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150 Day term special at 3.25%
January 11, 2019
1:09 pm
HISAhopper
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I have contribution room of around 28K for TFAS in 2019. I don't need the money for a long period, so my options:
1. Meridian 3.25% TFSA GIC locked in for 18 months
2. Ideal 3.25% TFSA GIC for 150 days then drop down to TFSA savings 2.76% after
Any advice would be appreciated.

January 11, 2019
2:29 pm
Loonie
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Are you committed to short-term investments (considering you don't need the money for a long time)?
Do you have other TFSA funds already invested, and when do they mature?
Also, which part of Canada do you live in? This limits your options.
It's hard to give good advice without more info.

Oaken has 18 months for 3.3% if 18 months is what you really want.
If you really want the shorter commitment of Ideal, then I would look at Hubert's one-year GIC at 3.1%, cashable and reinvest-able without penalty quarterly. Neither Hubert nor Oaken currently has a transfer-out fee. Meridian has transfer-out fee; I don't know about Ideal.
If I were going to go with Meridian, I would take the 3 year rate at 3.45%.

January 11, 2019
3:30 pm
semi-retired
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HISAhopper said
I have contribution room of around 28K for TFAS in 2019. I don't need the money for a long period, so my options:
1. Meridian 3.25% TFSA GIC locked in for 18 months
2. Ideal 3.25% TFSA GIC for 150 days then drop down to TFSA savings 2.76% after
Any advice would be appreciated.  

If you transfer funds from another FI into Meridian 18 month term at 3.25% you also receive a 1% cash bonus on the total up to 750$.I an doing this with both mine & the wifes Hubert TFSA accounts & will get almost 1300$ bonus cash.Also no transfer fees at Hubert.

January 11, 2019
4:40 pm
Loonie
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The Meridian 1% offer is only for transfers. OP seems to be talking about a new contribution. Could try asking Meridian for the sme deal for a new contribution though - mgr might agree.

January 11, 2019
5:54 pm
HISAhopper
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Loonie said
Are you committed to short-term investments (considering you don't need the money for a long time)?
Do you have other TFSA funds already invested, and when do they mature?
Also, which part of Canada do you live in? This limits your options.
It's hard to give good advice without more info.

Oaken has 18 months for 3.3% if 18 months is what you really want.
If you really want the shorter commitment of Ideal, then I would look at Hubert's one-year GIC at 3.1%, cashable and reinvest-able without penalty quarterly. Neither Hubert nor Oaken currently has a transfer-out fee. Meridian has transfer-out fee; I don't know about Ideal.
If I were going to go with Meridian, I would take the 3 year rate at 3.45%.  

Thanks Loonie for the reply. I am newb on the financial market, I have only put money in HISA and hopped around for the most part, scared to get into other forms of investment.

I am in Toronto, the other half of TFSA is in GIC not yet matured, (wife did the investment, I have no knowledge about finance). I just learned that I have TFSA room so I read up last night and start with some baby steps to make use of it.
Thank you for valuable info on Hubert and Oaken. Hubert is in Manitoba i think, so will rule it out. Oaken seems great with no transfer-out fee, but a bit wary as I had a GIC with it right at the time it fell into trouble. Will consider it.
Why 3 years rate with Meridian? is there rumor that interest rate is on the rise?

edit: Just realized IdealSavings is in Winnipeg, will rule it out as well

semi-retired said

If you transfer funds from another FI into Meridian 18 month term at 3.25% you also receive a 1% cash bonus on the total up to 750$.I an doing this with both mine & the wifes Hubert TFSA accounts & will get almost 1300$ bonus cash.Also no transfer fees at Hubert.  

it's not a transfer, the money coming out from Tang savings, currently earning 3.15% till end of March.

Loonie said
The Meridian 1% offer is only for transfers. OP seems to be talking about a new contribution. Could try asking Meridian for the sme deal for a new contribution though - mgr might agree.  

yeah it is new contribution and definitely try the manager if going with Meridian. Thanks for the tip.

January 11, 2019
10:23 pm
Loonie
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OK. thanks for the extra info.
You obviously have a lot of things to consider.

Here are a few thoughts.

Not sure why you would rule out FIs (financial institutions) in MB. The ones referred to are all online and available to residents of Ontario. I use Hubert. The only reasons I know of not to use them are if you think the MB economy is terminal or if you are concerned about things like powers of attorney and estates and are not satisfied with answers provided by the FIs. The credit unions are all governed by provincial legislation. All credit union deposit insurance is governed by provincial insurance organizations, with the exception of Coast Capital, which is federally regulated but not yet offering anything to Ontario.

