Meridian 4.25% Advertisement - Grow Your Tomorrow Class A Investment Shares | Meridian Credit Union | Discussion forum

Please consider registering
guest

sp_LogInOut Log In sp_Registration Register

Register | Lost password?
Advanced Search

— Forum Scope —




— Match —





— Forum Options —





Minimum search word length is 3 characters - maximum search word length is 84 characters

No permission to create posts
sp_Feed Topic RSS sp_TopicIcon
Meridian 4.25% Advertisement - Grow Your Tomorrow Class A Investment Shares
April 30, 2017
8:48 am
JW
Member
Members
Forum Posts: 50
Member Since:
July 19, 2013
sp_UserOfflineSmall Offline

Not CDIC covered, but what is the trick? Claims will pay 4.25% for 5 years??? What is the likely risk? Comments please.

April 30, 2017
8:57 am
Top It Up
Member
Members (temp break)
Forum Posts: 1363
Member Since:
December 17, 2016
sp_UserOfflineSmall Offline

if dividends are declared is the catch (actually, there are a lot of catches to this offering . proceed with caution) ... from the Meridian website

What is the dividend rate?

The Board of Directors has passed a resolution setting a minimum annual dividend rate of 4.25% for the first 5 years (if dividends are declared), prorated for the first year of issuance. The dividend rate is subject to change after the initial 5 years, as outlined within the Offering Statement, and each five years thereafter. Dividends (taxed as interest) are not guaranteed to be declared annually and are non-cumulative.

https://www.meridiancu.ca/personal-banking/ClassA/default.aspx

https://www.meridiancu.ca/Meridian/media/images/PDFs/Meridian-OS-Series-17-Investment-Share-Offering-Statement.pdf

April 30, 2017
9:07 am
JustMe2016
Member
Members
Forum Posts: 129
Member Since:
October 21, 2016
sp_UserOfflineSmall Offline

IIRC when I read the fine print some time ago, liquidity could also be an issue when you'll wish to sell your 'shares'. They are not true 'shares'. The name is symbolic (like a gimmick).

ALWAYS read ALL the fine print.

April 30, 2017
9:13 am
rhvic
Victoria, BC
Member
Members
Forum Posts: 493
Member Since:
May 28, 2013
sp_UserOfflineSmall Offline

No thanks, not for me. These look a bit like preferred shares such as one finds on the open market, except that these do not trade on any market and can only be redeemed through Meridian. One has to hold them for 5 years and after that can only redeem 10% of them each year, or trade them to another member if Meridian can find such a buyer. I also do not see what the 'fixed redemption value' is, hence no guarantee one gets the original principle back.

Perhaps better off with normal bank preferred shares on the TSX.

April 30, 2017
12:18 pm
Jon
Member
Members
Forum Posts: 435
Member Since:
August 9, 2014
sp_UserOfflineSmall Offline

rhvic said
These look a bit like preferred shares such as one finds on the open market, except that these do not trade on any market and can only be redeemed through Meridian.  

I agree with you and because preferred share that are non-cumulative is consider tier 1 capital. Perpheps Alterna is expanding their business.

Anyway, preferred share is generally a bad investment because during bad times, they are very volatile and lost value quickly, just like common share, but it does not share the up side when things are good.

April 30, 2017
12:58 pm
Top It Up
Member
Members (temp break)
Forum Posts: 1363
Member Since:
December 17, 2016
sp_UserOfflineSmall Offline

Jon said

Anyway, preferred share is generally a bad investment ...  

Really . I've had 5,000 5.1% non-cum preferred shares sitting in my RRSP for a long, long time - pretty damned happy with that return.

April 30, 2017
1:15 pm
Jon
Member
Members
Forum Posts: 435
Member Since:
August 9, 2014
sp_UserOfflineSmall Offline

It is overly focus in the field of finance, and is more junior than all other creditor. It didn't share the up side and only share the down side with common stock. Not to mention that preferred share have no maturity, implying it will lost large chunk of its value when interest rate increase as increase interest rate increase yield.

I still believe junk bond or REITS or utility and consumer-stable common stocks is better if a person want yield.

That being said, bank in the State is acturally fairly stable right now as all the garbage is being claen out after 2008. At the same time, personal debt in the State is also much lower than Canada.

April 30, 2017
1:30 pm
Top It Up
Member
Members (temp break)
Forum Posts: 1363
Member Since:
December 17, 2016
sp_UserOfflineSmall Offline

Hmmm .... when's the last time we saw 5.0% GIC rates in Canada and what's your crystal ball say about when we might see them again ... and in between that period I've been earning 5.1%.

April 30, 2017
1:39 pm
Jon
Member
Members
Forum Posts: 435
Member Since:
August 9, 2014
sp_UserOfflineSmall Offline

Top It Up said
Hmmm .... when's the last time we saw 5.0% GIC rates in Canada and what's your crystal ball say about when we might see them again ... and in between that period I've been earning 5.1%.  

