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Email this3:12 pm
May 28, 2013
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I just spoke on the phone to a rep at Coast about the 33 month 4% GIC, and asked what the limit was for the amount one can put in. She said, "25 Million". I asked her to confirm that, as I had read here the limit was $25,000, and she confirmed that yes it is 25 million! I had her confirm it again, and she said she recently set up such a GIC for $300,000, so yes the limit is 25 million.
Thought people here might want to know, if this has not been mentioned earlier in this thread.
9:29 pm
February 17, 2013
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Not crazy about locking up cash for 33 months, BUT.... I can be bought. $10775.00 in March would mature for around 12K in December 2020 - just in time for 2021's TFSA contributions. Just a thought.
5:10 am
June 15, 2016
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Weird 33 months promo.
Might as well keep 30 months - 2.5 years or 36 months - 3 years.
But good rate. I don't see the rates at 4 % even 3 years from now, the way economy is going these days.
Lot of layoffs are taking place & good paying jobs are gone.
10:28 am
February 17, 2013
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Would be great timing to pull a December maneuver as well ... if I had any TFSA room.
1:53 pm
December 12, 2009
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rhvic said
I just spoke on the phone to a rep at Coast about the 33 month 4% GIC, and asked what the limit was for the amount one can put in. She said, "25 Million". I asked her to confirm that, as I had read here the limit was $25,000, and she confirmed that yes it is 25 million! I had her confirm it again, and she said she recently set up such a GIC for $300,000, so yes the limit is 25 million.Thought people here might want to know, if this has not been mentioned earlier in this thread.
This was a typo on my part. I've since acknowledged this and corrected it. It's $25 million.
Cheers,
Doug
8:57 am
February 24, 2018
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Hi All,
Long time reader of this site, first post right now. Thank you to all who have contributed.
I am an Alberta resident who owns property in BC and will be making the move to BC by the end of this calendar year. As a result, I was able to proceed through the Coast Capital account process for both myself and my wife.
Current State:
600K in high interest savings with the bulk at Simplii (565K between 2 accounts) and the balance spread between RBC, Scotia, Tang, ZAG, EQ.
605K in registered funds including RSP, TFSA, RESP and Pension.
The question I have for the members is this:
At this point we do not own GIC's as we have been short term rate chasers. I like the GIC laddering idea and would like to start with taking advantage of the 4.00% currently being offered by CC once the current Simplii offer expires. Considering our current rate environment and the feds anticipated 3 rate hikes, any thoughts on how much of the 600K of cash to deploy into the current GIC offering?
Thank you,
Bill
11:59 am
July 1, 2016
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I called and asked ... BC residents ONLY.
12:48 pm
October 21, 2013
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Darkman said
I called and asked ... BC residents ONLY.
If they've already bought in BC, this will count.
NOTE TO MODERATOR: The system seems to somehow allowed two people with code name "Bill" to register?
1:34 pm
October 21, 2013
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The answer to your question is complicated.
I wouldn't make any assumptions about where rates are going. We don't know. The principle of laddering is agnostic about rate changes. The point of it is to cover off such variations by reinvesting annually in five year GICs (once you get the ladder set up).
The current CC offer is for 33 months, maturing in 2020, so, for laddering purposes, I would call it a two-year GIC.
It does have the unusual feature of convertibility. If rates go up during these 33 months, you have the option of reinvesting for same or longer term at higher rate. However, I think it's very unlikely that CC will offer any better rates within 33 months, as they are already on the very high end.
So,if you were to convert, it would possibly be for a higher rate for an even longer period, possibly extending it as much as another five years at higher than 4%. If that happens, you can deal with it at the time, but I think it is not too likely.
So, we're back to this being effectively a two-year GIC for laddering purposes.
That gives you only one step in your ladder and a relatively shorter-term one at that.
With that in mind, I would invest no more than one fifth of your available cash. You may also need to consider keeping some aside for emergencies, moving costs etc etc.
And keep an eye out for other offers coming up this year for other terms. In the unlikely event that this offer is still available a few months down the road, you might consider putting another one fifth in, for maturity in 2021, and consider it as a 3 yr GIC, filing another rung.
