Log In
Register
Home
Topic RSS
Facebook
Twitter
Email this4:24 pm
April 24, 2015
Offline
I'm busy making changes to our RRSP and RRIF accounts that we have with TD. Both are Direct Investment accounts, so it's up to me to make the decisions.
I want some of the funds to be in GICs, as a hedge against possible downward movement of bond mutual funds that I will also have. TD lists a bunch of GICs in WebBroker, but the interest rates are not very attractive. IIRC the best was Equitable at around 1.6% for 1 year. At rates like that, I might be better off buying higher interest GICs in nonregistered accounts and pay the full tax on them.
Or are there other ways to invest in high interest GICs inside these accounts?
I'm an advocate of simplicity, so might not be too keen on opening RRSP and RRIF accounts at the institutions like Accelerate and Luminus offering the high rates.
Words of wisdom appreciated.
4:40 pm
September 11, 2013
Offline
Not sure what the question is, because GICs in Direct Investment or other accounts usually pay about the same whether they're in a registered or an unregistered account. And if you move money from your registered to non-registered accounts you will have to pay tax on that income, so that would be an important consideration, I'd think. If you want to avail yourself of the (generally) higher rates offered by credit unions, that's a different matter, and you will likely have to transfer your accounts, registered or unregistered, there. But maybe you know this already..........?
6:46 pm
December 23, 2011
Offline
J
Archibald said
I'm busy making changes to our RRSP and RRIF accounts that we have with TD. Both are Direct Investment accounts, so it's up to me to make the decisions.
I want some of the funds to be in GICs, as a hedge against possible downward movement of bond mutual funds that I will also have. TD lists a bunch of GICs in WebBroker, but the interest rates are not very attractive. IIRC the best was Equitable at around 1.6% for 1 year. At rates like that, I might be better off buying higher interest GICs in nonregistered accounts and pay the full tax on them.
Or are there other ways to invest in high interest GICs inside these accounts?
I'm an advocate of simplicity, so might not be too keen on opening RRSP and RRIF accounts at the institutions like Accelerate and Luminus offering the high rates.
Words of wisdom appreciated.
Hi Archibald. Your 1.6 is exactly what I just got for a one year GIC rate with my adviser. He put it through Coast Capital and was .3 higher than if I walked in to Coast Capital. And also your brokerage like my adviser is making .25% from that transaction. So the question is....how do you get that extra .25%?
If you are self managing your funds you are saving on fees and should be wanting higher rates. I do believe the reason why some of the Manitoba CUs offer better rates......they don't deal with brokers or advisers and pass better rates direct to their clients. I know why you want to stay with one institution especially for controlling the mandatory RRIF payments. But keep in mind when it comes to RRIF...it is a percentage of the total and when dealing with more than one institution you will have to accept payments from each one. BUT if you want to manage how much you want, as long as you are meeting or exceeding the mandatory amount, you can have flexible options that will suit your needs. And here is what I would recommend.....you might have to deal with more than one institution....make sure the institution offers a RRIF GIC, and RRIF savings account, TFSA GIC and TFSA savings account...etc. having the savings account adds a lot of flexibility for you! Then either email (is better in black and white) or call them for what their withdrawal options are.
7:32 pm
April 24, 2015
Offline
Bill said
Not sure what the question is, because GICs in Direct Investment or other accounts usually pay about the same whether they're in a registered or an unregistered account. And if you move money from your registered to non-registered accounts you will have to pay tax on that income, so that would be an important consideration, I'd think. If you want to avail yourself of the (generally) higher rates offered by credit unions, that's a different matter, and you will likely have to transfer your accounts, registered or unregistered, there. But maybe you know this already..........?
Bill, my question is, how do I get those high GIC rates in my TD direct investment account. Peoples Trust is offering 2.25% for a 1 year GIC. But when I go online in my DI account, I don't see the PT GIC, nor the other high paying GICs. The best GIC I can get is about 1.6%.
For all I know, there are ways, but I'm new at this, and I sure don't know the ways.
It sounds like the answer to my question is, it can't be done in this framework.
7:43 pm
April 24, 2015
Offline
kanaka said
Hi Archibald. Your 1.6 is exactly what I just got for a one year GIC rate with my adviser. He put it through Coast Capital and was .3 higher than if I walked in to Coast Capital. And also your brokerage like my adviser is making .25% from that transaction. So the question is....how do you get that extra .25%?
If you are self managing your funds you are saving on fees and should be wanting higher rates. I do believe the reason why some of the Manitoba CUs offer better rates......they don't deal with brokers or advisers and pass better rates direct to their clients. I know why you want to stay with one institution especially for controlling the mandatory RRIF payments. But keep in mind when it comes to RRIF...it is a percentage of the total and when dealing with more than one institution you will have to accept payments from each one. BUT if you want to manage how much you want, as long as you are meeting or exceeding the mandatory amount, you can have flexible options that will suit your needs. And here is what I would recommend.....you might have to deal with more than one institution....make sure the institution offers a RRIF GIC, and RRIF savings account, TFSA GIC and TFSA savings account...etc. having the savings account adds a lot of flexibility for you! Then either email (is better in black and white) or call them for what their withdrawal options are.
