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No GIC interest at Oaken for February 29
March 1, 2020
11:16 am
rodeworthy
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"Interesting" to note that Oaken has not paid out interest to GIC holdings for February 29, 2020. It is Oaken's practice to add interest to GIC balances on a daily basis.

My experience is GIC interest has been applied every day except the omission for the leap year day. I have no idea what algorithm they use to calculate interest.

It probably all works out at the time of maturity but it is an unusual occurance for this unusual day. A day that does not exist?

March 1, 2020
4:48 pm
Norman1
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rodeworthy said

My experience is GIC interest has been applied every day except the omission for the leap year day. I have no idea what algorithm they use to calculate interest.

GIC's usually compound yearly. Interest is added to the GIC on each anniversary.

If the rate is 3% per annum, then, each anniversary, 3% of the balance on the previous anniversary is the interest added to the GIC balance. The exact number of days since the previous anniversary doesn't matter.

It seems to be like monthly rent or monthly condo fees. Rent and condo fees are quoted as a monthly rate and are the same each month, in spite of the fact that the days each month varies from 28 days to 31 days.

March 2, 2020
2:28 am
rodeworthy
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Norman1 said
GIC's usually compound yearly. Interest is added to the GIC on each anniversary.

Norman, I agree but there is nothing usual about the way Oaken applies interest to GICs. Cash accounts show interest accrued monthly which is normal. But GICs are different.

Non-registered GICs, at inception, are provided with the anticipated yield at maturity.
Registered GICs do not get this advance expectation of the yield.

Posted GIC balances change daily (7 days a week) which reflect the interest earned for the previous day. At maturity, they do add up to the pre-determined yield, in my experience.

I like to track my investments so that my balances agree with the FI's balances. If you can't beat them, join them so I undertook to create a spreadsheet that requires input of the daily balances and then a script I wrote applies the daily interest to each GIC. It works very well. Downside is - Oaken does not provide balances in a way they can be electronically extracted so it involves manually keying in those numbers. Takes a few minutes each day, but satisfies my innate need for detailed records. My bad on that part.

Obviously, Oaken's algorithm uses a 365 day year. So Feb. 29 is just by-passed. It works, so no problem. Just another quirk in our management of funds.

March 2, 2020
5:16 am
Bill
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When they loan out your GIC money as mortgages do you think they charge interest for Feb 29?

March 2, 2020
5:35 am
AlainJF
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rodeworthy said
"Interesting" to note that Oaken has not paid out interest to GIC holdings for February 29, 2020. It is Oaken's practice to add interest to GIC balances on a daily basis.

My experience is GIC interest has been applied every day except the omission for the leap year day. I have no idea what algorithm they use to calculate interest.

It probably all works out at the time of maturity but it is an unusual occurance for this unusual day. A day that does not exist?  

Hi rodeworthy,

I have notice the same thing, but I believe that it is because their daily equivalent rate (displayed for convenience) is based on a 365 days year. Consequently, they have to remove one day in 2020 to come to the annual rate at term. As you wrote in your last sentence, it believe also that it will be fine at the time of maturity, based on the number of remaining days until maturity and the daily equivalent rate in use (365 days based).

March 2, 2020
5:49 am
Bud
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What should the total interest compounded be on a $250,000 gic issued Feb 27 2020 maturing in 18mths at the end of the term Aug 26 2021 rate of 2.3?

thanks

March 2, 2020
8:18 am
ReX
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at 2.60%
$9,788.82

March 2, 2020
8:33 am
lhsaid
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Bud said
What should the total interest compounded be on a $250,000 gic issued Feb 27 2020 maturing in 18mths at the end of the term Aug 26 2021 rate of 2.3?

thanks  

First 12 months: ($250000/100)*2.30=$5750.00
Last 6 months: (($250000+$5750.00)/100)*2.30/2=$2941.13
Total Interest: ($5750.00+$2941.13)=$8691.13

March 2, 2020
9:02 am
ReX
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lhsaid said

First 12 months: ($250000/100)*2.30=$5750.00
Last 6 months: (($250000+$5750.00)/100)*2.30/2=$2941.13
Total Interest: ($5750.00+$2941.13)=$8691.13  

It is actually first year interest(365 days)+180 days interest and not yr/2
Bud has not indicated the interest rate in his original post so I verified rates at Oaken to be 2.60% for 18mths.
It appears the original post has now been edited to show 2.3%.

March 2, 2020
8:59 pm
Bud
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lhsaid said

First 12 months: ($250000/100)*2.30=$5750.00
Last 6 months: (($250000+$5750.00)/100)*2.30/2=$2941.13
Total Interest: ($5750.00+$2941.13)=$8691.13  

Right what I got but Td is showing $8650.84 why u think? They claim no commission it's the way their computer calculated.

March 2, 2020
9:50 pm
ReX
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Bud said

Right what I got but Td is showing $8650.84 why u think? They claim no commission it's the way their computer calculated.  

You must've missed my clue...

First 365 days... $5,750.00
Add 180 days.... $2,900.835
Total.................$8,650.835 sf-surprised

March 3, 2020
7:25 am
Bud
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clue?

March 3, 2020
10:58 am
ReX
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Bud said
clue?  

post #10
it's in bold

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