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GIC's have broken 5%
June 21, 2022
12:26 pm
NCC1701Z
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7 to 10 year rates are now 5%!

6 year is 4.85%

https://www.motivefinancial.com/en/rates

Highest rates since the 90's

June 21, 2022
12:39 pm
cgouimet
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Exciting I suppose, but this was posted here yesterday ...

CGO
June 21, 2022
1:05 pm
Bill
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What a coincidence, highest inflation rate since 1990s too.

June 21, 2022
1:33 pm
Dean
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.
Meh sf-smile

I'll get excited when 4 & 5Yr GICs are in the 5+% area.

I don't think we'll have to wait too long ... maybe by the end of summer ❓

    Dean

sf-cool " Live Long And Prosper " sf-cool

June 21, 2022
4:10 pm
MattS
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Maybe soon after July 13 0.75 BOC increase they slowly adjust up

Motive has been at 5% for a while now on the longer terms.. not new

June 21, 2022
4:27 pm
NCC1701Z
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Bill said
What a coincidence, highest inflation rate since 1990s too.  

Hmmmm, on 1M, I now get 50k interest vs 25k awhile ago and my grocery bill is up $100 a month. I'll take the inflation and the 25k extra 🙂

Once your house and major assets are paid off, inflation has much less impact.

June 21, 2022
4:52 pm
lifeonanisland
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NCC1701Z said

Hmmmm, on 1M, I now get 50k interest vs 25k awhile ago and my grocery bill is up $100 a month. I'll take the inflation and the 25k extra 🙂

Once your house and major assets are paid off, inflation has much less impact.  

Exactly the point that I always make when someone expresses concern that interest rates and returns won't offset higher inflation. Not much of a consumer at this stage of my life...thus I see this as a golden opportunity starting to present itself.

June 21, 2022
5:22 pm
Alexandre
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If you are 75 or older, with $1M cash, you could just take $40K from the principal every year and keep the rest at whatever best HISA interest you could get. Perhaps, even add some or all of that interest to $40K you are taking.

With current average 2% HISA it would be up to $60K during first year.

June 21, 2022
6:35 pm
Bill
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Yes, your interest income is higher, but your $1M is losing more purchasing power due to higher inflation so whoever ends up with the 1M increasingly devalued dollars, or whatever is left of it, is paying the price.

June 22, 2022
4:57 am
savemoresaveoften
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Bill said
Yes, your interest income is higher, but your $1M is losing more purchasing power due to higher inflation so whoever ends up with the 1M increasingly devalued dollars, or whatever is left of it, is paying the price.  

exactly, its really if one wants to protect the legacy or not.

June 22, 2022
7:35 am
COIN
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Bill said
Yes, your interest income is higher, but your $1M is losing more purchasing power due to higher inflation so whoever ends up with the 1M increasingly devalued dollars, or whatever is left of it, is paying the price.  

One can protect one's purchasing power by buying stocks and/or real estate, although there is a short term downside risk.

(I'm assuming that folks who have $1mm in cash have already paid off their house.)

June 22, 2022
7:52 am
Bill
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Post #6 referred to interest income, not stock dividends.

Anyone in USA (Canada too?) retiring between about 1930 and 1955 (25 year span) and needing their stock market money would disagree with you that stock market risk is only short term. But that was so long ago, pointless to even mention it, right?

June 22, 2022
9:34 am
COIN
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Don't put all your eggs in the interest basket.

President Reagan use to say:
1/3 in cash
1/3 in bonds/GIC's
1/3 in real estate
1/3 in stocks

True story. A couple bought a house in High Park in early 1950's for $5,000 (yes, $5,000). They sold that same house in mid-1990's for $500,000 (a 100 fold increase).

Guess how much that house is worth to-day.

June 22, 2022
9:57 am
bigzim
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It all comes down to your own time horizon and situation. Personally, I have created my nest egg and the intent is for me and my wife to live comfortably on that nest egg. If you don’t have to take the risk to fund a legacy then why should you? I personally can live handsomely if I was fully invested in a GIC ladder strategy, thanks to rates exceeding 4%. Considering the unknowns in the markets today, the GIC rates we are seeing now are a gift to the ones who have a substantial nest egg. Normalization is a good thing. Moving forward fixed income such as GIC’s will challenge dividend stocks as an alternative. I’m not saying to sell the AQN,ENB, or TD , BCE,S of the world. I’m saying the conditions are ripe to be able to sleep well at night if you allocate accordingly. Good luck to all

June 22, 2022
12:12 pm
MattS
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Nikkei index was flat from 1995 - 2015.. there's a recent 20 yr example.

June 22, 2022
12:53 pm
COIN
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bigzim said
It all comes down to your own time horizon and situation. I’m saying the conditions are ripe to be able to sleep well at night if you allocate accordingly. Good luck to all  

Everybody has their own comfort level.

GIC's also carries risks as we saw with the Home and Pace fiascoes although the depositors did make out whole in the end (we hope).

With respect to equities, just how much risk is there with a BCE or a Royal Bank or an Enbridge?

I know this is a high interest board so I do apologize for taking the discussion off course by bringing up equities and real estate as part of a diversified portfolio.

June 22, 2022
1:33 pm
Winnie
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COIN said
Don't put all your eggs in the interest basket.

President Reagan use to say:
1/3 in cash
1/3 in bonds/GIC's
1/3 in real estate
1/3 in stocks

True story. A couple bought a house in High Park in early 1950's for $5,000 (yes, $5,000). They sold that same house in mid-1990's for $500,000 (a 100 fold increase).

Guess how much that house is worth to-day.  

At least 5,000,000 today.

June 22, 2022
1:46 pm
NCC1701Z
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COIN said
Don't put all your eggs in the interest basket.

President Reagan use to say:
1/3 in cash
1/3 in bonds/GIC's
1/3 in real estate
1/3 in stocks

True story. A couple bought a house in High Park in early 1950's for $5,000 (yes, $5,000). They sold that same house in mid-1990's for $500,000 (a 100 fold increase).

Guess how much that house is worth to-day.  

Parents bought in 46 for 3,000 in Vancouver eastside (the cheap end), Now worth over 2M. 8 blocks west it would be worth 4-5M We bought for 50k in later 70's.

June 22, 2022
2:28 pm
COIN
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1946 was the beginning of the baby boom and the economy boom with it. Those were the days when only one parent had to work outside the home.

I guess my example of buying the house in High Park in 1950 is a very similar scenario to the 1946 example.

June 22, 2022
4:10 pm
NCC1701Z
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COIN said
1946 was the beginning of the baby boom and the economy boom with it. Those were the days when only one parent had to work outside the home.

I guess my example of buying the house in High Park in 1950 is a very similar scenario to the 1946 example.  

My widowed mom paid of that house ~1960ish working at a dry cleaners !

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