Oaken has a retail outlet in downtown TO, and there is free parking underneath - they will endorse your ticket. You can also deal with them online. I use them as well. The main weakness of Oaken is that they do not (yet) offer a TFSA or RSP savings account - such as you have evidently been using up til now. This can make it awkward when it comes time to renew your GIC. If your plans are uncertain, there is no place to park it while you figure it out.

I had no real concerns during Oaken's financial crisis, and in fact invested more money then as they were offering 3.5% for five years, which was well ahead of competitors. As long as I stick within CDIC (Canadian Deposit Insurance Corporation) limits, I feel OK about it. I also thought their business model was sound - as did Warren Buffett, who bought in. They seem to have recovered now and have new managers. Personally, I see no further cause for concern at this time.

Hopping around to get best offer with HISAs, especially for registered funds, gets tiresome and can be expensive with transfer fees, as you have no doubt discovered. If you wish to stay with interest-bearing investments and have no foreseeable need for access to the funds, you will, I think, need to move to GICs sooner or later.
If you are considering other kinds of investments for your TFSA, such as stocks, ETFs, mutual funds etc, then you should probably put it off until you have decided about that.

Assuming you need to be looking at GICs, I would suggest you consider creating a "GIC ladder". You can no doubt read about this concept elsewhere online. The basic idea is that you try to arrange your investments so that, in due course, they are staggered so that one-fifth mature annually and all are invested in five-year GICS (where rates are typically highest - although we've seen some exceptions lately). It may take you a few years to set this up since you have some of your money already in GICs (not sure when they mature) and you are starting from scratch with the 28K. You would need to draw up some kind of chart or plan to show how you would accomplish this.
However, we are, at this stage, still dealing with relatively small totals in TFSAs, because they have not been around a long time, so, if divided into five, it may be too small to fiddle with. In this regard, a few ideas: remember that you will be adding 6000+ annually; consider splitting maturities with your wife so that one of you has funds maturing annually; consider any other funds you may have invested in GICs, such as in RSPs, and arrange it so that your ladder includes these as well, so that your TFSA GICs mature less often and have larger amounts. It cuts down on the number of times a year that you have to make a decision! Another reason to spread the maturities with your wife and your RSPs is to minimize the number of transfer fees, should there be any that are not refunded by the receiving FI. Transfer fees increase periodically, and they do it during the course of your GIC so that you are powerless.

It sounds like you're a bit stuck between wanting to retain day-to-day control and wanting to invest for a longer period, and that you are compromising with shorter term GICs.
Some feel that rates are still on the upswing and that therefore it's best to invest for shorter terms. and pick up higher rates later. They might be right, and they might be wrong. Nobody knows, and nobody can know.
Personally, I feel the decision should be made without speculating about future rates, but this won't always work in your favour. You can probably see this yourself in the GIC(s) your wife invested you in. It's likely that the rates you are getting there would be better if you did it today, but, on the other hand, you would not have had the higher-than-HISA rates in the interim.

Where feasible, given current contribution limits, I think it makes sense to try to keep your TFSA contributions in one FI, two at the most. It just gets unwieldy otherwise, considering the smallish amounts involved. That is one of the reasons I suggest Oaken or Hubert, because they have had consistently competitive rates for quite a while, making renewals easier. Meridian often has great promo rates, but, when the promo is over (or when your GIC matures), the new rate is poor, necessitating a transfer or a big compromise.sf-frown In future, I intend to use Meridian only for non-registered funds for this reason - easier to get the money in and out.

If you have ruled out Ideal for being in MB, that only leaves you Meridian, from your original options. I've explained why I think that might be a problem. However, it would buy you time - 18 months to be specific. By then, you might be a little clearer on how you want to proceed for the long term. You can do a little better on an 18 month GIC at Oaken. The difference is not significant enough to worry about, with 28K, but it places you in an FI that has had fairly consistent good rates.

If i were going with Meridian, I would definitely go with the 3 year rate. You could also divide your 28K into 2 x 14K and have different maturities, but that could cost you 2 transfer fees later, and all of Meridian's other rates are poor right now except if you could get the one-year Promo.

You could also wait a little while. Rate promotions come and go during the year. Last year I bought my TFSA GIC in March.

