Government Savings Bonds - Advice on how to purchase | General financial discussion | Discussion forum

Are you inquiring about Canada Savings Bonds or Government of Canada marketable bonds?

They are both issued by the federal government. But, they are distributed quite differently.

slow_n_steady said

I am trying to determine how I can purchase Canada Savings Bonds (CSBs) or provincial savings bonds. Preferably with getting a paper certificate for them.

I have checked the CSB website and they aren't selling new bonds till later in the year. I would like to purchase some in the short term.

I was wondering if anyone on this forum has experience with this.
From what I understand, bank branches are limited to selling new bonds only when they are available.
I think I would have to find a bond broker to access the bond market for bond purchases then. But I am unsure what the fees are for such transactions as well if you get a paper certificate. Or how to find a qualified and reputable bond broker.

Is there another method to purchase bonds other then through a broker and still get a paper certificate?

If anyone has advice on the paper certificates whether they are needed or not, that would be helpful too.

I am fully aware that bond returns are significantly lower then GIC returns.

Thank you for your opinions in advance.

For a CSB here are all your answers.
http://www.csb.gc.ca/products/.....ings-bond/

I used to buy at work but lots of businesses have cut costs and no longer offer due to costs to administer and lack of longevity of workers in the workplace.

slow_n_steady said

I am trying to determine how I can purchase Canada Savings Bonds (CSBs) or provincial savings bonds. Preferably with getting a paper certificate for them.

I have checked the CSB website and they aren't selling new bonds till later in the year. I would like to purchase some in the short term.

I was wondering if anyone on this forum has experience with this.
From what I understand, bank branches are limited to selling new bonds only when they are available.
I think I would have to find a bond broker to access the bond market for bond purchases then. But I am unsure what the fees are for such transactions as well if you get a paper certificate. Or how to find a qualified and reputable bond broker.

With all due respect, CSBs and provincial savings bonds are terrible investments. Regular bonds whether fed/provincial/municipal government or corporate bonds can be purchased through bond dealers which include full service commission brokers like RBC Dominion Securities or discount DIY brokerages like RBC Direct Investing. All of the big bank companies have brokerages. You have to have investments accounts with these brokers and it is best to keep the bonds in street name, i.e. electronic held by the brokers themselves.

Paper certificates are becoming as ancient as the abacus or mechancial calculuators.

slow_n_steady said

I have already learned something from your post - I don't know the difference between the CSBs and GoC marketable bonds.

Would you be able to explain to me the difference (distribution and how to purchase) and pros/cons of each. Of if that is too long to explain - point me in the direction of an appropriate internet resource on the topic.

Department of Finance: Government of Canada Market Debt Instruments provides an overview of GoC debt instruments, including CSB and GoC marketable bonds.

Canada Savings Bonds and Canada Premium Bonds are the bonds that go on sale for a limited time in the late fall every year. They are normally non-transferable and don't trade. They are not available outside of their sale period. The link kanaka provided has more details about them.

Government of Canada marketable bonds are one of the bonds that are transferable and can be traded. Government issues them from time to time. Investment dealers/brokers buy them as inventory to resell to investors. The federal government does not offer these bonds directly to ordinary investors.

For marketable bonds, most retail investors end up buying from or selling to their broker's bond inventory and not from/to a bond market. So, one needs to call a few brokers up to see who is offering the best price for what one wants.

The comments about the yields are correct. A five-year Government of Canada marketable bond now yields about 0.59% per annum, before commissions and broker markup. The current Canada Savings Bonds yield is 0.5% per annum. Rates for latest series P87 of Canada Premium Bonds are 0.8% for 2016 and 0.9% for 2017.

kanaka said

.... In the day they served me well and I really liked that 18% one.....I barely squeezed $500 from somewhere to buy it! Hasn't the interest % structure changed on them?

Actually, it was better: 19½%!

According to the S92 rates document on matured Canada Savings Bonds at CSB: Rates, these were the rates on the Series S36 Canada Savings Bonds issued in November 1981:

My personal 2 cents worth: Unless you want to play the capital gain/loss game (i.e. as interest rates fall the value of market-available bonds goes up, and vice-versa) and/or you want to lock in for more than 5 years, I think GICs do better - you can always find a promo rate somewhere plus no commissions (extra or buried in price) when buy and sell.

Might be one of these two articles about GIC's on the PWL Capital site:

PWL Capital: When Should I Buy GICs? (October 10, 2012)
PWL Capital: HBB vs. GICs (January 30, 2015)

This comment from the second article suggests that PWL Capital does offer GIC's as well:

.... The other investor prefers to keep it simple, and instead invests $100,000 in a boring 5-year GIC paying 2.15% interest annually (this was the highest rate available through our brokerage at the time of writing). ....