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What is one level riskier than GIC but gives higher yield on average?
January 22, 2023
1:51 pm
butterflycharm
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What is only one level riskier than GICs but gives higher yield than GICs for durations of 1 to 5 years?

Please name a product or a list that makes such a balanced portfolio.

January 22, 2023
3:03 pm
Bruford
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I know, I know, your mattress in a total collapse

January 22, 2023
3:44 pm
Dean
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.
But Bruford ... there's no 'Yield' there

Think Again sf-wink

    Dean

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

January 22, 2023
4:46 pm
Loonie
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And... you never know... a mouse might eat away at those new plastic dollars!

The next best thing to GICs for you would be to go to the library and read some books on investing. Start with Benjamin Graham.

January 22, 2023
6:30 pm
Bruford
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Dean said
.
But Bruford ... there's no 'Yield' there

Think Again sf-wink

    Dean

  

In a collapse, cash in a mattress outperforms cash in a GIC.

January 22, 2023
7:52 pm
mordko
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On a more serious note, I am not aware of any FI right now that gives better return over a fixed term unless you take A LOT more risk.

If you want “a balanced portfolio” then lots of options starting with VBAL. Not comparable to GICs and not a 1 to 5 year investment but with less risk over long term.

January 22, 2023
11:08 pm
butterflycharm
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mordko said
On a more serious note, I am not aware of any FI right now that gives better return over a fixed term unless you take A LOT more risk.

If you want “a balanced portfolio” then lots of options starting with VBAL. Not comparable to GICs and not a 1 to 5 year investment but with less risk over long term.  

Interesting that there is no such product and there is a big gap.

Cash ETF (aka Alternative ETFs?) which by their name and description (pooling of big amounts of cash into high interest savings accounts) should give a higher yield than GICs (because a bank should be interested in a bigger pile) but have lower rates than GICs. How do they even exist? Is this all marketing and people just buy what they see more often without research? or maybe that is riskier for banks as one investor might pull out all funds at once vs thousands different customers are at less chance of flight of funds at once.

VBAL (Vanguard Balanced Portfolio) graph does not look *balanced* at all 🙂

Funny are the cash fund ETFs with negative returns. Is that a joke?

What does the sharp up and down signify in the cash ETFs?
Maybe cash ETF

January 23, 2023
3:52 am
mordko
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1. VBAL is balanced by definition, regardless of how it “looks” to someone who doesn’t know the definition.

2. Cash ETFs share prices drop by the amount of payment on the day of paying out, usually monthly. Same goes for any stock or fund which pays dividends/interest, for obvious reasons but its less obvious for non-HISA investments because there are other factors influencing the price.

3. GICs are subsidized by the taxpayer who takes on the risk. Apart from that, prices go up or down depending on issuer’s needs and competition for money, and could be higher or lower than other products at various times.

January 23, 2023
5:06 am
savemoresaveoften
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butterflycharm said
What is only one level riskier than GICs but gives higher yield than GICs for durations of 1 to 5 years?

Please name a product or a list that makes such a balanced portfolio.  

What is one level easier than asking simple questions on a forum ?

Google or if you are old fashion, books…

January 23, 2023
12:56 pm
co
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Corporate bond such as from the banks, utilities companies, etc., but I don't know an easy, cheap way for an individual to access this market. You can buy them through many of your usual broker but the commission is high. Let me know if you do find a good option.

Then you can have equivalents to automatically-reinvested very short-term "GIC": Ultra Short-Term (Investment Grade) Bond ETF, but the extra risk does not seem to generate a significant higher yield (this is a personal calculus). BMO's ZST has an average duration of 0.45 years and for some reason only yields 4.44%. Horizon's HFR has an average duration of 0.66 years and yields 5.21%. There are a few more that you can look up easily on Google by searching Ultra Short-Term Bond ETF.

January 23, 2023
1:56 pm
butterflycharm
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con6450 said
Corporate bond such as from the banks, utilities companies, etc., but I don't know an easy, cheap way for an individual to access this market. You can buy them through many of your usual broker but the commission is high. Let me know if you do find a good option.

Then you can have equivalents to automatically-reinvested very short-term "GIC": Ultra Short-Term (Investment Grade) Bond ETF, but the extra risk does not seem to generate a significant higher yield (this is a personal calculus). BMO's ZST has an average duration of 0.45 years and for some reason only yields 4.44%. Horizon's HFR has an average duration of 0.66 years and yields 5.21%. There are a few more that you can look up easily on Google by searching Ultra Short-Term Bond ETF.  

Thanks.

ZST 21% over 12 years so about 1 to 2% per year average. This product probably not bringing in a lot given GICs are rated better.

HFR low return and very risky. Negative return in 1 year.

REITs or business in real-estate lending are probably the next level risk to GICs. But it seems none are efficient enough.

"Corporate bond such as from the banks, utilities companies, etc., but I don't know an easy, cheap way for an individual to access this market"

Which one are you looking for specifically? I can look and tell you where you might be able to buy it at lowest price.

January 23, 2023
2:10 pm
Norman1
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con6450 said
Corporate bond such as from the banks, utilities companies, etc., but I don't know an easy, cheap way for an individual to access this market. You can buy them through many of your usual broker but the commission is high. Let me know if you do find a good option.

The bond market only exists for those who transact in blocks of $100,000 face value. Others transact with whatever bond inventory one's broker has.

BMO InvestorLine has been quite good the past year or so. Commission is disclosed during order entry but the formula for calculating it is not. However it is calculated, the BMO InvestorLine bond commissions have been more reasonable than those of Scotia iTRADE which charges $1 per $1,000 bond, minimum $24.99.