I'm not sure why you are only considering your non-registered funds for this purpose. I assume your registered funds are all tied up?
5:36 pm
December 12, 2009
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Loonie said
NOTE TO MODERATOR: The system seems to somehow allowed two people with code name "Bill" to register?
Hrm, strange. Maybe the "name" next to our posts is not displaying our "username" but our preferred display name? While it could be confusing, as long as each user has a different username/login name and userID, it's probably OK. One way for them to differentiate themselves would be by their "location" and/or by their signature(s). 🙂
Cheers,
Doug
7:09 pm
February 24, 2018
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Darkman said
I called and asked ... BC residents ONLY.
We have owned the undeveloped property in BC for over 10 years and have been paying provincial property taxes along with utility maintenance fees, all with proof of ownership.
Loonie:
Thank you for the guidance on the term and investment amount to start the laddering scheme. The one fifth over 5 years is what I was thinking, so you provided the additional validation.
Yes, registered funds are currently tied up in self directed dividend stocks (Scotia iTrade). iTrade does not currently offer the Coast Capital GIC in their basket of purchasable GIC's. Currently the best GIC offering in iTrade purchasable GIC's is 3.030% for a 5 year term (Home Trust). Hence the appeal of the 4% 33 month offering.
Correct me if I am wrong, but I cannot transfer or pull registered funds from one institution to another (even for re-investing) without being taxation penalized correct? Or, am I missing an opportunity by taking some profit from the dividend stocks and transferring them to a different FI for the purpose of reinvesting into a 4% CC GIC?
Thank you,
Bill (the 2nd)
12:32 am
October 21, 2013
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Hi Bill the second,
You may have to continue to identify yourself this way until Peter gets it sorted out as the other "Bill" is an active member.
You're welcome.
As regards the RSP: as soon as the money leaves the shelter of an RSP, it is fully taxed at regular income rates. you probably know that.
You can, however, if you wish, transfer all or part of that RSP to an RSP at another financial institution. You would probably want to sell the stocks first, keeping the proceeds within the itrade RSP. First, set up an RSP at the receiving institution (e.g. Coast Capital), then fill out a transfer form and send it to CC. CC will then arrange to transfer the RSP as a cash amount to your new RSP (either in part or the whole, according to your instructions). You may be able to specify, on the transfer form, how you want it to be invested upon receipt (i.e. GICs). If not, you can do that once it arrives.
However, there is a risk that, by the time the funds arrive, the offer will no longer be on the table (e.g. 4%). So, you need to ask the receiving institution beforehand how long they will hold the offer for you, or if they will hold it until the transfer is complete. Most will wait about a month, but transfers from investment houses do not always arrive that quickly, so that is the dilemma. There is no hard and fast rule about how fast they have to move, just recommendations. You need to keep on their case with regular phone calls at both ends to see how things are progressing. Your request may get "lost" and thus not processed (worst case scenario, but it happens).
iTrade will undoubtedly charge you a fee for making this transfer, no matter if they are speedy or not. It will probably be at least $100, but you can look it up on their fee schedule. However, most receiving institutions will reimburse some or all of this fee if you ask them ahead of time. None will do it if you don't ask.
If it is your desire to have some or all of your RSP funds in GICs (which I think makes sense as you are always going to pay top tax rate on them when you cash them in, with no dividend tax credit, cap gains, etc), and if you can't get a firm commitment from the receiving institution to honour your desired rate whenever the funds may arrive, then you should probably just get on with it and make the transfer somewhere anyway, perhaps to an RSP savings account while you look around for another good rate. Note that not all financial institutions offer a a registered savings account (e.g. Oaken).
I think you will find that a brokerage essentially never offers GICs that will match the best offers out there, especially promos. I certainly wouldn't hold my breath. Every set of hands that the money passes through is going to take a piece, one way or another.
