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Email this10:22 pm
December 23, 2011
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Hi, everyone. Just wondering what kind of products are out there on the stock market that are as safe as a GIC. My thoughts are to find something that is a bit better return and that will have a lower impact for income tax as a result of dividends and capital gains vs interest. I am not looking for tips for the stock market, just type of product. If you want to name something go for it.
Thanks Peter
1:51 pm
February 22, 2013
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kanaka said
[snip]
as safe as a GIC.
[snip]
A GIC is "guaranteed". Nothing else is guaranteed!. Having said that, if I were looking at a, say, 5 year GIC, I would compare its rate to the rate of a 5 year strip bond from a Government or Government entity, such as one of the Hydro offerings or CMHC or the like.
The benefit of a strip bond is there is no reinvestment risk. It is only "guaranteed" by the creditworthiness of the institution offering it. And, if one of the provinces were to default, we would likely have bigger issues to deal with.
[I am about to roll over a 5.5% Canada Bond and was looking for somewhere new to invest and for an 8 year term the best rates were from Bell Canada and Telus. I already hold a Bell strip bond and simply am not comfortable putting more money in that bucket.]
Greg
2:56 pm
February 22, 2013
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And now having had a chance to look at my RBC Direct Investing platform I see a 5 year GIC from Equitable Trust is quoted at a 2.26% rate and surprisingly, RBC is next with a 2.25% rate. This is for both and annual and compound GICs.
The strip bonds they offer paying out in May of 2018 include ones for Trans Canada Pipeline and Bell Canada paying in the 2.35% range and then ones for the Governments of Ontario and Saskatchewan and for Ontario Hydro paying in the 1.68% to 1.92% range. [Note: Other platforms may, and likely will, have other offerings.]
So, why wouldn't one buy a GIC? The only reason I could see would be if one thought one might want to cash out early.
Greg
8:06 pm
December 23, 2011
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GS said
And now having had a chance to look at my RBC Direct Investing platform I see a 5 year GIC from Equitable Trust is quoted at a 2.26% rate and surprisingly, RBC is next with a 2.25% rate. This is for both and annual and compound GICs.
The strip bonds they offer paying out in May of 2018 include ones for Trans Canada Pipeline and Bell Canada paying in the 2.35% range and then ones for the Governments of Ontario and Saskatchewan and for Ontario Hydro paying in the 1.68% to 1.92% range. [Note: Other platforms may, and likely will, have other offerings.]
So, why wouldn't one buy a GIC? The only reason I could see would be if one thought one might want to cash out early.
Greg
Hi, 5 year rate at Accelerate is 2.7%.
I realize I kind of erred in looking for another product to buy other than a GIC in regards to safeness. But your response fits the bill.
I am currently removing my RRSP funds annually, while keeping in the lowest income tax bracket. I am using the withdrawals to reallocate other monies used to buy TFSA's and to buy new TFSA's. This prevents us from ever looking at any type of claw back and in some cases it appears I will make more out of my reallocated RRSP deposits. My decision to do this is a long story that I won't get into. What I see in four years is that all of our RRSP withdrawals will completely reallocate to our TFSA accounts. The RRSP withdrawals after that....I need to see them prosper preferably without making "interest" but making either capital gain or dividends. That way my income will not impact too much on the amount of my annual RRSP withdrawal. Make sense or is it all muddy?
I do have access to buying bonds and I currently have some bond ETF's in our TFSA accounts. I should have realized!!!!
Tell me, the bonds you buy ...
do you buy them from a discount brokerage?
do you have to buy "face value" of 5000.00?
are there any fees to buy or sell them?
can you sell them before they mature?
if you can sell them before maturity, is there a penalty?
Thanks Peter
10:52 pm
February 22, 2013
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kanaka said
[snip]
Tell me, the bonds you buy ...
do you buy them from a discount brokerage?YES - RBC Direct Investing
do you have to buy "face value" of 5000.00?
YES - but I have purchased less when their inventory was less than $5k face. Buying $5k face of a strip would cost less, and often a lot less, than $5k, depending on the term left and the interest rate to be earned.are there any fees to buy or sell them?
YES, to buy, NO - to mature, not sure about selling - but the fees are built into the price quoted and (today) are "hidden". I recently read the brokerages are going to have to disclose the fees charged and I believe that occurs in mid-2014.
can you sell them before they mature?
YES - if one were to buy $5k face today for, say, $4k, then between today and maturity the value would steadily approach $5k. It isn't a straight line and if interest rates moved significantly, then the sell price would be better or worse than if the rates stayed exactly the same.
if you can sell them before maturity, is there a penalty?
Perhaps - it depends on what current interest rates are.
