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At what long-term rates would you commit the bulk of your portfolio to fixed income
June 12, 2023
9:35 pm
NCC1701Z
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hayman said
NCC1 I’m a rookie fixed asset investor, what 5% 10 year bonds specifically are you referring to and what is the cheapest way to buy them? Kind regards/Matt Hayman  

Not bonds but GIC's (7yrs) at Accelerate and Motive (10yrs)

June 14, 2023
9:50 am
RetirEd
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AltaRed: Thanks for that link - but it leaves us to do the analysis ourselves, and I am unsure how to do that. In the general terms of which we speak (not just GIC vs stocks) there's still no clear consistent winner between fixed returns and equities.
RetirEd

RetirEd

June 14, 2023
5:44 pm
hayman
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Thank you! I am getting BMO to match at 5.1% paid monthly, appreciate the comparable with Motive. My main reasoning is that I think there are huge demographic head winds 10 years out for Real Estate and that’s all I know. I believe the market is about 50% long no matter what money but there are huge potential problems on the horizon, again credit is more important then cash in my opinion interest rates will go lower with unemployment going higher. These rates are great, I am 42 and want to focus on my health and young daughter, survive until 2025, remortgage one home and buy 10. I am 50% Real Estate and 50% GICS. Kind regards

June 17, 2023
3:41 pm
dougjp
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Dean said

I hear ya, Loonie

Call me Crazy, call me Stupid ... but for my own reasons, I'm presently restricting myself to locking in for no more than a 'Max' of 2 years.

Come two years from now, will I regret it ❓

I'll letcha know. sf-wink

    Dean

  

Even crazier (and sooner to let you know), I went to laddering GICs over 6 months ago with my non-stock market funds, with a maximum 1 year term (18 month in the latest Tang rate, for a small amount). GICs are now 84% of total cash, with 98% due at numerous times in less than 12 months. The balance of funds are in either a HISA @ promo rate or DYN6000. A HISA isn't that important any more with frequent GIC maturities to access funds from if needed.

" We may never pass this way again " - Seals & Crofts

June 17, 2023
4:42 pm
Loonie
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My longest are 3 years, but most of the 3 year GICs were bought 2 years ago when I was doing a five year ladder.
I am disproportionately weighted in one-years.
For the rest of this year, I won't buy anything longer than 2 years max. And I have significant cash, which will remain accessible.
This is about all I can stomach right now, given the state of the world and my age!
I remain concerned about USD and CDN$ future purchasing power but don't know that anything else would be more reliable.

June 17, 2023
4:46 pm
Pewter
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I have TFSA and non registered pretty much equal on 5 yea ladders.

I use a lot of 1 year GICs at Hubert instead of savings Account. They are quite handy.

June 17, 2023
5:02 pm
NCC1701Z
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We now have the highest GIC rates in decades. Why would you not go beyond 3 years? Especially in retirement with a short timeframe.
Odds are the rates will be lower in the near future.

June 17, 2023
5:19 pm
HermanH
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NCC1701Z said
Odds are the rates will be lower in the near future.  

Why do you believe that?

June 17, 2023
7:56 pm
Loonie
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Just because rates are higher now than they have been in recent years doesn't mean they can't or won't go higher. I remember when rates were 20%+.

I'm 76. I like to keep my money handy. I might want to spend it!

Inflation is proving very difficult to tame. At first we were told by BoC that it was "temporary". Remember? I wrote then on this forum that I didn't think it was temporary.

The effects of climate change and global political instability will mean life will become more expensive by increasingly large margins. These massive changes are already happening faster than we expected.
Only a few months ago, inflation was declared to be dying and rates were said to have peaked. Now, we have clear rate inversion, which usually means that short is better.

You don't have to agree, but this is my view at this time.

June 17, 2023
10:50 pm
NCC1701Z
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What the heck are you going to spend a large amount of money on at 76? I'm assuming this is not RRIF money because that has to be withdrawn in a controlled fashion due to tax rates.

Just a couple months ago you were advocating annuities that lock in rates forever.

I don't know, maybe the rates will continue or even rise but the long term bonds are still around
4%

I don't think it matters much at our age with a shorter term investment horizon.

June 17, 2023
11:40 pm
Loonie
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I can think of lots of things I might do with the money, but we all have different circumstances and understandings of what the future is likely to bring.
.

As I've said before, I believe everyone should have a clear and informed understanding of why annuities are or are not suitable for them.

