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Email this11:31 am
October 21, 2013
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There is no such thing as off-target "for a moment" on this site.
Unfortunately this site has increasingly become a playground for people who are not really very interested in GICs and very limited interest in HISAs. Peter doesn't seem to care, and I am tired of it all.
So I will just say to any young(er) people out there, be careful. AltaRed's strategy will not fit all of your situations. It works best for people who have more money than they will ever need, will never have any debts incl mortgage debt, and who are more concerned about inter-generational wealth than personal. If that's not you, seek better advice - and good luck with that.
Added: I appreciate AltaRed's amendment, which I just saw, but my advice stands. Perhaps we will even agree.
1:11 pm
September 11, 2013
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Alexandre, I think the point about GICs not having an upside is that there's no way your principal portion can rise, can increase, unlike stocks.
Over my lifetime AltaRed's diversification and time in the market approach has beaten GICs-only handily, even if some don't like to hear it. And that success hold true for all participants, large or small, i.e. it's false to say it worked just for those who had more than they need or who cared about intergenerational wealth, etc. That's useful for youngsters to know, advice re GICs and HISAs vs equities. And history is clear, so to me the only real question young people need to ask themselves is, "do I think the Boomer-era experience will be replicated in the future?" Your answer to that should drive your diversification strategy.
I fully support what Peter does here, he walks that line very well, I like it, lots of related, tangential stuff I've learned here not just exclusively related to the GIC & HISA part of my portfolio. And a site limited 100% only to those who are "very interested" in GICs and HISAs, well, not sure that's a heck of a lot of people (and the charts alone pretty well say what the average person wants to know). But luckily participation on here is not mandatory so if I ever got tired of it I'd just stop.
2:17 pm
October 21, 2013
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There is a lot on this site that is not related to stock market and related bragging, but it gets sidetracked over and over again by those who persist on diverting threads to talk yet again about their stock investments (retrospective mostly).
OP asked about CDIC, which is a question about HISAs and GICs, but once again here we are talking about stocks, making the thread increasingly irrelevant to anyone actually interested in the topic. Should anyone attempt to interrupt all this nattering about the stock market and return to the topic, readers would not likely find that information as they would have given up reading by then.
Most people here really are interested in GICs and HISAs and related topics. There are just a handful who insist on talking about their stock market investments regularly, regardless of the topic.
6:47 pm
September 11, 2013
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Maybe, Loonie, but I'm sure most of us are still ok with the fact that your posts just in the last few hours referencing Trump, Biden, the Auto Pact and Lyndon Johnson (!) in the (non GIC/HISA-related) "WHAT IF there is a war" thread weren't deleted!
7:31 pm
October 21, 2013
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So?
I don't have a problem with that thread. At least it's something new and different to talk about rather than the endless repetition, but I would have a problem with it if it degenerated into another round of fatuous political bluster.
International relations could indeed have an impact on interest rates.
t.
7:40 pm
October 27, 2013
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Alexandre's post #17 triggered my response because on its own, that post is highly misleading at best. My post was to demonstrate why no one with a diversified portfolio of equities (in whatever form they want them) loses money over extended periods of time. BUT I agree the rebuttal could have been posted differently so as not to derail the thread. My apologies for that distraction.
Regardless, I think Loonie and I do agree there is a place for HISAs and GICs, especially early in one's investing journey and for elderly seniors. I had them too at at earlier part of my investing journey, and HISAs still are the basis of my 'cash reserve' in retirement.
Alexandre could have also said HISAs and GICs carry their own risks (loss of purchasing power) regardless of insured amounts. Inflation is a real b**ch in that regard. That is also probably better debated in 'inflation' threads.
7:44 pm
October 27, 2013
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Loonie said
I don't have a problem with that thread. At least it's something new and different to talk about rather than the endless repetition, but I would have a problem with it if it degenerated into another round of fatuous political bluster.
International relations could indeed have an impact on interest rates.
There are many threads I don't consider reading because my interest is not there. Perhaps just ignore them?
8:29 pm
April 6, 2013
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mechone said
My Dad did Confederation trust I believe in 1993, took 6 months to get his money
A few years later, in 1996, Security Home Mortgage failed.
According to the CDIC history book I mentioned, the depositors received their money in about three weeks:
Although it had no idea that this was the case at the time, the last failure of CDIC’s first fifty years occurred in June 1996, when Calgary-based Security Home Mortgage Corporation closed its doors for good. About 2,600 Canadians had deposited a total of $42 million with this company. Of that amount, all but $10,000 of the deposits was insured. Within three weeks, CDIC had made payment of all insured deposits.