Last but not least, don't forget Ganaraska credit union - only if you can get time during a weekday to go to Port Hope or Peterborough to join. You have to show up in person to join, but you only have to do it once. They offer the best deal available right now for people living within reach - 4% for 4 years, compounded; $50 transfer-out fee. Their operation is good for this sort of thing but not for everyday banking or moving money around regularly. Should be OK for a TFSA. However, it may be a one-off or rarely used membership. Their promotional rates are excellent but their everyday rates are poor. You can expect to need to transfer out at the end. The next-best-competition for four years is Hubert at 3.55%. - which is a very good rate. The Ganaraska offer would net you $513 more than Hubert on 28K after current transfer fees after four years. Strictly in dollar terms, I think it's the best thing going at the moment, but there are always the other considerations. (This offer may not last too much longer.) https://www.ganaraskacu.com/Personal/

You can also still get 3.75% for five years at DUCA credit union in GTA.
This is also a very good deal, but, again, their non-promo rates are not so good

I hope that gives you a few things to consider.

FWIW, I would go with one of Oaken, Hubert, Ganaraska or DUCA, depending on whether highest rate or longer-term affiliation is the higher value. Oaken is the only one insured by CDIC, if that is important to you.
I live in TO too and am still pondering for this year...Will likely go with Hubert, but I am only looking at one year's contribution room so the difference in rates is not significant. If it were more, I would likely go with Ganaraska.

January 12, 2019
11:51 am
HISAhopper
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Thanks Loonie for sharing your thoughts, info and personal experience on the TFSA.
I ruled out those CU in the west coast for being possibly out of reach in case of an emergency.
I consider Meridian as I am already a member there but as you pointed out its regular rate is low plus transfer-out fee applied. Ganaraska is great thanks for sharing, but a bit out of the way for me.
I am leaning towards Oaken given your info that there is currently no transfer fee and its recovery looks good.

January 12, 2019
1:14 pm
Loonie
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Oaken would be as good a choice as any, all things considered.

Two other things worth knowing about Oaken, although they should not affect your decision:

Home Capital, their parent, includes two separate companies, namely Home Bank and Home Trust. Each is separately insured by CDIC. This means that, once your TFSA (or any investment category) reaches 100K, you still have room for another 100K investment through the other company. It effectively doubles your protection. I suggest you keep everything with one or the other until you reach limits, just to make it simpler.

Second, they typically send their customers a nice box of good quality chocolate every Christmas season - free!sf-smile

And they may offer registered savings accounts in the future. A while ago, on a customer survey, they asked if we wanted them, so they are aware there is an interest in having them.

Good luck!

January 12, 2019
1:41 pm
HISAhopper
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Great info, I'll keep that in mind,
Thanks.

January 12, 2019
3:09 pm
Ed
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Both Ideal and Meridian reimburse up to $50 of the transfer fee. Don't know about the others.

January 12, 2019
8:11 pm
Loonie
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Transfer fee reimbursements only happen on the receiving end. If you were transferring OUT of Meridian, for example, you would need to convince the receiving FI to reimburse you. Most will do so IF they themselves charge a fee, but won't if they don't. Accordingly, Oaken would not reimburse a transfer fee from Meridian.

January 12, 2019
9:28 pm
Ed
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Exit fees only apply when you use the T2033 transfer form. I cashed out on December 1st and got back into a TFSA promo offer last week. Transferring can take 2 to 6 weeks and the funds are required to be sent by cheque to the receiving FI using snail mail and don't collect interest while in transit which can sometimes take an inordinately long amount of time.

January 12, 2019
10:46 pm
Loonie
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HISAhopper is buying a GIC. Cashing out in December and reinvesting in January is not relevant if you are buying a GIC in January. It only works for savings accounts and GICs that mature in December. I don't know of any FI that offers this possibility that also has consistently good rates and is not located in MB.
Any losses from transfers need to be weighed against the financial gain of investing in a longer term at a better rate.

Some transfers do sometimes take longer than they ought. The financial institutions have made an agreement amongst themselves to not delay, but this isn't always strictly followed. They are especially willing to excuse themselves during "busy" seasons. It's important to keep an eye on what is going on, follow up, and act together with the receiving FI to encourage the transfer to move along.
I had one once where Oaken was the recipient of an RSP but nothing seemed to be happening. When I pushed them to pursue it, they discovered they had sent the request to the wrong address! Other than that, all of my transfers have been smooth, taking 2 or 3 weeks.
However, HISAhopper is a long way from enacting transfers.

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