June 18, 2023
5:07 am
savemoresaveoften
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@loonie, I agree totally age should not be a factor when it comes to making big purchases etc, it’s one’s own money after all.
However it seems like you are also trying to maximize your interest income, to try to time to capture higher rates. Since you mention you are 76, isn’t trying to time the market to capture the highest rate a bit unnecessary ?

June 18, 2023
7:42 am
UkrainianDude
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Loonie said
Just because rates are higher now than they have been in recent years doesn't mean they can't or won't go higher. I remember when rates were 20%+.

I'm 76. I like to keep my money handy. I might want to spend it!

You don't have to agree, but this is my view at this time.  

I would like to know how much debt population had during 20% interest rates vs now.
This is reminiscent of summer 2007 to me.

June 18, 2023
12:15 pm
NCC1701Z
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I had a 14% ~50k mortgage in 81-82. My neighbours was 21% on a 100k!!! The BC government rebated the difference down to 12% I think. Anyways the high rates only lasted a couple years.

It's very different today with 1M mortgages. Can you imagine 20% of 1M, everyone would be defaulting!

I'm pretty sure debt is much higher today with the low rates we've had for decades

June 18, 2023
2:27 pm
Loonie
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savemoresaveoften said

However it seems like you are also trying to maximize your interest income, to try to time to capture higher rates. Since you mention you are 76, isn’t trying to time the market to capture the highest rate a bit unnecessary ?  

I think it depends on the individual. I could have another 25 to 35 years ahead of me if genes were the deciding factor. Who knows? I have to be prepared for the possibility that I might not make it to 80 but also that I might survive well past 100. It's not much different than being 40.

I enjoy getting a good bang for my buck. It's fun, even if I never use or need all the money.
I am using deposit brokers more frequently now. I find it easy and efficient. I keep most of my cash in accounts that have companion chequing, for quick access. The broker sends a courier to pick up my cheque.

My concessions to older age are to reduce use of FIs that don't offer chequing, reduce length of ladder, and to funnel more money through deposit broker. Works for me, but always subject to change if I get a better idea.

I don't give a lot of thought to timing the market. I just look for choices that meet my other criteria. But this doesn't mean I'm not interested in market trends or alert to protecting my assets.

There is no one answer that suits everyone.

June 18, 2023
4:22 pm
NCC1701Z
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"The broker sends a courier to pick up my cheque."

Why would you need a cheque?

June 18, 2023
5:16 pm
Loonie
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NCC1701Z said
"The broker sends a courier to pick up my cheque."

Why would you need a cheque?  

The deposit broker requires payment by cheque. They are not a bank and don't hold our money. I think they then deposit the cheque in the account of the issuer.

June 18, 2023
6:11 pm
fat_dog
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I do not know about “ don't hold our money. “
I was at the office of gic direct in winnipeg trying to buy a gic from MACAN . and they were telling me I had to make the cheque payable
to gic direct . when I asked what they would do with the cheque . I was told gic direct would cash in an account they had at C.I.B.C bank
and in a few day they would buy the G.I.C. from macan

so g.i.c direct was going to hold the money .

and the cheque was going to be payable to G.I.C. DIRECT

June 18, 2023
9:40 pm
Loonie
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fat_dog said
I do not know about “ don't hold our money. “
I was at the office of gic direct in winnipeg trying to buy a gic from MACAN . and they were telling me I had to make the cheque payable
to gic direct . when I asked what they would do with the cheque . I was told gic direct would cash in an account they had at C.I.B.C bank
and in a few day they would buy the G.I.C. from macan

so g.i.c direct was going to hold the money .

and the cheque was going to be payable to G.I.C. DIRECT  

I have dealt with 2 deposit brokers over the years. My cheques are always written to either the issuer or myself, and there have been no problems. I have NEVER been asked to write a cheque to the broker. Without solid corroboration, I don't find your story credible.

June 18, 2023
11:20 pm
fat_dog
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Ok then

GIC direct in Winnipeg were I live . Are sold out of a small insurance agency just down
the street for Shaw cable in an industrial park the office consists of one secretary and one guy in a fancy suit . White guy clean shaven only met him once . Do not renumber his name .
On the glasses door of the office their is the symbol for iroc .

And if you do not believe me phone the Winnipeg office and ask them .

I was as shocked as you are that this was how it was going to go down and did not buy the G.I.C and have not returned . When I was in the office he phoned and checked to see if I could make the cheque payable to macan and was told no .

Then he gave me some good advice . And said if you are uncomfortable not writing the cheque to macan and right it to gic direct . Do not do it . And I left

So from this you know were the offices the striker on the door the place in an industrial strip
the general look of the guy selling it . And I invite you to phone him and ask

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