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Where can one invest a LIRA in GIC's?
May 18, 2023
2:23 pm
NCC1701Z
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It seems not many institutions will accept a LIRA or LIF invested in a GIC.

What other safe options are there besides annuities? Not totally against annuities.

We will be starting to draw down next year.

May 18, 2023
2:31 pm
phrank
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Meridian does it.

May 18, 2023
7:16 pm
Norman1
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According to their registered accounts application form, Scotia iTRADE offers LRSP, LIRA, RLSP, LIF, LRIF, PRRIF, and RLIF accounts.

May 18, 2023
7:29 pm
NCC1701Z
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Norman1 said
According to their registered accounts application form, Scotia iTRADE offers LRSP, LIRA, RLSP, LIF, LRIF, PRRIF, and RLIF accounts.  

I have mine in investors edge but the gic rates are not great.

Do you happen to know what rates Scotia offers or where I can see them?

May 18, 2023
7:34 pm
AltaRed
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I would imagine most discount brokerages do. I am also aware RBC DI and BMO IL do in addition to Scotia iTrade.

Added: To respond to post #4, most of the brokerages will have same/similar rates for GIC offerings. After all, it is the issuer of the GIC, e.g. Equitable Bank, that sets the rates, not the brokerages.

Added2: I don't think rates (yield) should be priority when positioning a registered account like a LIRA. The priority should be flexibility of offerings that a discount brokerage provides. If you go with FI A right now because of decent GIC rates, what are you going to do when that FI is no longer competitive? Stay the course because you are trapped? Or have the flexibility to be able to buy just about anything you want from a discount brokerage? Personally, I would never have a registered account like a RRIF or a LIRA/LIF with any of the FIs on the list in this forum. Your neck is in that noose.

May 18, 2023
9:46 pm
Loonie
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You might ask at Steinbach CU. I no longer belong to that one as I didn't like dealing with them and didn't need them any more, but I noticed they do offer some accounts that other places don't, so it's worth asking if you are having difficulty finding something suitable.

In my opinion, you are best to stick with the GICs, as you intend to do. RIFs and LIFs are not suitable for more adventurous investments because of how the withdrawal rules are structured; volatility will play havoc with your annual income and can damage your principal in a way that is difficult to recover from in these accounts. A trading account may be an option, but only if you can't get anything somewhere else that traditionally offers better GIC rates. I agree though that changing FIs with RIFs and LIFs is a royal pain, even worse than for RSPs and LIRAs, and is best avoided.

May 19, 2023
6:15 am
AltaRed
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I was not necessarily suggesting the OP get more adventuresome (take more risk) with security types. Only that, in my opinion, flexibility in offerings far outweighs the hangman's noose' of a single FI.

The OP already knows from his/her CIBC IE trading account what GIC offerings exist there. The rates are not bad at all. Perhaps 20bp less than a few of the ones on the GIC chart here but that is a small price to pay to avoid the risks/penalties of 'reaching for yield'. I wouldn't restrict myself a single FI for a nanosecond.

May 19, 2023
8:54 am
Rail Baron
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I moved my LIRA into MAXA last year, and was very happy to invest it at 5.1% in one of their 5 year term GICs. The rates are lower now, but the transfer process went smoothly.

I don't need that money for at least another 5 years, so don't feel any "noose" in having it at a FI presently. There is a $150 transfer out fee for registered funds at Maxa, but that seems a small cost compared to the returns I have locked in for five years.

If I shift these funds to some alternatives in future - e.g., annuity or money manager, they will even pay for the transfer fees out from Maxa.

I doubt that I would convert this LIRA into a LIF at Maxa, but that conversion point is almost a decade away for me, so I was looking for a good place to park these funds, and I think that I found it.

May 19, 2023
12:22 pm
NCC1701Z
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It's almost a 100 basis pts difference from investors edge. Plus I can ladder up to 10 year terms at ~5%. I also rec'd a quote of 7200/yr per 100k on a joint non-reducing annuity 10 yr guarantee so that's pretty tempting for the LIRA portion of my portfolio.

May 19, 2023
1:00 pm
Loonie
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That seems to be a pretty good deal for your annuity, but remember that the rate is not the main thing in choosing to go with with annuities; it's the longevity insurance and the hassle-free future that you are effectively buying. It is misleading to simply compare the rate with GICs.

Yes, the difference between rates at investment accts and elsewhere can be significant, especially over the course of retirement years. It depends too on the size of your account. Ultimately LIFs and RIFs wind down, with mandatory withdrawals, to a point where investment accounts charge an annual maintenance fee, and you are powerless to add any funds to offset this. At that point, you must either cash out (increasing your income significantly that year), pay the fee annually, or transfer out. So it is not a permanent solution.

