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Long term GICs
September 10, 2020
6:35 am
unforgettableid
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Norman1 said
... Valiant Trust Company ...

They don't take deposits. (Source.)

September 10, 2020
6:37 am
unforgettableid
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dentgal said
Does anyone know if Motive has a separate arm to allow for double the CDIC protection? ... I have not dealt with Motive.

I'm not sure. If you phone them and find out, please let us know.

They do seem to always answer phone calls right away. I don't think I've ever waited on hold to talk with Motive.

dentgal said
I'm maxed at Oaken, EQ, People's Trust, etc.

If this is the case, and if you don't own any investments at all:

  • Depending on your age and life situation, it might (or might not) be wise for you to invest in some low- to moderate-risk index mutual funds or ETFs.
  • Even if you put just 10% of your net worth into some index mutual funds or ETFs, this (or might not) be beneficial for you.
  • Remember that investments sometimes do drop in value — sometimes precipitously. Overall, in my experience, my investments have (thankfully) done well in most years.

If you decide not to buy any investments:

  • You might want to consider becoming a customer of a Manitoba credit union. The DGCM claims: "All deposits in any Manitoba credit union or caisse populaire are guaranteed, without limit". I don't know for sure how solid this guarantee is, but I suspect it's quite solid. There's a relevant thread here.
September 10, 2020
11:39 am
Rick
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unforgettableid said

dentgal said
Does anyone know if Motive has a separate arm to allow for double the CDIC protection? ... I have not dealt with Motive.

I'm not sure. If you phone them and find out, please let us know.

They do seem to always answer phone calls right away. I don't think I've ever waited on hold to talk with Motive.

Answered (no)...see post 18

September 10, 2020
12:53 pm
unforgettableid
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Rick said
Answered (no)...see post 18  

Ah; okay.

On the other hand, Motive's owners could change their mind, if they wanted. Those two trust companies already exist. If Motive's owners told them to start accepting deposits from Motive customers, perhaps they could start doing so.

So I think it still might be worth calling Motive and suggesting the idea.

September 10, 2020
12:58 pm
unforgettableid
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unforgettableid said

dentgal said
I'm maxed at Oaken, EQ, People's Trust, etc.

Even if you put just 10% of your net worth into some index mutual funds or ETFs, this (or might not) be beneficial for you.

Or, if you just want to dip your toe into the waters, you could invest much less. You could try investing only a tiny sliver of your net worth (e.g. $500⁠–⁠$1000) for just a year or two.

September 10, 2020
3:09 pm
Loonie
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I don't think there is much point in putting a tiny amount into a fund. Even if it does very well, you won't have made a significant impact on your net worth - and it might not.
In order for it to be worth doing, it needs to be at least 5% of your money in a well diversified fund. If you can't stomach the risk in that, then don't do it.

September 13, 2020
11:24 pm
unforgettableid
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Loonie, I respectfully disagree.

Investing a tiny amount of money into a fund can help a person to learn and internalize an important lesson. This lesson is: after the markets fall, they seem to always bounce back.

Some people can't stomach investing 5% of their net worth. For these people, 1% or 0.5% might be wiser, and can help them to develop a stronger stomach.

September 14, 2020
3:03 am
Rick
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Loonie said
I don't think there is much point in putting a tiny amount into a fund. Even if it does very well, you won't have made a significant impact on your net worth - and it might not.
In order for it to be worth doing, it needs to be at least 5% of your money in a well diversified fund. If you can't stomach the risk in that, then don't do it.  

I guess the point would be to balance out the interest rate by buying, what...52 $1000 GICs instead of 1 $52,000 GIC. I just don't want to keep track of dozens of little GICs spread all over the place.

September 14, 2020
3:28 am
Loonie
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unforgettableid said
Loonie, I respectfully disagree.

Investing a tiny amount of money into a fund can help a person to learn and internalize an important lesson. This lesson is: after the markets fall, they seem to always bounce back.

Some people can't stomach investing 5% of their net worth. For these people, 1% or 0.5% might be wiser, and can help them to develop a stronger stomach.  

Yes, I am aware of this, and I don't deny it.