Thanks Peter
The benefit to me of a strip is that you know what you will be getting in a payout on the maturity date. I've now built a ladder with $32k face value maturity roughly the middle of each year for 8 years out. Each mid-year I started with a three or four year ladder and then would take my $32k each year and reinvest it, so I have ended with an 8 year ladder. I am currently figuring out what to do with this years $32k, which happens to be a Canada Bond that has been paying 5.5%. This is the last of the Canada Bonds I bought when I really wasn't sure what I was doing.
(And, now while reviewing this, I realize that I should have a sliding scale of, say, $32k to $36k to cover for inflation. Ah, but life isn't perfect!)
Today my portfolio includes both corporate, provincial and provincial agencies. I do not buy a bond if I already own one from the same issuer or issuer family (so one holding a Province of Ontario bond would make me really consider whether I wanted an Ontario Hydro bond as well. My holdings include Nova Scotia Power, TD Bank, Molson Coors, Loblaws, Quebec Hydro, 2 x Ontario Hydro, Province of Ontario, BMO, Bell Canada and Province of Quebec. I am overweight in both Ontario and Quebec but that is a chance I felt I could live with. I would not buy any more of either province no matter how good tha rate was. I look for Corporate stuff that is BBB or higher, but do own one that was BBBL when purchased.).
3:24 pm
October 5, 2009
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I experienced problems entering formatted data in a readable format, so I gave up on that idea.
Anyway . . . . With a bunch of GICs coming due last year; goodies but oldies at 5.25%; I
figured I would have to really try to fail, than do worse than 2.0% savings interest. So . . . On May 30, 2012, exactly one year ago, I opened up a trading account with TD Waterhouse with $135,000. I tossed another $100,000 in September 1, and $100,000 November 1, for a total of $335,000. So only about a third of the funds have been in there for the full year. Nevertheless, I am waay ahead of simple interest investments on capital gains alone. Add to that: dividends, and this has been a VERY good partial first year.
In selecting reliable stocks, I pretty much followed the lead of the big banks, iShares and mutual funds, who already own half of these stocks. All of the stuff I bought was already half owned by the big players, and if they, with all their resources, think it's a smart investment; who am I to disagree?!! Do you know where big banks invest most of their $$$?? In the other big banks!!
BANK OF MONTREAL BMO:
Quantity: 500
Average Cost/Unit:$57.18
Current Value: $61.27
Book value: $28,589.990
Current Value: $30,635.00
Capital Gain: $2,045.01 7.15%
Plus Dividend: 4.74%
BCE INC BCE:
Quantity: 2,000
Average Cost/Unit:$42.42
Current Value: $46.63
Book value: $84,844.98
Current Value: $92,660.00
Capital Gain: +$7815.02 9.21%
Plus Dividend: 5.03%
IMPERIAL BK COMMERCE CM:
Quantity: 500
Average Cost/Unit: $71.08
Current Value: $78.30
Book value: $35,589.99
Current Value: $39,150.00
Capital Gain: $3,560.01 10.00%
Plus Dividend: 4.77%
Toronto Dominion Bank TD:
Quantity: 1000
Average Cost/Unit:$80.07
Book value: $80,069.99
Current Value: $83,800.00
Capital Gain: $3,730.01 +4.66%
Plus Dividend: 3.88%
TRANSALTA CORP TA
Quantity: 5,200
Average Cost/Unit:$15.04
Current value: $14.79
Current Value:
Book value: $78,182.95
Current Value: $76,908.00
Capital Gain: -1,274.95 -1.63%
Plus Dividend: 7.71% = $5,900!
12:31 pm
December 23, 2011
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Stan said
What was on your mind, Stan?
6:10 pm
March 7, 2013
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Thanks for the detailed info, Stan!! It's always helpful to have some actual numbers to look at when comparing investments.
9:36 pm
December 23, 2011
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Stan said
I experienced problems entering formatted data in a readable format, so I gave up on that idea.
Anyway . . . . With a bunch of GICs coming due last year; goodies but oldies at 5.25%; I
figured I would have to really try to fail, than do worse than 2.0% savings interest. So . . . On May 30, 2012, exactly one year ago, I opened up a trading account with TD Waterhouse with $135,000. I tossed another $100,000 in September 1, and $100,000 November 1, for a total of $335,000. So only about a third of the funds have been in there for the full year. Nevertheless, I am waay ahead of simple interest investments on capital gains alone. Add to that: dividends, and this has been a VERY good partial first year.In selecting reliable stocks, I pretty much followed the lead of the big banks, iShares and mutual funds, who already own half of these stocks. All of the stuff I bought was already half owned by the big players, and if they, with all their resources, think it's a smart investment; who am I to disagree?!! Do you know where big banks invest most of their $$$?? In the other big banks!!