8:19 am
September 11, 2013
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GIC rates were much higher when some of us were young (though so was inflation), allowing a bigger base to build on more quickly. I can see why young people aren't taken with the idea that they can net $15 or so after tax on their $1000 gic after waiting a whole year. Couple or 3 coffees.
In fact, come to think of it, the young people I know never really mention GICs, not sure they even know what they are as they seem pretty much "markets" oriented. Lot of that's also to do with constant marketing of no/low fee trading platforms, of alt-discount broker accounts, instantaneous trading by phone, easy availability of ETFs, DIY attitude, shorter attention spans thus no patience to wait 5 (!) years, etc, etc.
8:40 am
November 8, 2018
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AltaRed said
Alexandre's post #17 triggered my response because on its own, that post is highly misleading at best. My post was to demonstrate why no one with a diversified portfolio of equities (in whatever form they want them) loses money over extended periods of time.
I didn't want to go off original topic, but must say that you don't see how your statement about diversified portfolio is misleading. Don't just parrot what they teach at MBA schools, without critical thinking.
That also directed at you, Bill. No, diversified portfolio does not guarantee higher returns. That's not the main reason why you diversify. Diversification reduces risk and volatility.
Nothing comes for free, so what are you losing when your portfolio is less riskier and not volatile? Potential payout for taking high risks, that's what, a.k.a. high returns.
Even with diversified portfolio, the risks still exist, making your claim "success hold true for all participants, large or small" factually incorrect.
In fact the claim like that, it sounds like "there is sure way to win in lottery, at casino, on stock market." Same promise of guaranteed success and same victim blaming directed at those who failed.
Yes, victim blaming, because the only people who lose money playing stock market Ponzi scheme are those who don't understand how to properly diversify portfolio, didn't wait long enough. It is because they are stupid. Right?
9:35 am
October 27, 2013
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Alexandre said
I didn't want to go off original topic, but must say that you don't see how your statement about diversified portfolio is misleading. Don't just parrot what they teach at MBA schools, without critical thinking.
I've never paid attention to business schools or attended one so you would need to enlighten me on why you know what you know to be supposedly true. A diversified portfolio purposely reduces risk and volatility and the reason to emphasize that specific point in my post. Anyone can look at the historical data for any broad market index, and in particular the MSCI World Index for global diversification to validate for themselves.
That kind of investing approach never guarantees 'higher' returns than a more concentrated stock portfolio where investors certainly place 'bets' on individual stocks that can win big or lose money. That is a good reason for most not to invest in individual stocks. That is Investing 101.
Added: Each of us invests/saves in the manner that we are most comfortable with - our sleep-at-night factor for example. There are risks in every style of investing and thus there is no right or wrong.
10:17 am
September 11, 2013
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Alexandre, you, not I, used the word "guarantee", if you read my post #22 properly you'll notice I was referring to the facts re past history, i.e. diversified portfolio creamed GIC-only. I made no recommendation re the future. Also you forgot to mention the "time in the market" part that was key part of my comment.
You are right that diversification is to reduce risk and volatility, doesn't change the fact it still beat GIC-only, per history. But, again, you chose to ignore my starting words, "over my lifetime", and then my ending hesitation about the future being the same. You made up the part about "promise of guaranteed success" in the future as you also made up the part about victim blaming, more fiction as no word of that in my post. And I never went near a business school. And I've no idea where "they are stupid" came from, that was your contribution. You made up a lot of stuff, Alexandre.
But good news, I've actually found some stuff comes for free, I've had several unexpected gains from many investments I picked over the years. Of course I've had my share of losers too, I take full credit for those as well but they pretty much disappeared once I learned to be patient.
10:48 am
March 15, 2019
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I vaguely remember President Reagan's investment advice.
1) 1/3 in cash
2) 1/3 in real estate
3) 1/3 in stocks
4) 1/3 in fixed income
11:40 am
March 30, 2017
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COIN said
I vaguely remember President Reagan's investment advice.1) 1/3 in cash
2) 1/3 in real estate
3) 1/3 in stocks
4) 1/3 in fixed income
hahahaha. Thats a good one
9:44 pm
November 18, 2017
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I can't find current numbers, but for decades, a sliding ten-year window of equities versus deposits showed most such windows were very close in yield. And there's a big advantage: you know in advance which is the best GIC deal to take, whereas you don't know what the equity will have done until the fat lady has sung.