The problem comes when and if, as they keep increasing their investment, they become convinced that they can't lose. Or they discover, during a downturn, that their stomach lining is not as thick as they thought, and they sell off at a bad time. Happens all the time.

My point is that a decision to invest this way and learning how to do it best is not a matter of getting our feet wet and getting used to the temperature and then deciding to get in deeper. It's not about desensitizing oneself, quite the contrary. It's about having a thorough understanding of risk and return. There is no law that says that because an investment has bounced back in the past, that it must do so again, ever, or in time for you to benefit. I hope things go well, because stability is easier to live with than chaos, but it's not guaranteed. As soon as I hear anyone suggest that an excellent track record is essentially a promise of future success, because success is seen as a predictor of success, all my red flags start waving.

September 14, 2020
8:54 am
gicjunkie
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If you are the type of person who needs assurances/guaranties from an advisor or investment company about the profitability of a fund or stock prior to investing, you probably cannot stomach the risk. Keep your money safe, even if it means limited returns. At least your principal will be preserved. Financial advisors will not agree with you, but you will sleep better. I have been listening to pitches from our home bank manager and everyone else in the financial businesses we deal with about diversifying. We have a need to keep our money safe and have occasionally politely listened, but ignored the pitches..

As a senior, I cannot afford to lose our principal, so I take the conservative approach. In today's low interest climate, that is tough to take, but it is safer. At some point rates will begin to increase again.

Also, one must be aware that there are FIs out there who, when they have a momentary need for funds, will offer a more decent rate of return on a "special" GIC. Just be prepared to grab it if you can.

September 14, 2020
11:12 am
Alexandra
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I too am a senior and fortunately have enough finances to live out the rest of my life fairly comfortably.

It is fun for me to look around for best interest rates etc. on GICs. I like it too that I totally use the banks and credit cards without paying them a dime in interest and carrying costs!! Except for a mortgage when I was in my 20's and early 30's, I never have. The exception being for an investment in a rental property.

I agree with others that it would be wise to invest say between 1-10% of your portfolio in stock market/mutual funds and the like just to get your feet wet and learn more about the ins and outs of investing.

But when you get a certain age, and you know you are safe albeit really bored with the low interest rates, maybe it is best for you (and your spouses) to just live with that knowledge and not go through the anxiety and sleepless nights over any kind of financial risk.

As I have said before.......it gets to a point at my age ....if I play it safe my grandchild will for sure get "X" amount of dollars at the time of my death. If I risk investments.......she will either get more or less than that. So it is just a matter really of how much my "estate" will be worth.

I would rather know I can be frivolous once and awhile with purchases or holidayssf-cool and not have to think I might regret it after I have lost in the stock market. I don't need to win anymore..........I just don't want to lose!!

September 25, 2020
10:44 am
Alexandra
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I think I am going to bite the bullet today and send some funds to my Motive Financial HISA and then purchase a 10yr term GIC at 2.5% with interest paid out annually. I called them yesterday and as long as you are 65 yrs old, you can do this. However you must phone them with that instruction once the funds arrive in the DISA.

Doing this just to even things out. I may even do this next year with my TFSA GIC's if the rate is still decent. I'll let that compound though ..... I guess.

Has anyone here did a "practice investing account" with RBC? They give you $100K free money and you can do pretend investments. Might be fun just to see how much one could have made in a certain period if they had used their own moneysf-laugh

September 25, 2020
11:32 am
topgun
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Alexandra said
I think I am going to bite the bullet today and send some funds to my Motive Financial HISA and then purchase a 10yr term GIC at 2.5% with interest paid out annually. I called them yesterday and as long as you are 65 yrs old, you can do this. However you must phone them with that instruction once the funds arrive in the DISA.

Doing this just to even things out. I may even do this next year with my TFSA GIC's if the rate is still decent. I'll let that compound though ..... I guess.

Has anyone here did a "practice investing account" with RBC? They give you $100K free money and you can do pretend investments. Might be fun just to see how much one could have made in a certain period if they had used their own moneysf-laugh  

I did a "practice investing account" with Scotia iTrade. They also give you 100K free money for pretend investments. Good whether you are a beginner or expert. Cannot setup dividend reinvestment with dividends. You need a live account for that.

