GIC monthly interest payout | Page 3 | GIC discussions | Discussion forum

One will need to wait until tomorrow to order GIC's. Today is a holiday for the bond and GIC markets. This is the notice from Scotia iTRADE:

The Bond Markets will be closed on Monday, November 13, 2023

Please be advised the Bond Markets will be closed on Monday, November 13, 2023, in observance of Remembrance Day.

Trades will not be settled on this day. GIC order entry will also be closed. Banking Services will not be available including cheque requests and EFT withdrawals.

The Canadian & US equity markets are open regular business hours.

Should you have any questions, the Scotia iTRADE Customer Service team will be available during regular business hours. ScotiaMcLeod clients should contact their Advisor.

TD 1-yr term offer on TDDI dropped to 5.55% today. I believe a peak is now in the rearview.

Most major FIs offer GIcs with monthly payouts.
The rates and options for ScotiaBank can be found here:
https://www.scotiabank.com/ca/en/personal/rates-prices/gic-rates.html

Note that the GICs with monthly payouts rates are always LOWER than GICs with annual and even semi annual payouts. If the flexiblity of monthly payouts is desired/required then there is a reduction in earned interest.
I am sure there is a background calculation by the FI ensuring the monthly payouts (reinvested at the same rate) dont cumulatively earn significantly more than the annual payout GICs.

These are my learnings from researching monthly payout GICs. There is never any free lunch, you want the flexibility of the monthly payout, you give up some potential interest earned.

hwyc said
TD 1-yr term offer on TDDI dropped to 5.55% today. I believe a peak is now in the rearview.  

Between reduced demand for loans and the likely rollover of the bond yield curve, that is probably a view worth betting on.

We won't know for sure pending another month or so of CPI data and/or the central bank continuing (or not) to hold on short term rates, but my guess is also that interest rates have peaked.

Case1030 said

althisa said

Note that the GICs with monthly payouts rates are always LOWER than GICs with annual and even semi annual payouts.  

Not always lower, TDDI shows three, 5 year GICs that all have the same interest rate (5.05%) for monthly, semi-annual, annual and compounding.
 

I stand corrected, GICs with monthly payouts rates are ALMOST always LOWER than GICs with annual and even semi annual payouts

Things you learn by being on this forum

I do need to sign up for a TDDI account if equal interest rates regardless of payout frequency is a regular practice, and not some quirk of a once in a blue moon inverted yield curve.

That's not correct because (1) the rate used to calculate the payouts is not necessarily the internal rate of return on the money invested and (2) the money invested at any point in time is not just the original principal.

This cashflow requires a 6% per annum, compounded quarterly, internal return on to achieve:

5-Jan -$10,000
5-Apr +$150
5-Jul +$150
5-Oct +$150
5-Jan +$10,150

However, this cashflow requires a 5.8695% per annum, compounded quarterly, internal return to achieve:

5-Jan -$10,000
5-Apr +$0
5-Jul +$0
5-Oct +$0
5-Jan +$10,600

So, one has receive a higher rate of return if one draws out the gains earlier and still ends up with the same total gains as someone else who left the gains in until the end.