Nonetheless, some people find it much easier to manage if everything is under one umbrella (or more if necessary for insurance limits) and are therefore willing to take the hit on a somewhat lower rate. You should probably decide how many different FIs you are willing to deal with before you make any moves, as you have a fair bit of money to spread around and it could get very complicated if you end up with several institutions. It can certainly be done,but you need to ask yourself how much work you are willing to handle. Also, if you are retiring (to that picturesque holding in BC?), this could be a consideration as it is more work for a power of attorney to manage too, when/if it comes to that.
But perhaps your question was different? I'm not sure if I understood you correctly. I wondered if you were perhaps asking about in-kind exchanges? If so, I am not up on them, and somebody else should answer that question. Not sure if allowed by CRA or not at this time.
9:35 am
February 24, 2018
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Loonie said
Hi Bill the second,
You may have to continue to identify yourself this way until Peter gets it sorted out as the other "Bill" is an active memberHi Loonie,
I have changed my very fitting display name as per Peter's instruction.
You did understand the question and answered it with clarity. I too was concerned about the transfer time and costs, as you pointed out, so I will probably just use a portion of the iTrade dividend stock profits to purchase a GIC inside of iTrade and include it in a laddering scheme. Unfortunately, my confidence in the TSX is waning and I will be looking to mitigate any further downward pressure on the portfolio.
One fifth of the cash currently sitting at Simplii will be deployed to a Coast GIC in my wife's name as she is currently in a lower tax bracket and will remain in that bracket once we make the move to BC.
If I have any further strategic GIC questions, I will move them into a new thread in the GIC forum.
Thank you for your insight.
Regards,
10:42 am
December 12, 2009
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Great points, Loonie. Scotia iTRADE's "transfer out" fee is either $125, $135 or $150 (can't remember which). They're pretty firm on it (as most are), in part, because they reimburse a lot of fees on the "transfer in" and need to be able to at least recoup what they have usually paid. With banks and credit unions, though, they typically don't reimburse transfer fees but it doesn't hurt to ask. They may limit it to equal what they would charge as their current "transfer out" fee and also have minimum account balance thresholds. For instance, if you hold $200,000 in three accounts with Scotia iTRADE, Coast might reimburse $50.00 per account (so $150 of the $450 that Scotia iTRADE will charge you), if you ask ahead of time. 🙂
Another consideration: you are moving from equities to all GICs. This is a major shift in your strategic asset allocation. Ask yourself the following series of questions, "why am I doing this? Is this just because I can earn 4% annually for ~3 years in a guaranteed investment? What about when it matures? For the non-registered portion, what are the tax implications on my capital gains to date? And, as Loonie mentioned briefly, what are the tax implications for the loss of the dividend tax credit?"
It may make sense to consult a fee-only financial planner, too, or a portfolio manager that offers actual true financial & wealth planning advice (not quasi-advice that the bank-owned mutual- and investment fund dealers offer) who is obliged to act in your best interest, not what is good for him or his firm (or hers).
Cheers,
Doug
11:02 am
February 17, 2013
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Parsimonious said
Hi All,Long time reader of this site, first post right now. Thank you to all who have contributed.
I am an Alberta resident who owns property in BC and will be making the move to BC by the end of this calendar year. As a result, I was able to proceed through the Coast Capital account process for both myself and my wife.
Current State:
600K in high interest savings with the bulk at Simplii (565K between 2 accounts) and the balance spread between RBC, Scotia, Tang, ZAG, EQ.
605K in registered funds including RSP, TFSA, RESP and Pension.The question I have for the members is this:
At this point we do not own GIC's as we have been short term rate chasers. I like the GIC laddering idea and would like to start with taking advantage of the 4.00% currently being offered by CC once the current Simplii offer expires. Considering our current rate environment and the feds anticipated 3 rate hikes, any thoughts on how much of the 600K of cash to deploy into the current GIC offering?Thank you,
Bill
Loonie always has well thought out advice. Since every situation differs, I'll just throw out my current plan and take any suggestions or comments. With regards to CC, I am willing to let them have some of my liquid cash for 33 months, but i would not consider using them to set up a ladder as, with the exception of this promo, their usual GIC rates are not very impressive. If you haven't already, check out their regular rates. You can easily do much better. I am not sure of your age, but our assets seem to be comparable except I am a low risk tolerance and have cashed in all stock market based investments. I have just recently retired and am in the process of getting all our ducks in a row for future withdrawals. Have been maxing out our TFSAs since inception of the program. About 5k each in a HISA we can access anytime for an extreme emergency fund. , some in GIC's at varying amounts, the last one maturing in 2020. Last year I started consolidating with the intent of creating a 5 year ladder each. Hers maturing every March, mine every September. Currently using Motive for those as they are our main FI and they have decent rates. Thinking max them out @ 80K (5 x 15K GICs and the 5K HISA) each, then start again with another FI for CDIC limits @ Motive, probably Hubert.