I also have some up until 2 years ago, which I buy around 2009/2010 due to the good rate. But in my opinion, it maybe a good move to sell now as interest is moving up globally, or at least QE is going to stop soon.

April 30, 2017
3:21 pm
Top It Up
Member
Members (temp break)
Forum Posts: 1363
Member Since:
December 17, 2016
sp_UserOfflineSmall Offline

I'm not convinced we'll see any strenghtening in interest rates anytime soon. Reason being ... I'm not convinced the BoC has any understanding of the impact of rising interest rates on personal consumer debt or the ability of homeowners to absorb rising mortgage rates.

May 2, 2017
8:02 pm
Jon
Member
Members
Forum Posts: 435
Member Since:
August 9, 2014
sp_UserOfflineSmall Offline

Top It Up said
I'm not convinced we'll see any strenghtening in interest rates anytime soon. Reason being ... I'm not convinced the BoC has any understanding of the impact of rising interest rates on personal consumer debt or the ability of homeowners to absorb rising mortgage rates.  

Top it up, if the situation with HCG is actually a precursor of what happen with the financial system of Canada, your preferred share is going to lost a lot of value very quickly, not to mention it will also not payout any dividend as banks need every penny to beef up its capital requirement, as dividend is not mandatory, unlike interest from bonds (assume your preferred share is from Canada).

Sum up, when to economy improve, your preferred share lost value, when shit hit the fan, your prefered share will also lose value. It really is only good right after a crisis, like the time I buy. (assuming the preferred share you buy is not convertible to common share)

May 3, 2017
12:06 am
Top It Up
Member
Members (temp break)
Forum Posts: 1363
Member Since:
December 17, 2016
sp_UserOfflineSmall Offline

Yeah, I'm not into doomsday, catastrophic, or Armageddon scenarios. BUT, were the sky to fall as you suggest, I and everyone else will have a whole lot more and, a whole lot less, to deal with.

May 3, 2017
1:17 pm
Doug
British Columbia, Canada
Member
Members
Forum Posts: 4275
Member Since:
December 12, 2009
sp_UserOfflineSmall Offline

Top It Up said
if dividends are declared is the catch (actually, there are a lot of catches to this offering . proceed with caution) ... from the Meridian website

What is the dividend rate?

The Board of Directors has passed a resolution setting a minimum annual dividend rate of 4.25% for the first 5 years (if dividends are declared), prorated for the first year of issuance. The dividend rate is subject to change after the initial 5 years, as outlined within the Offering Statement, and each five years thereafter. Dividends (taxed as interest) are not guaranteed to be declared annually and are non-cumulative.

https://www.meridiancu.ca/personal-banking/ClassA/default.aspx

https://www.meridiancu.ca/Meridian/media/images/PDFs/Meridian-OS-Series-17-Investment-Share-Offering-Statement.pdf  

That's just a legal statement - what they've said they have every intention of declaring a quarterly dividend for the first five years. I'd say you could be reasonably certain they'll maintain that policy, much the same as the "Big 5" banks maintain their quarterly dividends, unless some catastrophic domestic or global financial calamity event occurred. 🙂

I'm confident dividends will be paid. The only issue here is liquidity, as earlier comments highlighted. If you don't need to touch the principal for at least 5-10 years, I'd say it's a fairly conservative investment and you are guaranteed to get back the "par value" of your investment shares once you make a redemption request after 5 years - the Board just may limit the frequency of your redemptions. Prior to 5 years, they'll try and arrange another buyer for your investment shares but make no guarantees.

They're like preferred shares, yes, but without the volatility (and liquidity) of the secondary market.

And, preferred shares do act like bonds when stock markets rise and like stocks, with a bit less severe volatility, when markets fall so, in that sense, they're not negatively correlated and not good "bond proxies". However, you are promised a regular income stream and, so long as you have enough liquid cash available to pay taxes owed upon your death, even if they're trading below their "par value" upon your death, you could possibly direct your Executor not to sell the shares and to let them continue in perpetuity, either in a trust, or by requesting that your beneficiaries do not sell them until they're "above water". 🙂

Cheers,
Doug

May 3, 2017
1:59 pm
Loonie
Member
Members
Forum Posts: 9391
Member Since:
October 21, 2013
sp_UserOfflineSmall Offline

Be sure you don't open an RIF to put them in.
You need something in the RIF that you can predictably draw from in order to meet mandatory withdrawals.
I say this because someone at Meridian recommended them to me for a small LIF where he knew it would be the only investment.

May 3, 2017
6:24 pm
Doug
British Columbia, Canada
Member
Members
Forum Posts: 4275
Member Since:
December 12, 2009
sp_UserOfflineSmall Offline

Loonie said
Be sure you don't open an RIF to put them in.
You need something in the RIF that you can predictably draw from in order to meet mandatory withdrawals.
I say this because someone at Meridian recommended them to me for a small LIF where he knew it would be the only investment.  

