Cheap easy way to buy Government of Canada T-Bill/Bonds? | General financial discussion | Discussion forum

I don't know about cheap, but at Scotia iTrade, on the Canada's Money Market tab at this moment, it lists durations as low as 15 days right through 11 months. Yields starting at 3.87% (Oct 27) to 3.91% (Jan 19) to 4.25% (Sept 14). They are all sold at a discount to $100 at maturity.

I have never bought them but I am guessing there is a minimum $24.99 commission (or $1/1000) to buy, and if so, that has to be factored into what one's net yield would be. I have never asked about commissions for Tbills.

The one-year treasury bill is a direct obligation of the Government of Canada. No question legally that it is backed by the Government of Canada.

con6450 said
If you trust CDIC and don't care about (potential) liquidity, GIC is perfectly fine, in my understanding.  

If that is the case, aren't you settling for less return? Instead of 4.80% on a GIC, you only get 4.31% on the T-Bill, a difference of almost 1/2%

I do understand that a T-Bill might be sold before the end of a year, but am assuming it to be held for an entire year, for the purpose of this discussion.

Are T-Bill yields taxed differently from GIC interest? Is there a capital gains component?

No need for account proliferation. There are many reasons why I wouldn't have accounts spread out over more than 1 or 2 of the FIs present on the HISA/GIC lists herein. The 1-6 month Tbill options look reasonably attractive today.

Added: Thanks to Norman1 for the calculation. The 3.28% compares to 3.05% for the Scotia DYN6004 Cl F ISA at the current time albeit one could squeeze a bit more going for perhaps a 6 month term. The difference isn't enough for me to consider moving from DYN6004.

AltaRed said
… The 3.28% compares to 3.05% for the Scotia DYN6004 Cl F ISA at the current time albeit one could squeeze a bit more going for perhaps a 6 month term. The difference isn't enough for me to consider moving from DYN6004.

If one can commit to six months and two weeks, there are the 2023/04/27 treasury bills maturing in 195 days. Scotia iTRADE asking 97.871. T+1 settlement. Yield after commission would be

[100/(97.871 + 0.100) - 1] * 365 / 194 = 3.897%

con6450 said

Thanks for looking into the example. I don't have an account with them, so this is really useful. They claim they have "no markups or hidden fees," so if it is just 0.1% of commission this is quite doable, in my opinion, for longer duration.

You may also check BMO InvestorLine to see if you will end up with a better net price on particular purchases of treasury bills.

Scotia iTRADE charges $1 for each $1,000 bond (0.1%). Minimum $24.99, maximum $250. That $24.99 minimum has a significant impact on net yield for something like a 30-day treasury bill. 0.1% commission on a 30-day bill will knock off around 1.2% off the quoted yield.

In contrast, BMO InvestorLine doesn't disclose its fixed income commission schedule:

Bonds, T-Bills, GICs, Strip coupons

Commissions, if any, are included in the quoted price. You may enjoy additional savings for online fixed income trades.

Quoted price is the net price. The amount of the embedded commission is disclosed on the trade confirmation slip. BMO InvestorLine doesn't have a $24.99 minimum commission. I've seen embedded commissions of $10 and even $0!

con6450 said

I never looked into the tax component. I just assumed it's the same as regular interests/GIC. Correct me if someone knows.

There is only regular interest when one holds a discount note, like a treasury bill or a strip bond, to maturity.

There could be a capital gain or capital loss part when one sells before maturity. There is a calculation to determine what the deemed interest is, for tax purposes, for the holding period. Selling price, less deemed interest, and less purchase price is a capital gain or loss.