Rate Increase for 1-Year Term (average 4.25%) - July 27, 2022 | Page 2 | Hubert Financial | Discussion forum

Norman1 said
Yes, it is 4.25%/4 compounded.

The $100,000 to $104,318 that HermanH calculated works out to be 4.24979%/4 compounded quarterly.

I got $104,317.49 in my calculations for $100,000 that would be purchased July 27 and have 92 days of 4.1%, 92 days of 4.2%, 90 days of 4.3%, and 91 days of 4.4%. That works out to be 4.24930%/4 compounded quarterly.

Date	Days	Rate	Begin	Interest	End
27-Jul-2022	92	4.10%	$100,000.00	$1,033.42	$101,033.42
27-Oct-2022	92	4.20%	$101,033.42	$1,069.57	$102,102.99
27-Jan-2023	90	4.30%	$102,102.99	$1,082.57	$103,185.56
27-Apr-2023	91	4.40%	$103,185.56	$1,131.93	$104,317.49
27-Jul-2023			$104,317.49

  

Not if u are putting in $10mm

Isn't interesting how math is boring to most until you place "$" in front of the numbers ...

Norman1 said

savemoresaveoften said

Not if u are putting in $10mm

It is actually. That $1.59 difference in the interest on $10 million is just rounding.

The more precise average rate is

4 x [⁴√(1 + ¼ x 4.1%)(1 + ¼ x 4.2%)(1 + ¼ x 4.3%)(1 + ¼ x 4.4%) - 1]
= 4.2499845%

$1.59 is insignificant compared to the difference from the starting date of the term deposit:

Date	Days	Rate	Begin	Interest	End
27-Jul-2022	92	4.10%	$10,000,000.00	$103,342.47	$10,103,342.47
27-Oct-2022	92	4.20%	$10,103,342.47	$106,957.03	$10,210,299.50
27-Jan-2023	90	4.30%	$10,210,299.50	$108,257.15	$10,318,556.65
27-Apr-2023	91	4.40%	$10,318,556.65	$113,193.15	$10,431,749.80
27-Jul-2023			$10,431,749.80

Date	Days	Rate	Begin	Interest	End
04-Aug-2022	92	4.10%	$10,000,000.00	$103,342.47	$10,103,342.47
04-Nov-2022	92	4.20%	$10,103,342.47	$106,957.03	$10,210,299.50
04-Feb-2023	89	4.30%	$10,210,299.50	$107,054.29	$10,317,353.79
04-May-2023	92	4.40%	$10,317,353.79	$114,423.69	$10,431,777.48
04-Aug-2023			$10,431,777.48

  

I'm bookmarking this for when I decide to put $10MM in a Hubert 1Yr GIC ...

Greedy Guy said
For more modest means investors, investing in a Tangerine 1 yr GIC at 4.5% is a better solution. Tangerine 95k GIC is fully covered by CDIC. Hubert GIC is not guaranteed by government.  

DGCM is a MB Gov Agency that covers 100% of deposits at MB member FI's. Funding is from member FI's not MB Gov.

CDIC is a Crown Corp and is also member funded without Gov funding.

Greedy Guy said
For more modest means investors, investing in a Tangerine 1 yr GIC at 4.5% is a better solution. Tangerine 95k GIC is fully covered by CDIC. Hubert GIC is not guaranteed by government.  

There is a huge difference during unstable times, to have access to your funds every 3 months without penalty vs an entire year locked away. There's no comparison at all between these 2 options IMO.

cgouimet said

DGCM is a MB Gov Agency that covers 100% of deposits at MB member FI's. Funding is from member FI's not MB Gov.

CDIC is a Crown Corp and is also member funded without Gov funding.  

DGCM covers member FI deposits with its investment portfolio: $437 million as of Dec 31, 2021.

CDIC covered deposits are backed by a $6 billion investment portfolio as of June 30, 2020 and government regulated/supported loans:

"Under the CDIC Act, CDIC has the authority to access additional funds through borrowing. CDIC’s statutory borrowing limit is indexed to the growth of insured deposits and, as at December 31, 2019, CDIC could borrow up to $25 billion, subject to approval by the Minister of Finance. Additional borrowing could be provided by Parliament through an Appropriation Act if available funding was not sufficient. CDIC could also receive loans from the Government of Canada beyond its statutory borrowing limit when deemed necessary to promote the stability or maintain the efficiency of the financial system in Canada."

https://www.cdic.ca/what-happens-in-a-failure/resolution-funding/

Loonie said
In other words, neither has comprehensive explicit government back-up. And neither has enough funds to reimburse everything they guarantee, should it come to that.  

CDIC was established by federal legislation, CDIC Act. CDIC coverage is guaranteed by a large investment portfolio and, if required, federal government regulated/supported loans.

Greedy Guy said

DGCM deposits are guaranteed by its investment portfolio: $437 million as of Dec 31, 2021. CDIC coverage is guaranteed by its $6 billion investment portfolio (as of June 30, 2020) and, if required, federal government regulated/supported loans.

CDIC deposits with government support (as required) is my choice.  

Your preference is just that and everyone should go with theirs, but who you choose to trust and which product you prefer does not make 2 very different products comparable.

Norman1 said
If one does compare them, then the Hubert one-year term, that compounds quarterly, is equivalent to a 4.3178% one-year GIC that compounds only annually.  

Hubert has an additional advantage. If rates go up , you may be able to cash out and reinvest at a higher rate during the year. As long as the first quarter new rate is higher than the one you would otherwise have, you're good.