BANK OF MONTREAL BMO:
Quantity: 500
Average Cost/Unit:$57.18
Current Value: $61.27
Book value: $28,589.990
Current Value: $30,635.00
Capital Gain: $2,045.01 7.15%
Plus Dividend: 4.74%BCE INC BCE:
Quantity: 2,000
Average Cost/Unit:$42.42
Current Value: $46.63
Book value: $84,844.98
Current Value: $92,660.00
Capital Gain: +$7815.02 9.21%
Plus Dividend: 5.03%IMPERIAL BK COMMERCE CM:
Quantity: 500
Average Cost/Unit: $71.08
Current Value: $78.30
Book value: $35,589.99
Current Value: $39,150.00
Capital Gain: $3,560.01 10.00%
Plus Dividend: 4.77%Toronto Dominion Bank TD:
Quantity: 1000
Average Cost/Unit:$80.07
Book value: $80,069.99
Current Value: $83,800.00
Capital Gain: $3,730.01 +4.66%
Plus Dividend: 3.88%TRANSALTA CORP TA
Quantity: 5,200
Average Cost/Unit:$15.04
Current value: $14.79
Current Value:
Book value: $78,182.95
Current Value: $76,908.00
Capital Gain: -1,274.95 -1.63%
Plus Dividend: 7.71% = $5,900!
As Deb said .... Thanks for the detail. I will do the same. While I don't have as much invested and I have been more concervative in choosing ETFs. Give me a few days and I will post. I have been investing for more than a year though.
Regards Peter
9:45 pm
October 5, 2009
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Hi Deb!
At 71 years, and well retired, getting involved in the stock market is probably the last thing I ever envisioned for my retirement years; but times have changed, and we all have to adapt to change, or suffer the consequences. To admit that the entire adventure has been quite a lot of fun, is like admitting to embracing a psychoses; but it really has been a lot of fun. Dealing with my portfolio along with my wife's portfolio on a daily basis, is a lot like having a day job again.
The more you study the market, and become familiar with specific categories of stocks, the more you enjoy the additional benefits of some form of day-trading as well!
Setting up a portfolio with MSN, is a good way to keep track of your investments, or merely do a dry run, to get a feel for this kind of investment,
5:57 pm
October 5, 2009
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On Fri May 31, when Enbridge was trading at $44.97; and with BC announcing that "You ain't gunno run no pipeline across our Province!" I figured it was a good time to toss in a stink bid for the Monday morning market opening:
Enbridge: 2000 shares @ $44.52
It was grabbed up rather early in the morning. within about $.06 of the absolute daily low.
By 10 am, I had made $1000, and by 2pm, I had lost it.
So now, to see how it all plays out. I'm betting on $2/share increase ($2000) by the end of the month! 
4:00 pm
October 5, 2009
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Okay . . . as promised . . . at the end of the month I didn't make my anticipated $2000 for the month! With bad news from south of the Border, June has been one of the worst trading sessions in a couple years, resulting in a big-time dive in stock prices!!
Nevertheless, considering bad times on the stock market, I am still rather pleased with the result of my first month into 2000 Enbridge shares:
June 4 bought 2000 shares @ $44.52/share
July 2 daily high 2000 shares @ 45.18/share
Monthly gain = .66 / share
2000 @ .66 = $1320
OR
1.5% = 12% annualized
While I could sweeten the result by tossing in quarterly dividends; that's not really all that important. The issue is whether it's better to invest your $$$ in a high interest savings account for a year @ 1.8%; or invest in a solid blue chip stock at 12% per year!!
I will check back in a month to let you know how everything is going!
4:13 pm
December 23, 2011
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Stan said
Okay . . . as promised . . . at the end of the month I didn't make my anticipated $2000 for the month! With bad news from south of the Border, June has been one of the worst trading sessions in a couple years, resulting in a big-time dive in stock prices!!
Nevertheless, considering bad times on the stock market, I am still rather pleased with the result of my first month into 2000 Enbridge shares:
June 4 bought 2000 shares @ $44.52/share
July 2 daily high 2000 shares @ 45.18/share
Monthly gain = .66 / share
2000 @ .66 = $1320
OR
1.5% = 12% annualized
While I could sweeten the result by tossing in quarterly dividends; that's not really all that important. The issue is whether it's better to invest your $$$ in a high interest savings account for a year @ 1.8%; or invest in a solid blue chip stock at 12% per year!!
I will check back in a month to let you know how everything is going!