It may be alarmist to think of alternatives as a hangman's noose. As far as I know, nobody on this forum has ever lost a penny in an insured GIC in Canada. Investment account holders often speak glowingly about long term returns, so I think it's fair to look at GICs in same light. And 100 bps per 100K over 20 year retirement is likely to be a substantial amount.

May 19, 2023
1:29 pm
AltaRed
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Loonie said
It depends too on the size of your account. Ultimately LIFs and RIFs wind down, with mandatory withdrawals, to a point where investment accounts charge an annual maintenance fee, and you are powerless to add any funds to offset this. At that point, you must either cash out (increasing your income significantly that year), pay the fee annually, or transfer out. So it is not a permanent solution.

It may be alarmist to think of alternatives as a hangman's noose. As far as I know, nobody on this forum has ever ost a penny in an insured GIC in Canada. Investment account holders often speak glowingly about long term returns, so I think it's fair to look at GICs in same light. And 100 bps per 100K over 20 year retirement is likely to be a substantial amount.  

The opportunities for a range of 15-20 GIC issuers at a discount brokerage provides flexibility that being stuck with a single FI does not provide short of transferring out. That has real value, but of course, it depends on what one's priorities are of course. For me, confined to one FI with a registered account that becomes non-competitive would be a hangman's noose.

I agree one will have to watch for account minimums as the LIF/RIF balances get low. Most brokerages though allow one to aggregate household balances across all accounts. Chances are if one has a RIF in a brokerage account, they also have other brokerage accounts (non-registered, TFSA, etc).

That all said, the OP already has a CIBC IE brokerage account and is looking elsewhere for GICs with a higher yield. S/he has already made that decision to look outside his/her brokerage.

May 19, 2023
3:13 pm
Loonie
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The "flexibility' to which you allude has some minimal value, but if they are all offering about 100 bps below elsewhere, it's not much value in my opinion.

If you pick an FI that , as I said earlier, has traditionally had good rates, you can come out ahead without transferring often or even at all.

I certainly know people who only have one investment account and would not be able to "aggregate" them. And, since you value flexibility, I assume you would not want them to feel they were obliged t keep all these accounts going. I know I wouldn't.

In reality, your various posts show you think investment accounts are the answer to pretty much everything and at last report you held no GICs anywhere. I see it all very differently. So OP has at least two views to choose from.

May 19, 2023
3:34 pm
AltaRed
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I do have 2 residual GICs which are yet to mature (spouse has more) but you are right. I will soon be out of them. BTW, the spread between brokerage GIC rates and the rates on the GIC chart here are not 100bp at the brokerages I deal with. Right now at Scotia iTrade, best rates are:

1 yr - 4.88%
2 yr - 4.75%
3 yr - 4.65%
4 yr - 4.4%
5 yr - 4.42%

The spreads have been 35-50bp over the last 10 years or so.

May 19, 2023
3:48 pm
NCC1701Z
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Reserving about 3 years in fixed income in the LIF should alleviate most volatility issues.

The annuity is tempting but I can't seem to get past the lack of an estate value and I don't think we'll be living into our 90's to get a decent return. The LIF is only a portion of our funds and with the low withdrawal restrictions it's a god candidate to annuitize.

Plus 1/2 the LIF will likely go to taxes so that's another compelling reason

May 19, 2023
3:57 pm
NCC1701Z
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Why are Scotia's GIC rates so much better? Are they 3rd party ?

Here's the rates I'm dealing with
.............. Motive .....InvestorsEdge
1-year 5.120% 4.55
2-year 4.850% 4.15
3-year 4.750% 4.0
4-year 4.720% 3.9
5-year 4.720% 3.95
6-year 4.850%
7-year 4.950%
8-year 4.950%
9-year 4.950%
10-year 4.950%

May 19, 2023
4:45 pm
Norman1
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The GIC's are supposed to include third party issuers when going through a brokerage.

These are the best rates from Scotia iTRADE:

1 year 4.88% Home Trust Company
HomeEquity Bank
2 year 4.75%
3 year 4.65% Home Trust Company
Equitable Bank
HomeEquity Bank
Concentra Bank
4 year 4.40%
5 year 4.42% Canadian Western Bank
Equitable Bank
Concentra Bank
General Bank of Canada
May 19, 2023
5:01 pm
Norman1
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From BMO InvestorLine:

1 year 4.88% Bank of Montreal
Bank of Montreal Mortgage Corp
BMO Trust
HomeEquity Bank
2 year 4.75% HomeEquity Bank
3 year 4.65% Bank of Montreal
Bank of Montreal Mortgage Corp
BMO Trust
Concentra Bank
Equitable Bank
HomeEquity Bank
4 year 4.40%
5 year 4.42% Bank of Montreal
Bank of Montreal Mortgage Corp
BMO Trust
Canadian Western Bank
Equitable Bank
Concentra Bank
General Bank of Canada

It looks like CIBC Investor's Edge is not the best for people interested in GIC's. sf-frown

May 19, 2023
6:19 pm
NCC1701Z
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Big Oops on Investor's Edge rates

I missed the tab for 3rd party GIC's.

