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HSBC GIC promo
February 9, 2018
3:07 pm
Koogie
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Thanks for letting us know.

It seems rather gimmicky but then HSBC is often like that.

February 9, 2018
3:48 pm
Loonie
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non-registered GIC only. new funds only. minimum 5K.

I don't think it's really any more gimmicky than other promos. The repetition of the number 8 is, I think, a just a reflection of Chinese culture, where 8 is considered a lucky number. It's a Chinese New Year special.

Could be a good deal for those who are anticipating further rate increases this year, and who live near an HSBC branch.

I have found HSBC cumbersome at best , to deal with. I would want to know how I was going to get the money out at the end and how much that was going to cost me before I took this offer. Make sure you do not allow auto-rollover!

February 18, 2018
4:48 am
gamgam
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I do live near an HSBC branch so I can obtain a bank draft upon maturity. Would anyone exceed the $100,000 CDIC limit? It is only 88 days? Thankyou for your advice?

February 18, 2018
10:59 am
Slybanking
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HSBC is one of the largest bank in the world. In term of assets they are more than twice as big as RBC.

February 18, 2018
11:05 am
gamgam
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Thanks Slybanking! Preparing for a new home for my Simplii cash

February 18, 2018
11:23 am
Doug
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Loonie said
non-registered GIC only. new funds only. minimum 5K.

I don't think it's really any more gimmicky than other promos. The repetition of the number 8 is, I think, a just a reflection of Chinese culture, where 8 is considered a lucky number. It's a Chinese New Year special.

Could be a good deal for those who are anticipating further rate increases this year, and who live near an HSBC branch.

I have found HSBC cumbersome at best , to deal with. I would want to know how I was going to get the money out at the end and how much that was going to cost me before I took this offer. Make sure you do not allow auto-rollover!  

Well, at least Coast's apparent "tie in" with the 4.00% GIC promo is: (a) long-term and (b) not so blatantly transparent. 2.88% for 88 days? C'mon...the only thing more gimmicky would be 8.88% for 88 days. sf-cool

(That would be a short term money loser but not out of the question, even in this environment, given its extremely short duration and that it's on net new money.)

Some existing customers might "park" money with this offer, for sure, but to me and for "rate chasers" anyway, the burden of setting up an HSBC account (they don't allow virtual account openings anymore as of 2013, despite being a pioneer in that area and closing 20% of their branches in the last 10 years) is simply too great.

4%, meanwhile, for net new money for 33 months (nearly 3 years), even for non-members is not.

Cheers,
Doug

February 18, 2018
11:30 am
Doug
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Slybanking said
HSBC is one of the largest bank in the world. In term of assets they are more than twice as big as RBC.  

You cannot necessarily make that comparison. Each bank is regulated separately in each country and each subsidiaries are "siloed" from regulatory reach in the event of a subsidiary's failure (i.e., Canadian authorities could not likely touch HSBC UK's assets in the event HSBC liquidated its Canadian operations). That said, HSBC Canada is a generally sound bank - about equal to that of Canadian Western Bank and Laurentian Bank in terms of capital adequacy and diversification of loan book. They are substantially dominated by commercial loans, even more than National Bank, and especially oil & gas company loans. Most of their revenue, and profit, comes from commercial banking. Keep that in mind.

Also, HSBC Holdings plc used to be the 1st or 2nd largest banking organization in the world. They've pared back operations significantly in the last 7 years or so, selling off assets, running off loan books, etc. They're probably a more sound banking group but the transparency of their financials is murky, at best. 🙁

Cheers,
Doug

Full & Fair Disclosure: I own shares in HSBC Holdings plc that I acquired through a combination of its HSBC Sharesave (International Section) employee stock option program and its Scrip dividend reinvestment scheme. I have little faith in the company but my equity stake is not material to my overall portfolio (about $3000 CAD equivalent at roughly recent GBP/CAD FX rates) but I hang on to them for the lack of liquidity options for me to sell them (they are in certificated form from the company's UK principal register).

February 18, 2018
12:15 pm
gamgam
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Doug, unfortunately for me Coast Capital is not an option as I do not reside in BC.

February 18, 2018
5:53 pm
Doug
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gamgam said
Doug, unfortunately for me Coast Capital is not an option as I do not reside in BC.  