I once got an RBC mutual fund pusher - who was called in when a mortgage loan arranger faced a friend of mine who was planning to pay off his mortgage (which he did). The two salesthings tried to tell him he should take a longer mortgage term and put his cash into RBC mutual equity funds (which were doing poorly). I pointed out that they were salesthings, not pledged to his fiduciary interests.
The called-in "expert" showed us charts of both GIC rates and equity mutual fund yields, and sure enough the equity average exceeded the GIC average. But the individual lines on the graphs showed that the best GIC (or bond) investments beat most of the equity mutuals, and one knows their rates ahead of time; the equities could have gone anywhere.
Atop this, there was the lower mortgage rate on the shortened term, a guaranteed saving. The "expert" harrumphed and protested being disrespected, but she did not contest my numbers.
My friend took the shorter term, paid $50 a month more for two years and burned his mortgage. Meanwhile, the fund they have his TFSA in - and wanted him to put more into - took a haircut for those two years.
RetirEd
RetirEd
1:13 am
October 21, 2013
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In addition, their GIC returns cited are based on THEIR pitiful rates, not the rates we would get elsewhere. So I wouldn't consider it a valid comparison.
maybe you should too!
The pressure to buy these funds is enormous. Always be suspicious of a "sure thing"; it probably isn't, especially if high returns are dangled in front of you; and never let yourself be pressured by "you can't afford not to do this". If you are feeling vulnerable, just take home the literature, study it at your leisure, consult with sceptics for balanced view.
You can also feel this pressure sometimes at CUs now. They are all into "Wealth Management". As someone pointed out, they can't lose as they will get a cut from every fund you buy whether it wins or loses without risking any of the FI's money; only you can lose. They are going for the nice steady income and volume; maybe you should do as they do, not as they say.
7:34 am
April 6, 2013
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RetirEd said
I can't find current numbers, but for decades, a sliding ten-year window of equities versus deposits showed most such windows were very close in yield. And there's a big advantage: you know in advance which is the best GIC deal to take, whereas you don't know what the equity will have done until the fat lady has sung.…
No, the ten-year returns have not been close. No, one doesn't know with GIC's either.
There was a previous discussion about this. The returns were close in ten-year periods with 2008. That's about it.
Those of us who have invested in equities know first hand that it takes a major calamity, like what happened in 2008, to bring the ten-year return of stocks down to that of GIC's and bonds.
One doesn't know the long-term return with GIC's either. One doesn't know what rate one will get on renewal when that five-year GIC matures.
8:47 am
September 7, 2018
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RetirEd said
I can't find current numbers, but for decades, a sliding ten-year window of equities versus deposits showed most such windows were very close in yield. And there's a big advantage: you know in advance which is the best GIC deal to take, whereas you don't know what the equity will have done until the fat lady has sung.
RetirEd
I think it would be informative for you to research some current numbers to back up your point. I have owned both GICs and equities in the last 10 years. Over the last 10 years the net return on equities outperformed GICs. It was not "close"!
What has been your average return on GICs for the last 10 years? 2.5%? 3%? 3.25%?
9:14 am
October 21, 2013
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Norman1 said
One doesn't know the long-term return with GIC's either. One doesn't know what rate one will get on renewal when that five-year GIC matures.
You CAN buy ten year GICs now, so it IS possible to know ten year results in advance. EQ and Motive advertise them, and others can sell them to you if you ask. CDIC covers them.
I wouldn't buy them right now, but they may be suitable for some. If you believe, as some have repeatedly said on this forum, that inflation will settle out at 2-3% over the longer term average, then you may be interested.
9:22 am
September 7, 2018
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Loonie said
Norman1 said
One doesn't know the long-term return with GIC's either. One doesn't know what rate one will get on renewal when that five-year GIC matures.You CAN buy ten year GICs now, so it IS possible to know ten year results in advance. EQ and Motive advertise them, and others can sell them to you if you ask. CDIC covers them.
I wouldn't buy them right now, but they may be suitable for some. If you believe, as some have repeatedly said on this forum, that inflation will settle out at 2-3% over the longer term average, then you may be interested.
Yes I see 10 year GICs available but I cannot visualize freezing funds for 10 years. Not sure what circumstances would encourage one to buy a 10 year GIC. Does anyone in this blog buy 10 year GICs? If so, tell my why for 10 years?
Please write your comments in the forum.