10 year GIC's not sure when you should stop that long a term. My FI does not offer more than 5 years. Maybe up to 10% of your GIC's would be fine in 10 year.

Have a Great Day

September 25, 2020
12:29 pm
hwyc
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Alexandra said in #4
I was just looking yesterday at the Motive 10/9/8/ yr GIC rates as well.

... if you wanted, you can get paid monthly (at Motive anyway) if you are over 65.

Hear you made a descision to bite the bullet in #32. However, on Motive website, it says GICs with a term of at least 12 months, customers over the age of 57 also have the option of having interest paid monthly into a Motive Savings account. ... here's also looking at the TFSA GICs w/monthly paid. In such low interest rate environment, earning interest tax free matters.

September 25, 2020
1:32 pm
topgun
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hwyc said

Alexandra said in #4
I was just looking yesterday at the Motive 10/9/8/ yr GIC rates as well.

... if you wanted, you can get paid monthly (at Motive anyway) if you are over 65.

Hear you made a descision to bite the bullet in #32. However, on Motive website, it says GICs with a term of at least 12 months, customers over the age of 57 also have the option of having interest paid monthly into a Motive Savings account. ... here's also looking at the TFSA GICs w/monthly paid. In such low interest rate environment, earning interest tax free matters.  

I agree with you. GIC's within TFSA are better for tax reasons than non-registered GIC's. Interest payment frequency is unique to each individual. Have fun.

Have a Great Day

September 25, 2020
10:35 pm
Rick
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hwyc said
Hear you made a descision to bite the bullet in #32. However, on Motive website, it says GICs with a term of at least 12 months, customers over the age of 57 also have the option of having interest paid monthly into a Motive Savings account. ... here's also looking at the TFSA GICs w/monthly paid. In such low interest rate environment, earning interest tax free matters.  

My understanding is non-registered GICs ONLY that have the option to pay out monthly. TFSA GIC's have the option to cash out anytime @ 0% from start date, and choose between compounded interest or paid out annually. The RSPs are frozen until maturity.

September 26, 2020
4:59 am
topgun
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Rick said

My understanding is non-registered GICs ONLY that have the option to pay out monthly. TFSA GIC's have the option to cash out anytime @ 0% from start date, and choose between compounded interest or paid out annually. The RSPs are frozen until maturity.  

RIF GIC's withdrawals are interesting. Dec 31 determine how much is withdrawn the following year. The following year take proceeds from the GIC with the lowest interest rate. If not enough in that GIC pick the next GIC with the lowest interest rate. etc. Nothing wrong with creating a 10 year ladder in RIF. If you need additional funds remove the funds from the next maturing GIC.

Have a Great Day

September 26, 2020
9:10 am
hwyc
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Rick said in #36

Note taken, Rick. Here's continue searching for a FI willing to provide that option in the TFSA setup. ... just don't understand what motive got to lose by extending that from non-registered to TFSA, whereas the elders got everything to gain on the TFSA side.

September 26, 2020
2:53 pm
topgun
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hwyc said
Rick said in #36

Note taken, Rick. Here's continue searching for a FI willing to provide that option in the TFSA setup. ... just don't understand what motive got to lose by extending that from non-registered to TFSA, whereas the elders got everything to gain on the TFSA side.  

I checked my FI. When purchasing GIC in TFSA the interest is either compounded to maturity or paid annually. I will be purchasing a TFSA GIC sometime. I am happy with the available interest payment frequencies. Maybe you should wait until the TFSA savings account has enough cash to purchase longer term GIC's. Everyone is UNIQUE.

Have a Great Day

September 27, 2020
1:39 pm
Rick
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topgun said

RIF GIC's withdrawals are interesting. Dec 31 determine how much is withdrawn the following year. The following year take proceeds from the GIC with the lowest interest rate. If not enough in that GIC pick the next GIC with the lowest interest rate. etc. Nothing wrong with creating a 10 year ladder in RIF. If you need additional funds remove the funds from the next maturing GIC.  

Note that Motive DOESN'T offer RIF's. They have been telling me for years now that it is in their plan "eventually". Although, they say that they have set up RIFs for clients that are required to convert. When I asked, they said they did it through CWB. YMMV

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