As for RSPs, they are currently in Motive and all set to mature in the first quarter of 2018. Wife and I will have about 100k each we will be laddering into 5 x 20 k GIC's maturing in Dec. If/when our liquid cash is expended, that is what we will be using to convert to TFSA's (or Christmas presents!! ;). Chose Dec so we can pick the tax year we withdraw when they mature Just opened at Hubert and will be creating a another 5 year ladder maturing every May. Chose Hubert basically because of their payment options once it converts to a RIF and they have Manitoba insurance instead of the 100k CDIC cap. At the current rates, this May I will open 5 GICs - 1 (34255), 2 (35197), 3 (36847), 4 (37888) & 5 (39044) years. Each will mature with a value of about 40K, but subject to the current rate of the day when they roll over. They said I can set them up to automatically renew at 5 year terms. We'll see if that's true. Plan is not have to use them until I hit at least 65 when my pension gets cut by 80% ...hopefully 71. so between TFSAs & RSP/RIFs, we will have something maturing in March, May, September and December. with the option of choosing a varied payment schedule at Hubert... monthly, quarterly, etc. See what happens with the unexpected.
11:02 am
October 21, 2013
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Yes, I too wondered if Bill the Parsimonious might benefit from some impartial advice. But that was not the question he asked, and he seems fairly clear that he does want to change his strategy. There may be other factors as well as his negative feelings about the stock market that are influencing this decision, such as age, retirement plans etc. Acceptance of various risks may and should change with time and age. I note too that he only plans to take the profits from his stocks to put into the GIC, although this undoubtedly involves selling some of them.
My experience is that the FIs that charge transfer fees will also reimburse them, but not necessarily the whole thing. Accelerate will. Meridian did for me last year for less than 20K. etc. Hubert won't, but that's because they don't charge any themselves.
11:14 am
February 17, 2013
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Doug said
Another consideration: you are moving from equities to all GICs. This is a major shift in your strategic asset allocation. Ask yourself the following series of questions, "why am I doing this? Is this just because I can earn 4% annually for ~3 years in a guaranteed investment? What about when it matures? For the non-registered portion, what are the tax implications on my capital gains to date? And, as Loonie mentioned briefly, what are the tax implications for the loss of the dividend tax credit?"It may make sense to consult a fee-only financial planner, too, or a portfolio manager that offers actual true financial & wealth planning advice (not quasi-advice that the bank-owned mutual- and investment fund dealers offer) who is obliged to act in your best interest, not what is good for him or his firm (or hers).
Cheers,
Doug
Good advice to see a FP. My reluctance to keep stock market based investments after i retire was given a bit of a boost by recent reports of Canadas stock market standing in the world (2nd last...only better than Venezuela's) and the growing international reluctance to invest in Canada from the recogniton that our economic "boom" is based on consumerism and real estate and not expected to last as we drift farther from the USA's protectionism, which will compound the issue.
11:43 am
October 21, 2013
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I have no idea what will happen to our stock market, but the reason we are always told to diversify into US stocks is because our economy is so narrowly based. Banks may be our salvation, but banks don't really produce anything, so that is precarious in its own way. Economists have a name for non-productive business like this that depend on "rent". See John Lanchester's
How to speak money: what the money people say: and what it really means (2014). I think you would really enjoy this book, Rick.