Thanks, kanaka.
I have no advisor, I have to make all the decisions myself.
Maybe I should work with one of those other institutions to get the better rates. However, I have found that opening accounts, etc with financial institutions is often way more complicated and time consuming than one at first expects. In the end, it is just a few bytes in a computer, and I don't know why it is so involved, but it is. So frankly I'm reluctant to change the registered accounts, even if there might be a reward of better rates.
If we are talking $10k and a difference of 1/2%, my gain is only fifty bucks before tax. OK, my stake is a bit more than that, but still not worth spending that much effort on for now.
It might be different for TSFAs. That's a separate matter and that will get my attention after I've dealt with the registered accounts.
7:56 pm
October 21, 2013
Offline
It think you've answered your own question. It's all about cost-benefit in the end. If the amount of money involved is big enough, you will probably find it worth your while to set up another account somewhere else. TD is never going to offer you the top rate available in the marketplace.
8:00 pm
October 27, 2013
Offline
I have investment accounts with 3 different discount brokerages and their GIC offerings are quite similar, with RBC DI having more issuers than either BMO IL or Scotia iTrade, but with the same rates. Does not matter whether registered or non-registered accounts. What a brokerage offers is going to depend on the relationship between the brokerage and the issuer, and ultimately the willingness of the issuer to pay the broker a trailer/commission.
You just are not going as high of rates as you can get from some of the CDIC insured online banks/trusts or credit untions. It comes down to a matter of choice whether one wants account proliferation or not (and I, for one, do not). C'est la vie.
As an aside, why the interest in a 1 year GIC unless you are wanting to have liquidity a year from now? For most folk, setting up a 5 year GIC ladder provides, as a minimum, one year liquidity based on 5 year rates when fully operational. Highest 5 year rates at the discount brokerages I use are 2.16% with Scotia iTrade having an outlier at 2.2%.
8:26 pm
December 23, 2011
Offline
Archibald said
Bill said
Not sure what the question is, because GICs in Direct Investment or other accounts usually pay about the same whether they're in a registered or an unregistered account. And if you move money from your registered to non-registered accounts you will have to pay tax on that income, so that would be an important consideration, I'd think. If you want to avail yourself of the (generally) higher rates offered by credit unions, that's a different matter, and you will likely have to transfer your accounts, registered or unregistered, there. But maybe you know this already..........?
Bill, my question is, how do I get those high GIC rates in my TD direct investment account. Peoples Trust is offering 2.25% for a 1 year GIC. But when I go online in my DI account, I don't see the PT GIC, nor the other high paying GICs. The best GIC I can get is about 1.6%.
For all I know, there are ways, but I'm new at this, and I sure don't know the ways.
It sounds like the answer to my question is, it can't be done in this framework.
I have iTRADE and their GIC rates are not a competitive as others for sure. What was trying to say before, not all institutions are prepared to give the intermediary a cut...ie PT gives the best rate to their client direct and simply does not do any business with a broker, advisor or discount brokerage. So you have to be flexible enough to deal direct and with more than one institution. And remember the old saying ...... take care of the nickels and dimes and the dollars will take care of themselves.
9:36 pm
April 24, 2015
Offline
AltaRed said
As an aside, why the interest in a 1 year GIC unless you are wanting to have liquidity a year from now? For most folk, setting up a 5 year GIC ladder provides, as a minimum, one year liquidity based on 5 year rates when fully operational. Highest 5 year rates at the discount brokerages I use are 2.16% with Scotia iTrade having an outlier at 2.2%.
Interest rates have got to start to increase, so if that happens, buying a 1 yr GIC sets me up to reinvest at a higher rate in a year.
I've been expecting this now for the last 10 years...
9:38 pm
April 24, 2015
Offline
I'm thinking I need to look at bond ETFs, maybe a nice short-term one, for my RRIF. I've never bought one of these, so are there any gotchas I need to know about?
10:03 pm
April 6, 2013
Offline
Archibald said
Bill, my question is, how do I get those high GIC rates in my TD direct investment account. Peoples Trust is offering 2.25% for a 1 year GIC. But when I go online in my DI account, I don't see the PT GIC, nor the other high paying GICs. The best GIC I can get is about 1.6%.
For all I know, there are ways, but I'm new at this, and I sure don't know the ways.
It sounds like the answer to my question is, it can't be done in this framework.
Peoples Trust is offering 2¼% for one-year GIC's. But, that's only offered to their direct clients. Their Today's Rates page has this note:
These rates are not applicable to agents. For agent rates please contact Peoples Trust Agent Services Department.
Keep in mind, the customary deposit brokerage commission charged for GIC's is around ¼% for each year of the GIC. So, it is not always possible to get the same direct rates through an intermediary like TD Waterhouse, who offer the TD Direct Investment accounts.