Fair enough. 🙂

Still, if you're not an existing HSBC Canada customer, and they offer little compelling reason to transition your business, I would strongly recommend against this offer for the following reasons:

  • HSBC has just come out of the corporate equivalent of a suspended sentence that avoids a criminal record and is now on the equivalent of probation. As such, their account opening regime is much stiffer than it has been, and stiffer than any other Canadian bank
  • Worse still, they suffer from incredibly high employee turnover, especially Premium Bankers, which are the equivalent of Financial Service Representatives at CIBC, Financial Advisors 4-6 (junior) at Scotiabank or Member Banking Specialists at Coast Capital Savings. In the branch I worked at, and I have no reason to indicate this has changed, average employee tenure in such positions is 3-6 months, 9 months if the branch is "lucky"
  • Moreover, you will most likely be subject to vigorous account monitoring for at least a year, perhaps longer, and quite likely might receive a phone call from one of their financial crime compliance specialists (called "HSBC Safeguard")
  • It's incredibly short in duration. There are better offers out there ranging from 2.5-3.25% for 1-5 year GICs, or all duration lengths basically. 🙂

Cheers,
Doug

February 18, 2018
6:27 pm
gamgam
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I thankyou so much for your insight as I take it you worked there in the past. I trust what you are saying which is why I love this platform! I hope we see better rates soon! I am looking for a short term home for $500K? I suppose Tangerine at 2.5% is the next best thing?

February 19, 2018
5:50 am
goldenhawk
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You can have the CDIC protection for up to 200 000$ since they can offer GIC trough 2 HSBC entities.

February 19, 2018
1:05 pm
Doug
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gamgam said
I thankyou so much for your insight as I take it you worked there in the past. I trust what you are saying which is why I love this platform! I hope we see better rates soon! I am looking for a short term home for $500K? I suppose Tangerine at 2.5% is the next best thing?  

Thanks for the kind words. Yes, I worked at the Westbank First Nation branch in B.C. since its inception (Feb. 2009) through Jan. 2014 plus the first year its main branch in downtown Kelowna (Jan. 2008-Feb. 2009, inclusive). 🙂

goldenhawk is correct on HSBC offering two CDIC issuers but it's worth noting, even then, there can be no assurances that all GIC promos and rate offerings are available through all of HSBC's CDIC member issuers.

It depends how concerned you are with CDIC insurance. With Tangerine, though it's a separate CDIC issuer from its parent, Scotiabank, because both are Canadian-regulated entities, OSFI and CDIC have jurisdiction that would prevent Tangerine from "failing" without Scotiabank first failing. To me, it's personally not a concern, other than with the smaller CDIC member issuer banks.

It sounds like you don't want to tie it up for even 1 year? In which case, I would say the Tangerine promo is probably your best bet but you might also look to a deposit broker and see what their best short term GIC (i.e., 9 months or less or 1 year redeemable after 30 days or 6 months without penalty). This also allows you to "spread your funds around" without opening accounts with each institution.

Cheers,
Doug

February 19, 2018
2:29 pm
gamgam
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Hi Doug, you are correct in not opening more accounts than necessary. I am considering the 18 month term with Oaken for TFSA's @ 3% of which I already have accounts open. Otherwise I prefer to be quite liquid as we are in the market for purchasing a lakefront retirement home in Lake of the Woods, ON. Also promo rates are not far off the 1 year GIC rates. I don't like being over CDIC limits but feel Simplii (3%) and Tangerine (2.5%) for a 90 day period not locked in is worth the risk. Am considering TD Private Wealth as being taxed on T5 income at Manitoba's highest tax rates suck! Need capital gains and dividends to net more in our pocket! Also want to preserve capital with some growth?

February 21, 2018
1:58 pm
Doug
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gamgam said
Hi Doug, you are correct in not opening more accounts than necessary. I am considering the 18 month term with Oaken for TFSA's @ 3% of which I already have accounts open. Otherwise I prefer to be quite liquid as we are in the market for purchasing a lakefront retirement home in Lake of the Woods, ON. Also promo rates are not far off the 1 year GIC rates. I don't like being over CDIC limits but feel Simplii (3%) and Tangerine (2.5%) for a 90 day period not locked in is worth the risk. Am considering TD Private Wealth as being taxed on T5 income at Manitoba's highest tax rates suck! Need capital gains and dividends to net more in our pocket! Also want to preserve capital with some growth?  

Which of those do you have accounts and are you (a) married and do you (b) trust your spouse?

