new 5yr, escape hatch
August 5, 2022
7:22 am
AllanB
Member
Banned
Forum Posts: 200
Member Since:
April 18, 2022
sp_UserOfflineSmall Offline

I don't know how anyone could lock in more than 3yrs without an escape hatch for the 5yr. Corruption and waste is off the charts. Without warning their could be another man-made collapse. How do they keep interest rates under 10% without stimulating inflation.

September 5, 2022
5:56 am
RetirEd
Member
Members
Forum Posts: 487
Member Since:
November 18, 2017
sp_UserOfflineSmall Offline

AllanB: If there's an economic collapse, those 5-year holders will be sitting pretty. It's out-of-control inflation that threatens them.
RetirEd

September 5, 2022
7:26 am
canadian.100
Member
Members
Forum Posts: 714
Member Since:
September 7, 2018
sp_UserOfflineSmall Offline

AllanB said
I don't know how anyone could lock in more than 3yrs without an escape hatch for the 5yr.  

With the following current HISA rates, why would u even want to lock up your money to inaccessible for 3 years. These rates are going to be here for a while.

Scotia Momentum Plus 3.90%
Meridian 3.65%
Manulife 3.5%
Duca 3.25%
Saven 3.15%
Motive 3.0%
Oaken 3.0%
Tangerine 3.0%

September 5, 2022
7:54 am
Bill
Member
Members
Forum Posts: 3349
Member Since:
September 11, 2013
sp_UserOfflineSmall Offline

You lock in because you think HISA rates will do worse over that term, e.g. there's a recession soon and rates collapse. I guess.

September 5, 2022
7:58 am
lifeonanisland
Member
Members
Forum Posts: 155
Member Since:
January 13, 2022
sp_UserOfflineSmall Offline

Bill said
You lock in because you think HISA rates will do worse over that term, e.g. there's a recession soon and rates collapse. I guess.  

Surprised you'd even have to write this...it's pretty much obvious.

September 5, 2022
8:33 am
AltaRed
BC Interior
Member
Members
Forum Posts: 2058
Member Since:
October 27, 2013
sp_UserOfflineSmall Offline

The more important observation I think is not to put all eggs in one basket. No one here really has any crystal ball on whether inflation, and thus BoC rates, will stay high for longer, or whether a recession and a collapse in inflation (and thus BoC rates) will occur within a year or so. No one here, other than the pre-boomers and boomers, have experienced a period of high inflation (pre-1995) in the investing arena. It is uncharted territory for them.

Diversification in 'commitment duration' seems fundamentally more important now than it has been at any time in the past few decades.

September 5, 2022
9:22 am
highlyinterested
Member
Members
Forum Posts: 9
Member Since:
May 2, 2018
sp_UserOfflineSmall Offline

canadian.100 said
With the following current HISA rates, why would u even want to lock up your money to inaccessible for 3 years. These rates are going to be here for a while.  

1. A 4.5% 3yr GIC is readily available on most brokerages and banks, while it can be a pain to set up a new HISA.

2. 4.5% is higher than HISA rates.

3. If you don't need the money in next three years, locking it up is irrelevant.

4. 4.5% is a decent rate to enjoy for 3 years.

5. HISA and GIC rates could quickly drop, leaving you without any good fixed income options.

September 5, 2022
9:32 am
ExtraSauce
Member
Members
Forum Posts: 46
Member Since:
December 16, 2020
sp_UserOfflineSmall Offline

Speaking of 'escape hatches' . . . being in my 2nd year of RIF forced withdrawls, I was delighted to hear that locking in for 5 year/5% term still means one can withdraw any or all RIF holdings so long as one is willing to take the tax hit.

i.e. unlike TFSA or non-registerd money which once locked at 5 years are 'komplett verboten', locking a RIF at the current highest 5% rate means all the money (minus the tax hit) is actually still available if ever desired or needed. Et voilà, a tidy escape hatch perk for seniors!

Pardon the presumptious language diversions, learning new languages is part of my retirement plan 😉

September 5, 2022
3:16 pm
Bill
Member
Members
Forum Posts: 3349
Member Since:
September 11, 2013
sp_UserOfflineSmall Offline

highlyinterested, I agree with most of your points, though it's way too early to declare 4.5% will end up being a decent rate over the next 3 years.

Interesting to me the amount of "market timing" GIC savers are doing here, an error often attributed to many equity investors, though I can see jettisoning the disciplined ladder-approach can appear appropriate when rates are clearly on the rise.

Please write your comments in the forum.