Narrow-minded nationalism tends to skew one's perspective. In 1900, Egypt had one of the biggest stock markets in the world and now it has nothing (Investment mistakes even smart investors make and how to avoid them, by Swedroe, Larry E. and Balaban, R. C. lesson #40 - also very worth reading). Things come and go. Who could ever have imagined the raucous history of the 20th century, when you stop to think about it? And who would dare to predict what will have become of the TSE by the end of this one? - Lots of folks, apparently! Optimism and the willingness to believe in a kind of endless trajectory of "progress" can be quite attractive, and deceptive.
1:36 pm
February 24, 2018
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Loonie, Rick and Doug,
For Clarity:
Current State:
- Both my wife and I earn employment income and interest income with a household monthly net cash flow of aprox. 7k per month. Two children 10 and 8.
- 600K in high interest savings with the bulk at Simplii (565K between 2 accounts) and the balance spread between RBC, Scotia,Tang, ZAG, EQ.
- 605K in registered funds including RSP, TFSA, RESP and Pension. Of the 605K in in registered funds 424K are self directed RSP, TFSA and RESP's earning aprox. 5.6% dividend and are all long positions with sell orders to protect original book values. The balance of the registered funds are pensions directed by our employers.
- TFSA's are at maximum for both my wife and myself.
- RESP's are at maximum with respect to capitalizing on Federal Education Grants.
- Pension is a function of earnings.
- 645K real estate evaluation (BC and Alberta assessed values) is clear title.
- Net worth aprox. 1.8M
The above was a strategy that my wife and I deployed in our mid thirties and have been sticking to it religiously for almost 20 years. Some will say we are not weighted enough in to stocks, but I am not comfortable following a 80/30 or even 70/30 rule, particularly with recent news on the performance of the Canadian stock market (Rick alluded to this). We actually arrived at our current registered stock positions as a result of using the RSP vehicle to lower net incomes and self directing the portfolio. Mutuals are not our thing and we have dabbled in real estate for a few years, hence the BC property.
Therefore, we are not interested in further exposure North American stock markets, mutual funds and bonds are not our thing and we feel real estate valuations are high and suspect they will remain stagnant for a number of years
Although my wife and I have worked diligently and independent from paid strategists at establishing some financial flexibility, I am feeling quite uncertain about how to proceed from here. To add complexity, when we make the move to BC, we will be adding aprox. 400K to the free cash balance (selling of our AB property minus building cost of home in BC) .
Therefore, the original post was to understand how to capitalize on the 600K free cash today and the additional 400K later this year by looking at the GIC Laddering scheme that I have read so much about on this site (capital gains vs dividend tax credit notwithstanding). I understand it may be time to initiate a FP as perhaps purchase of global equities of some sort or a shift in how we approach Canadian taxation laws may be the next step. I agree with both Rick and Loonies assessment that the TXE lacks global investment and more importantly our continually narrowing economy may suggest we shift toward US or Global positions. The TXE might as well be called the TXEFI as banks seem to be the driver right now.
Although a FP may advise a completely different approach on how to deploy 1M free cash, we have always behaved as savers with the motto of "cash is king" and therefore my instinct leads me to being satisfied with a guaranteed return on an insured investment vs the temptation of choppy and risky portfolio growth. Good strategy or bad, not sure. One thing is for sure, by reaching out on this site last night, you have provided food for thought committing me to act sooner rather than later.
Thank you so much for your interest in assisting. Pardon the pun.
9:06 pm
February 17, 2013
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Just an FYI... I bit the bullet and committed half my liquid cash to their offer. Went smoothly and had no problems setting it up over the phone on the day the funds arrived. I do wish they would do something to improve the wait time on hold. That has to improve ... especially if they go national. On the "Hmmmm...that's weird" side ...after setting it up and confirming the details, I checked my account on line and saw it showed as a 5 year term. I will spare you my immediate thoughts, but after calming down and before phoning back to raise holy hell, I checked the details and found that it did indeed mature in 33 months. Sorry to CC for assuming the worst and thanx for the jolt to blood pressure. Always good to confirm you're alive.
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