Thanks for the update. I lost this month too. But I am not investing as heavily as you. I count on my dividends to buy more shares every month.
Regards Peter
3:50 pm
October 5, 2009
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kanaka said
Thanks for the update. I lost this month too. But I am not investing as heavily as you. I count on my dividends to buy more shares every month.
Regards Peter
Hi Peter,
I have been implementing the same approach: rolling over dividends into more shares. Observing the nature of the stock market, where shares go up and down like a roller coaster, I've learned to be patient, pick a low point from their performance over the past year, place a bid and wait it out until my target comes down to a price that's agreeable. While it tends to be a little irksome; two, three months, seeing your $$$ just sitting there, earning no interest, basically doing nothing; this strategy has worked out well for me.
I now have a $100,000 just sitting in a no-interest bank account, without a clue what to do with it. I believe I have picked a good point to limit my stock market investments to a pre-determined percentage of assets + rolling over accrued gains.
I just read a couple articles in Financial Post: "What to do with the cash" kind of articles which totally failed to resonate with me; notwithstanding, that I realize that the majority of articles in the Financial Post tend to be total nonsense, failing my first rule for advisors:
"If they still have to work for a living, then . . . . . . . "
8:57 am
May 6, 2010
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Thank you Stan!!
I am definitely going to be buying bank dividend stocks and just keeping them in there. I don't care whether they go up or down, just as long as I get that cheque every four months (or whatever). We have 10,000 due in August at 5.25...the best we could do with a GIC is 2.70 with Achieva where we already have quite a bit of money, so I figure we can't lose with a bank dividend stock.
Any comments from others? At this stage of the game, we just want to up our income which has dropped drastically in the last few years. Thank goodness for the TSFA. I wonder if they'll frig that up for us.
Getting the GST cheque this year was very embarrassing.
regsmith
11:37 am
December 23, 2011
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regsmith said
Thank you Stan!!
I am definitely going to be buying bank dividend stocks and just keeping them in there. I don't care whether they go up or down, just as long as I get that cheque every four months (or whatever). We have 10,000 due in August at 5.25...the best we could do with a GIC is 2.70 with Achieva where we already have quite a bit of money, so I figure we can't lose with a bank dividend stock.
Any comments from others? At this stage of the game, we just want to up our income which has dropped drastically in the last few years. Thank goodness for the TSFA. I wonder if they'll frig that up for us.
Getting the GST cheque this year was very embarrassing.
regsmith
With the recent dip in the market both my wife and I have about 6 different investments in the market, in our TFSA and the best to weather have been BCE of which my wife only has 6 that were inherited and XDV. While I Am a novice I have read a lot here and have articles from Money Sense. I decided to modify their allocation suggestion and have a couple of years to complete it. I feel confident to be in the 7% gain soon even with our current losses, we are sitting around 3-4%. If you need any info in regards to the article or my choices, let me know. I have money sense turned on in my Feedly RSS reader and find it very helpful along with buying the odd magazine at Costco or? http://www.moneysense.ca/
I do have some money in an etf that includes banks but I think allocation is important.....but that is a personal decision.
Regards Peter
11:48 am
October 5, 2009
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Well . . . I made my $2.00 per share, but it took an extra couple weeks to get there.
June 4 bought 2000 shares @ $44.52/share
July 17 2000 shares = $46.56/share
So that's 4.5% return in six weeks; and only 50% is taxable income. 
2:14 pm
July 17, 2013
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Just a side note. Everybody seems to be pushed up the risk curve. When I hear about people putting retirement money on the stock market when really they should be taking it out this makes me nervous.
Don't buy into Bernanke's bubble. The market moves in ways that hurt the most number of people.
2.0 is crap, but the markets can't keep going up. They are fueled by low interest rates (both those who want decent returns and those borrowing on leverage). There is more borrowed money on the stock markets now than in 08. Think about that.
2:16 pm
July 17, 2013
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Hi regsmith:
Yes, you can loose with a bank dividend stock - especially when everybody thinks they can't loose in a dividend stock.
People need better returns now than they did in 08 because they lost money in 08. This is going to create Lehman 2.0. Buy gold right now. Its cheap.
Ian
10:14 pm
February 22, 2013
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In mid 2008 I inherited a little over $100k. I added it to my existing investment mix and was then worth x+$100k. The dot com bubble burst within a few weeks and my net worth was quickly back to x. The $100k had evaporated.
I now have an asset mix with which I am happy. When the current bubble bursts (note I said "when" not "if") my net worth will drop but likely by less than half the percentage drop that occurs in the market.
Am I happy earning 2%. No! But am I willing to risk 100% of my investment? Again, No!
Lessons were learned!
Greg
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