The rates are indeed about the same as Scotia and BMO

I wonder if you have the option to take more than the minimum RRIF withdrawal each year?

For Annual payments: (at maturity, S/A and monthly also available)

GIC Issuer
1-Year
2-Year
3-Year
4-Year
5-Year
B2B BANK
4.850%
4.720%
4.350%
4.250%
4.200%
CONCENTRA BANK
4.860%
4.730%
4.650%
4.400%
4.420%
Canadian Western Bank
4.600%
4.700%
4.640%
4.390%
4.420%
EQUITABLE BANK
4.860%
4.730%
4.650%
4.400%
4.420%
FAIRSTONE BANK OF CDA (DUO BANK)
4.860%
4.700%
4.620%
4.340%
4.400%
HAVENTREE BANK
4.850%
4.710%
3.950%
3.850%
3.800%
HOMEQUITY BANK
4.880%
4.750%
4.650%
4.400%
4.410%
HSBC BANK
4.650%
4.250%
4.100%
4.000%
3.650%
ICICI BANK CANADA
4.550%
4.640%
4.550%
4.330%
4.330%
LAURENTIAN BK
4.850%
4.720%
4.350%
4.250%
4.200%
MANULIFE BANK
4.000%
4.000%
4.100%
4.150%
4.200%
MONTREAL TRUST
4.550%
4.150%
4.000%
3.900%
3.950%
NATIONAL BANK
4.550%
4.150%
4.000%
3.900%
3.950%
NATIONAL TRUST
4.550%
4.150%
4.000%
3.900%
3.950%
PEOPLES TRUST
4.820%
4.700%
4.150%
4.050%
4.000%
PRESIDENT'S CHOICE BANK
4.710%
4.650%
4.560%
4.250%
4.300%
VERSABANK
4.830%
4.700%
4.360%
4.260%
4.210%

May 19, 2023
7:52 pm
Loonie
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NCC1701Z said
Reserving about 3 years in fixed income in the LIF should alleviate most volatility issues.

The annuity is tempting but I can't seem to get past the lack of an estate value and I don't think we'll be living into our 90's to get a decent return. The LIF is only a portion of our funds and with the low withdrawal restrictions it's a good candidate to annuitize.

Plus 1/2 the LIF will likely go to taxes so that's another compelling reason  

I think you have correctly understood the trade-off with annuities. They provide insurance against something you don't think is going to happen, but you know you could be wrong. Maybe ask your doctor for an educated guess, given lifestyle and genetic factors. My mum has been thinking she wouldn't last much longer since she was about 85 or so. She'll be 102 in a few weeks and could easily last another few or several years. Her parents were about 80.

It's like any kind of insurance. You don't think you'll die young, but you buy life insurance to protect your family in case you do; you don't think your house will be burglarized or destroyed, but you buy property insurance in case it does, etc etc.

Yes, if you die as soon as you seem to imagine, the tax on remaining LIF will be substantial. Same for any RIF funds.

LIFs are worse than RIFs as there is so little flexibility. And RIFs are bad enough!; indeed, you might as well buy an LIF annuity, and I think that is actually what they want you to effectively do by boxing you in. I hate being put in a strait jacket like that.

The rates quoted above don't look too bad if indeed they are available for LIFs. Personally, I am skeptical they will remain competitive as they have not been when I've looked in the past and even the differences cited by AltaRed can add up.. You might ask a deposit broker if they sell LIF GICs. I doubt they do, but it will help you cover your bases to ask. If they do, it could be your best bet.

May 19, 2023
8:05 pm
Loonie
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There is one way around the annuity conundrum that may or may not appeal.

If you have a favourite charity, preferably a large one like a university, hospital, large religious body etc., many of them can help you set up a Charitable Remainder Trust. I'm not sure if LIFs qualify but they will know. The idea is that you get the monthly payout similar to a regular annuity but the charity gets the remainder when you die rather than your estate. I'm not an expert on this so you'd need to ask them. Lots of wealthy people use this to reduce taxes and provide help to charities.. It's NOT a DIY project though, and small charities do not have the expertise.

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