That's potentially a good idea, Loonie. Thanks for that! I'd probably say a TFSA would be the best place to park these investment shares, with the higher-than-usual recurring quarterly income that's likely taxed as "interest income," not eligible or non-eligible dividends. Other than that, potentially, as a non-registered investment as there'd be no capital gains upon disposition since you simply get back the "par value" for the shares. 🙂

The only way a RIF investment might make sense is as part of an overall RIF portfolio that returns at least several percent above the required minimum RIF withdrawal.

Fortunately, for me anyway, the RIF is at least 37 years away. 😉

I wonder what the deadline is to buy these investment shares?

Cheers,
Doug

May 3, 2017
7:01 pm
Loonie
Member
Members
Forum Posts: 9391
Member Since:
October 21, 2013
sp_UserOfflineSmall Offline

I don't think there is a deadline per se. They will stop selling them when they've raised the capital they want.

I think that, no matter which part of your portfolio you put them in, you need to look at the ultimate purpose for these funds. They could be locked up for a long time. I agree, best for TFSA and non-reg'd, as an income stream. Most people will be able to keep ahead of inflation and taxes with an income stream at this rate. In that sense, they are indeed a lot like bank stocks.

March 16, 2019
3:10 pm
Doug
British Columbia, Canada
Member
Members
Forum Posts: 4275
Member Since:
December 12, 2009
sp_UserOfflineSmall Offline

I noticed Meridian still has this offering up. Does anyone know if they're still selling investment shares?

Regarding your post above, Loonie, on the mandatory minimum RIF withdrawals, I wonder if there's a CRA election form that lets you take out the minimum RIF withdrawal from one plan to satisfy the RIF withdrawal requirements for both?

Example: Client had a Meridian investment share RIF and a RIF with Bank of Nova Scotia (thru its trust company subsidiary as trustee), if the minimum annual withdrawal was 4.05% for each plan, I wonder if there's a CRA election form you could complete, each year, to state you are withdrawing 8.10% from your BNS RIF to satisfy the requirements for the Meridian and BNS RIFs. If not, novel idea? 😉

Cheers,
Doug

March 16, 2019
9:54 pm
Loonie
Member
Members
Forum Posts: 9391
Member Since:
October 21, 2013
sp_UserOfflineSmall Offline

this may be a new issue, Doug. I haven't seen the ad.

No, it's not possible to do as you suggest. Each FI must take out the mandatory minimum, although they have some flexibility about where it comes from if you have more than one investment. Thus, a brokerage account will give the most flexibility.

March 17, 2019
10:13 am
Doug
British Columbia, Canada
Member
Members
Forum Posts: 4275
Member Since:
December 12, 2009
sp_UserOfflineSmall Offline

Loonie said
this may be a new issue, Doug. I haven't seen the ad.

No, it's not possible to do as you suggest. Each FI must take out the mandatory minimum, although they have some flexibility about where it comes from if you have more than one investment. Thus, a brokerage account will give the most flexibility.  

Yeah, I didn't think so, having worked for HSBC Bank Canada; however, since I didn't deal with RRIFs that often (we couldn't even look customers' RRIFs, since they weren't "in" our banking system - only in monthly generated RRIF reports by branch; they may have fixed this, though, as I see HSBC Bank Canada RRIFs can qualify for HSBC Advance and HSBC Premier), but thought I'd check since I know you have RRIFs. Agree with you that a brokerage account offers the most flexibility to, say, sell your HISA funds or money market funds before stocks or terminate GICs). Deposit broker held GICs and HISAs would likely offer the next most flexibility, mind you...how does that work with RRIFs? I guess your deposit broker technically needs to establish separate RRIFs with each institution, unless it's a credit union which might all share the same Concentra Trust or Concentra Bank plan registration?

I will try e-mailing Meridian and follow up here when I can. In the mean time, is anyone aware of any credit union investment or preference share sales programs? I see Casera has one, but they haven't specified what the indicated dividend rate would be. I suppose I could just purchase additional Sunova shares next time Hubert has a temporary program that lets you buy more than 200 x $5.00 shares ($1000).

Cheers,
Doug

March 17, 2019
10:40 am
Doug
British Columbia, Canada
Member
Members
Forum Posts: 4275
Member Since:
December 12, 2009
sp_UserOfflineSmall Offline

Update: I called Meridian's Contact Centre and spoke with Elena, one of their Contact Centre Representatives, who looked into whether this offer was still ongoing. She advised that, although it was brought back in 2017 and/or 2018, it's currently not on offer. I let her know the URL of the page, which she said she'd pass on to the appropriate team member(s). sf-cool

Interestingly, she did add that, from what she's aware, there's almost always a waiting list for their investment share offerings. She advised going to a Meridian branch and speaking with an Advisor to be put on the waiting list, if you live in Ontario and near a branch. Otherwise, if you're like me and live in another province, she advised to call back during regular business hours (i.e., 8 am to 5 pm Eastern time) Monday to Saturday and speak with an Advisor at the Contact Centre, who can also put you on the waiting list. So, it's good to know their investment share offerings are typically over-subscribed. sf-cool

Cheers,
Doug

No permission to create posts

Please write your comments in the forum.