Peoples Trust GIC's are available from some discount brokers. BMO InvestorLine offers them. However, a one-year Peoples Trust GIC through BMO InvestorLine only pays 1.35%.
10:20 pm
April 6, 2013
Offline
Archibald said
I'm thinking I need to look at bond ETFs, maybe a nice short-term one, for my RRIF. I've never bought one of these, so are there any gotchas I need to know about?
Yes, there definitely are! See previous discussion How to keep money liquid yet have it grow?
My post #10 there explains why one's payout from a bond ETF is not actually what one's return will end up being.
1:43 am
October 21, 2013
Offline
Archibald said
I'm thinking I need to look at bond ETFs, maybe a nice short-term one, for my RRIF. I've never bought one of these, so are there any gotchas I need to know about?
Archibald said
I'm thinking I need to look at bond ETFs, maybe a nice short-term one, for my RRIF. I've never bought one of these, so are there any gotchas I need to know about?
ETFs don't come in terms unless perhaps you are talking about a market-linked fund.
Avoid them. Read Norman1's references.
If you want higher guaranteed returns, you will have to move the money somewhere else.
If you have a significant enough amount of money to invest, you could invest in a portfolio of carefully chosen individual bonds where the return would be guaranteed, depending on the viability of the issuer.
6:30 am
June 29, 2013
Offline
Loonie said
If you want higher guaranteed returns, you will have to move the money somewhere else.
If you have a significant enough amount of money to invest, you could invest in a portfolio of carefully chosen individual bonds where the return would be guaranteed, depending on the viability of the issuer.
Bonds don't have "guaranteed returns", Loonie. While even Govt of Canada Bonds which are very low on risk scale of default, they not truly guaranteed as to returns as they do trade on the market.
Only GICs have what could be called guaranteed returns.
6:48 am
September 11, 2013
Offline
Archibald, I agree with you re GICs. Locking up money for 5 years when rates are historically low carries risk, something GIC buyers are usually trying to avoid, plus you only get a slightly higher rate for locking up. On the other hand there is always the chance rates in a year might be even lower! Note, as has been pointed out, bond values will also take a hit if it ever appears we might be returning to more "normal" rates. Bottom line to me is that my GIC dough is not my risk money, so I play it safe there, eliminate risk and get a little less. Other parts of your portfolio can be invested in riskier instruments in hopes of making some real dough.
9:28 am
October 27, 2013
Offline
Archibald said
AltaRed said
As an aside, why the interest in a 1 year GIC unless you are wanting to have liquidity a year from now? For most folk, setting up a 5 year GIC ladder provides, as a minimum, one year liquidity based on 5 year rates when fully operational. Highest 5 year rates at the discount brokerages I use are 2.16% with Scotia iTrade having an outlier at 2.2%.Interest rates have got to start to increase, so if that happens, buying a 1 yr GIC sets me up to reinvest at a higher rate in a year.
I've been expecting this now for the last 10 years...
And therein lies the problem. People have been expecting higher rates for the past 5 years since the dramatic central bank overnight rate decreases during the financial crisis. Instead interest rates have kept getting lower. I've not wavered in my 5 year GIC ladder I have had going for at least a decade. I believe my aggregate weighted yield has just now dropped below 3% with my last purchase of a 5 year GIC at 2.15%. Not an issue if interest rates go up because that just means my next 5 year GIC (maturing at 3.5% later this year) will renew at a higher rate than 2.15% and then my weighted average interest rate will eventually start to increase again.
Think of a 5 year GIC ladder with a 2.5 year duration as being relatively equivalent to the duration of a short term bond ETF like VSB or XSB, etc. but with a better current yield. The difference is less liquidity than a short term bond ETF.
Added: I know a lot of people chase yields and bravo on them for taking the time to do that, assuming they do it for material amounts of money (to them). I do a bit of that in non-registered HISA savings type accounts, but I would never consider chasing yield in registered accounts. Too painful.
1:03 pm
October 21, 2013
Offline
Brian said
Loonie said
If you want higher guaranteed returns, you will have to move the money somewhere else.
If you have a significant enough amount of money to invest, you could invest in a portfolio of carefully chosen individual bonds where the return would be guaranteed, depending on the viability of the issuer.Bonds don't have "guaranteed returns", Loonie. While even Govt of Canada Bonds which are very low on risk scale of default, they not truly guaranteed as to returns as they do trade on the market.
Only GICs have what could be called guaranteed returns.
Government bonds don't have to be traded. They have guaranteed returns if held to maturity and are arguably more secure than bank-issued GICs, especially federal ones. But, yes, if sold before maturity, there is a risk. And, as I said, it is dependent on the viability of the issuer.
In any event, I only mentioned them because he seems determined to find some other vehicle, and they may be the next best bet. Sometimes it's hard to accept that rates are just plain terrible, no matter where you look - especially with inflation now rearing its ugly head again..
Please write your comments in the forum.