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Email this7:19 pm
November 8, 2009
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This 5 year market linked GIC protects principal and guarantees a minimum 5.1% return and a possible maximum 20%. Anybody have any experience with this type of product?
It sounds attractive as the regular 5 year rates creep lower and lower.
7:47 pm
March 23, 2012
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"Minimum Return is 5.1%4 Maximum Return2 is 20%"
If you check the notes at the bottom of the page...
for the Minimum return the "4" after 5.1% refers to this note:
4 Actual return is 1.00% per annum, compounded annually, payable at maturity (equivalent to 5.1% total return).
for the Maximum return the "2" refers to this:
2 Equivalent to the total return over the term of the investment (i.e. not an annualized rate)
So the way I see it is you're locking it in for 5 years and will get anywhere between 1% and 4% per year ... so definitely not as attractive as it looks initially
8:40 am
There is nothing new to these index linked GICs. They were populare in the mid 1990s, where the only thing guaranteed was your principle investment. The annual minimum return is far less than 5.1% --- that is the total return over the five year period.
2:55 am
I smell a con! Not a con in the sense of the actual product, but in the carefully designed wording of the sales pitch. It's nefarious practice to hide the probably outcome of a process behind disclaimers and fine print.
9:14 am
It is a scam if you want to get a decent return. My advisor told me that the 10,000 we have in TSFA will get its interest on the day it matures, and is contingent on what the market is THAT DAY. So if it's up, fine, if it's down, you lose.
I wish we hadn't gotten it but we did and it matures in a couple of years. We'll see how the interest goes then...ha.
9:43 am
kilarney said:
This 5 year market linked GIC protects principal and guarantees a minimum 5.1% return and a possible maximum 20%. Anybody have any experience with this type of product?
It sounds attractive as the regular 5 year rates creep lower and lower.
That is 1% per year, don't do it
9:45 am
Russell Upsomgrubb said:
I smell a con! Not a con in the sense of the actual product, but in the carefully designed wording of the sales pitch. It's nefarious practice to hide the probably outcome of a process behind disclaimers and fine print.
You got it, but they are not hiding it, it is in the small print.
9:47 am
cmore said:
There is nothing new to these index linked GICs. They were populare in the mid 1990s, where the only thing guaranteed was your principle investment. The annual minimum return is far less than 5.1% --- that is the total return over the five year period.
Doubt it is 4% for one year. More like 1% + maximum 20% = 1.2%. I could be wrong but it is another creative product designed to confuse the general population into giving their money. Keep it simple and get back to basics people.
2:00 pm
What is old is new again…with interest rates remaining so low over an extended period, I'm not surprised savers are chasing yields and some financial institutions are taking advantage of people's greed by re-introducing these GIC linked products that have traditionally produced poorer performance than standard GICs being laddered over multiple periods. This is great for the FI, as they have access to your funds with no guarantee of repayment — other than your principle investment and a very modest return (if any).
If you are truly a conservative/risk-adverse saver, my advice is stick with the likes of Achieva Financial. They have offered among the highest GIC rates over the past 12+ years with a no gimmick product offer and a full deposit guarantee. ING is also good, however, their rates have slipped well below the virtual market over the past five years.
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