That $1 per $1,000 or 0.1% commission on a 30-day treasury bill will shave 1.2% off the yield. It's even worse if one just buys $10,000. The $24.99 minimum works out to be 0.2499% and will shave almost 3% off a 30-day treasury bill!

With BMO InvestorLine, I've purchase around $10,000 of short term bonds and was only charged around $3 for commission.

January 23, 2023
2:17 pm
TommyT
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butterflycharm said

Interesting that there is no such product and there is a big gap.

Cash ETF (aka Alternative ETFs?) which by their name and description (pooling of big amounts of cash into high interest savings accounts) should give a higher yield than GICs (because a bank should be interested in a bigger pile) but have lower rates than GICs. How do they even exist? Is this all marketing and people just buy what they see more often without research? or maybe that is riskier for banks as one investor might pull out all funds at once vs thousands different customers are at less chance of flight of funds at once.

VBAL (Vanguard Balanced Portfolio) graph does not look *balanced* at all 🙂

Funny are the cash fund ETFs with negative returns. Is that a joke?

What does the sharp up and down signify in the cash ETFs?
Maybe cash ETF  

The surest trade is to short the U.S. dollar. You might lose a bit from now to March as inflation picks up in America but the dollar will collapse over the next several years.

January 23, 2023
2:19 pm
Dean
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butterflycharm said

What is only one level riskier than GICs but gives higher yield than GICs for durations of 1 to 5 years?

Please name a product or a list that makes such a balanced portfolio.  

Reposting the OP's original question , cuz at least one poster here
has already 'Fallen Off The Tracks'.

Chuckle sf-laugh

    Dean

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

January 25, 2023
9:35 pm
co
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butterflycharm said

Which one are you looking for specifically? I can look and tell you where you might be able to buy it at lowest price.  

For the sake of discussion, I've found a few bonds on Questrade's public bond list that may satisfy "one level riskier than GIC but gives higher yield on average":

  • FIRST CAPITAL REALTY INC 2026-05-06 5.386% BBB
  • BROOKFIELD PROPERTIES CO 2026-09-30 5.616% BBB(low)
  • BOMBARDIER INC. 2026-12-22 6.429% BB

These yields also include significant commission, I assume, so if you can find the real market quote and a cheap way to buy them, it could be attractive for some people.

January 26, 2023
4:35 am
mordko
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Careful here. These are nothing like a GIC. BB = non-investment grade. You need to know what you are doing before you buy bonds.

January 26, 2023
5:31 am
savemoresaveoften
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mordko said
Careful here. These are nothing like a GIC. BB = non-investment grade. You need to know what you are doing before you buy bonds.  

co said

For the sake of discussion, I've found a few bonds on Questrade's public bond list that may satisfy "one level riskier than GIC but gives higher yield on average":

  • FIRST CAPITAL REALTY INC 2026-05-06 5.386% BBB
  • BROOKFIELD PROPERTIES CO 2026-09-30 5.616% BBB(low)
  • BOMBARDIER INC. 2026-12-22 6.429% BB

These yields also include significant commission, I assume, so if you can find the real market quote and a cheap way to buy them, it could be attractive for some people.  

All brokerages (both discount and full service) offer a good staple of corporate bonds if one is interested. Log in to your account and you will see the live quotes, no need to guess the price....

Commission is irrelevant esp if one wants to dabble on corporate bonds, whether you want it or you dont. Its not grocery shopping and try to find the best price when it comes to investment.

January 26, 2023
7:19 am
Norman1
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One can shop around and get a better prices for bonds. The difference is not huge though.

The First Capital Realty 3.604% 2026/05/06 bonds are 94.765 today at Questrade for a yield to maturity of 5.371%.

They are 94.016 are Scotia iTRADE before commission. The $1 per $1,000 commission for $25,000+ purchase gives a net price of 94.116 for a yield of 5.599%.

BMO InvestorLine doesn't offer that bond.

Questrade is charging about $7.49 per $1,000 in commission for that bond.

January 26, 2023
8:05 am
savemoresaveoften
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Norman1 said
One can shop around and get a better prices for bonds. The difference is not huge though.
 

Unless one has multiple trading accts at different brokerages, its just not doable shopping around.
Brokerage house offers what they have in their inventory, what is offered at one shop need not show up at another either.

70 upfront basis pt commission ? That sounds high. But then it is what it is.

January 26, 2023
5:53 pm
Norman1
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One has to have multiple brokerage accounts if one is serious about buying bonds. That has been the case even before there were discount brokers.

Back then, your full service broker won't quote the best prices on bonds the brokerage firm can offer once he or she realizes you don't shop around! You wouldn't know that the First Capital Realty bond could be bought with a yield of 5.599%.

If you accepted a yield of 5.25% instead, you would pay 95.114 instead of 94.116. That is an extra $9.98 per $1,000 in commission for the broker! On $25,000 of those bonds, it would be almost an extra $250!

As you said, not all the bonds are available through every broker. If one is looking for Bell Canada bond, one broker may not have it but can offer a Telus bond with a similar maturity and yield.

A 70 bps front-end commission on a three year bond is not really that high. A deposit broker would be paid 75 bps on a three year GIC and the deposit broker doesn't need to buy the three year GIC first.

Questrade may have to charge more than Scotia iTRADE because Questrade doesn't offer online bond trading:

Trading bonds
To place a bond trade, please reach out to our trade desk department at 1.866.… - Monday to Friday, 8:00 a.m. to 3:30 p.m. ET. Trading bonds at Questrade is commission free and the minimum order is $5,000 (some GICs may have higher minimums). …

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