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Short Term vs. Long Term GIC's
January 4, 2021
1:50 pm
topgun
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Fed's Evan says Monetary Policy will be accommodative for a Long Time. Over the years I purchased 5 year GIC's. The premium was more than short term. With interest rates so low these days the difference is not going to change us. I purchased a 5 year GIC today @ 1.75%. It will be interesting to see how long is long.

Have a Great Day

January 4, 2021
2:44 pm
Dean
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.
For myself, I'm going no further out than two (2) years, for now. No, I don't have a crystal ball, but with GIC interest rates being So Low now, I can't bring myself to lock in for any longer than that.

Example:
I recently purchased a 18 month GIC from Oaken @ 1.60% (the same rate as their 3 year GIC).

Who's right ❓

Time will tell.

    Dean

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

January 5, 2021
1:35 am
MS
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Don’t invest right now until the seasons RRSP/TFSA offers come out. Each yr I have done .25-.50 % better February 1st over January 1st rates. You will do better 30 days from now if you look at what’s available.. don’t have time to look? Don’t worry the sharks on this board will report any new deals within hours of being available

January 5, 2021
5:18 am
davidgeorge
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I renewed a 5 year GIC today @ 1.90%, the best available rate for 5 year GIC now.

January 5, 2021
9:33 am
Vatox
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I Agree with Dean. I think rates will be better in a year or two.

January 5, 2021
2:43 pm
Dean
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davidgeorge said

I renewed a 5 year GIC today @ 1.90%, the best available rate for 5 year GIC now.  

Caveat Emptor

The problem is (according to my newly purchased crystal ball) in ~ 2 years time, 5yr GIC rates will be back up in the 3.50% area.

See below for details . . .

        Dean sf-wink

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

January 5, 2021
4:19 pm
Rick
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Dean said

Caveat Emptor

The problem is (according to my newly purchased crystal ball) in ~ 2 years time, 5yr GIC rates will be back up in the 3.50% area.

See below for details . . .

        Dean sf-wink

  

Hope you got the 2020 model...2018 model sucked.
My ladders are pretty much set. The last one renewed at 1.9, but still have several earning around 2.75 - 3.6. Factoring in the new one, I think my average rate is about 2.8 something.

January 5, 2021
5:55 pm
topgun
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I wrote a spreadsheet that keeps track of average yield. I use a 5 year ladder. My average is 2.8%.

Have a Great Day

January 7, 2021
4:18 am
davidgeorge
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Dean said

Caveat Emptor

The problem is (according to my newly purchased crystal ball) in ~ 2 years time, 5yr GIC rates will be back up in the 3.50% area.

See below for details . . .

        Dean sf-wink

  

If you think that in ~ 2 years time, 5yr GIC rates will be back up in the 3.50% area, why have you purchased a 18 month GIC from Oaken @ 1.60%? You should just leave fund in savings account with rates from 1.50% to 1.8%.

rates.JPG

January 7, 2021
9:37 am
Dean
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davidgeorge said

If you think that in ~ 2 years time, 5yr GIC rates will be back up in the 3.50% area, why have you purchased a 18 month GIC from Oaken @ 1.60%? You should just leave fund in savings account with rates from 1.50% to 1.8%.

rates.JPG  

.
And just how long do you think those HISA rates will last, until they fall into the toilet, like all the others ❓

I'm guessing sometime within the next two to three months ... but 'Good Luck' with that.

      Dean

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

January 8, 2021
1:29 pm
Bud
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There's a loss of confidence in the system more investors want to remain liquid due to unforeseen government events and actions. Your trapped in the 5yr it's like being in jail when there's a fire.

January 8, 2021
3:53 pm
topgun
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Nothing wrong with 20% of your GIC's maturing each year. You need a liquid reserve fund to balance out your cashflow.

Have a Great Day

January 9, 2021
2:36 pm
christinad
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MS said
Don’t invest right now until the seasons RRSP/TFSA offers come out. Each yr I have done .25-.50 % better February 1st over January 1st rates. You will do better 30 days from now if you look at what’s available.. don’t have time to look? Don’t worry the sharks on this board will report any new deals within hours of being available  

I would keep an eye out as to when the next bank of canada interest rate announcement is. I just read rates could go lower.

Looks like next ones are jan 20 and March 10

January 10, 2021
5:19 am
MS
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Thx for the tip. Jan 20 I will check it out.. what’s amazing to me is that money is currently free, interest rates at 100 yr lows but the gov’t thinks one more .25 % lower fixes any of their issues. Money at zero percent imagine how the Lib’s could spend then

January 10, 2021
2:33 pm
topgun
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A friend had a 6 month GIC mature at Tangerine last month. A rate of .60% for 6 months to renew. Although the rate is low it will not affect him. He will stay with Tangerine.

Have a Great Day

January 10, 2021
5:27 pm
Loonie
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There seems to be more to it than BoC rates. Rates have been falling steadily without additional help from BoC. But, with hel, they will undoubtedly fall further.

January 10, 2021
11:59 pm
Rick
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Loonie said
There seems to be more to it than BoC rates. Rates have been falling steadily without additional help from BoC. But, with hel, they will undoubtedly fall further.  

Maybe this has something to do with it?
https://nationalpost.com/news/politics/household-savings-in-canada-skyrocket-during-pandemic-as-ottawa-doles-out-billions-in-emergency-benefits

January 11, 2021
9:02 am
Dean
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Rick said

Maybe this has something to do with it?
https://nationalpost.com/news/politics/household-savings-in-canada-skyrocket-during-pandemic-as-ottawa-doles-out-billions-in-emergency-benefits  

That's ⬆ not the only factor of course, but it does have a 'LOT' to do with it . . .

      "A new report by CIBC on Tuesday estimates that Canadians are sitting atop $90 billion in excess cash — easily the highest in the country’s history and equal to about four per cent of consumer spending. Canadian businesses, the report said, are hoarding another $80 billion. The savings rate in the second quarter of 2020 surged to 28.2 per cent, up from 3.6 per cent before the COVID-19 pandemic struck."

With all that cash sitting in the FI's, there's no incentive for them to increase SA & GIC interest rates, and a Lot of incentive for them to continue to lower those rates.

I'm guessing it could be two years (or more❓) before things turn around.

Time will tell ...

    Dean

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

January 11, 2021
12:10 pm
Bobbyjet11
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I find the TD Canadian Banks GIC - 5 yr term interesting:

The good:
- Guaranteed Minimum Interest Return is 2.50%
Maximum Return is 7.00%

The bad:
- 5-year term

Any comments?

January 11, 2021
12:31 pm
Norman1
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That's 2.5% and 7% per term, not 2.5% and 7% per annum!

That 7% per term maximum over five years works out to be just 1.36% per annum.

One relative got bamboozled into a market linked GIC like that at RBC thinking the quoted returns were per annum.

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