If so, consider this scenario vis-a-vis Oaken Financial:

- $100,000 with Home Trust 3% 18-month GIC in your name
- $100,000 with Home Bank 3% 18-month GIC in your name
- $100,000 with Home Trust 3% 18-month GIC in your and your spouse's names
- $100,000 with Home Bank 3% 18-month GIC in your and your spouse's names

$400,000 fully CDIC insured in one place (one umbrella organization and online banking profile).

As long as you have some other liquid capital should you need it and you don't anticipate buying that place for 18 months, it's a fine strategy. Alternatively, leave out whatever you feel you can't tie up for 18 months and employ a similar strategy with either Tangerine (or Simplii) and be fully CDIC insured.

I'm a bit confused on the TD Private Wealth bit...what would you be invested in? You realize you're taking market and, potentially, currency and other risks there. It's not a guarantee but, generally speaking, if you're comfortable with the volatility, you should be OK in the longer run. For 18 months, I wouldn't, personally, tie up that much capital in ETFs, mutual funds or other equity investments (or even bonds, which are illiquid). I would stick with the GIC strategy above, possibly combined with HISAs. As for the Manitoba T5 comment, GIC interest is taxed as interest income in any Canadian province - it is not a Manitoba-specific issue so if you're happy, service and rate wise, sticking with a Manitoba CU is a great option, too. 🙂

Cheers,
Doug

February 21, 2018
8:46 pm
Saver-Mom
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Doug, don’t forget 100,000$ in each HT and HB in spouse’s name alone, for a total of 600,000$ per couple...as long as we are talking trust

February 21, 2018
10:47 pm
Loonie
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In order to be fully insured, you should only put about 96,000 into each of these pots. The interest is included in the 100K CDIC coverage, so you have to work backwards from there to see what your max deposit should be.

I agree; wouldn't touch any other kind of investment for 18 months. Need at least 10 years, preferably 20 or, better, 30. Further, 400K is not enough to interest TD Private Wealth Mgmt in your account - unless you have other assets to offer them; and, if it did, they would likely take 1% in management fees, with no guarantee of exceeding net 3% or even meeting it.

February 22, 2018
2:52 am
Saver-Mom
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Good points, Loonie. I agree, Gamgam, that Tang is still attractive due to their promo rates and ease of transfering large sums, making places like Alterna less attractive. Oaken remains tops in customer service and best GIC rates, but should increase their daily interest savings rates to 2% to match the others.

February 22, 2018
4:28 am
gamgam
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Thankyou Saver-Mom, I was aware of how to achieve several CDIC limits. The reason I like to keep investments in my name alone is to pay less income tax. We have an accountant that seems to think a joint T5 slip has to be claimed 50/50. 50.4% tax vs. 37.9% tax? It all adds up!

Thankyou Lonnie, I too do the calculation of including paid up interest into my CDIC limit. As far as TD Private Wealth Mgmt, we are at that level we are accepted (well over 1 mil) as we have our RRSP's with TD Waterhouse now. Management fees would be 1% but we are at 1.7% now. I also am hesitant on the next 18 months as far as the stock market goes. I think TINA is coming to an end!

Lastly thankyou Doug, We would be invested in a balanced fund as we are nearing retirement and would draw this out first as we do not have pensions. Hopefully to capture a 33.25% tax bracket. Have saved very well though! As far as T5 interest taxed as income in any Canadian province? Take a look at provincial combined taxes across the provinces and look at the difference! I would have no complaints claiming the province BC on my return! As soon as we are over $68K look out! Much worse $202K!

P.S. Should start a new thread as this has nothing to do with HSBC

February 22, 2018
4:48 am
Loonie
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Sounds like you are pretty well fixed if you are anticipating tax of 33%. You could probably afford to go into the balanced fund or whatever, but I would not count on withdrawing from it first, in case it has some bumps. I would look at it as something for your longest term, i.e. towards the end of your life, assuming a long life. If you're not comfortable with that long horizon, then you should probably avoid it.

1.7% is a lot, for essentially nothing, IMO. The Mawer Global Balanced Fund, is, I believe, 1.15 and is as good as any if you must have a mutual fund, and I think you can buy direct from them, avoiding middle man fees. You can probably get a suitable ETF for less. But perhaps you need or want the TD system for other reasons. It's hard to find sufficient GIC homes for that much money, at close-to-best-rates with adequate insurance without using CUs in MB and points West, possibly Ontario if you can find a good enough rate somewhere, which is difficult.

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