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Email this6:20 pm
February 9, 2019
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So any idea on how to get the best monthly return for $650,000?
6:39 pm
December 12, 2009
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Denise Milani said
So any idea on how to get the best monthly return for $650,000?
What's your time horizon, Denise, and how much of the money can you afford to lock up for at least 3-5 years (if not longer)?
Also, are you comfortable in investing at least a portion of it in a diversified portfolio of low cost equity and fixed income ETFs? If so, if your portfolio declined by 20% or more, would you:
(a) sell it all;
(b) ride it out; or
(c) buy more?
Once you've answered those questions, I can help you. 🙂
Cheers,
Doug
7:20 pm
February 9, 2019
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5 years and bulletproof.
7:25 pm
December 12, 2009
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Denise Milani said
5 years and bulletproof.
LOL! I like that. Nice and concise. 🙂
I would maybe put a portion of it in the Hubert Financial 1-year quarterly GIC that's cashable every quarter (say $100,000, perhaps more), another $200,000-250,000 in 2-5 year GICs with either Oaken Financial, Hubert Financial, or some other bank, and then maybe $300,000 into either of the Vanguard, iShares, or BMO single-ticket asset allocation ETFs (either the 'xBAL' or 'xGRO' variants, depending on which asset allocation you prefer). You may want to average in to whichever asset allocation ETF you choose, though, should the overall stock market correct, you'll take advantage of reducing your overall cost base. Let me know what you think. 🙂
Links:
* Vanguard's asset allocation ETFs: https://www.vanguardcanada.ca/individual/indv/en/product.html#/productType=etf&assetClass=balanced
* BlackRock Canada's asset allocation ETFs: https://www.blackrock.com/ca/individual/en/products/product-list#!type=iSharesETFCA&tab=overview&view=list&search=Portfolio
* BMO's asset allocation ETFs: https://www.bmo.com/gam/ca/advisor/products/etfs#--tabs-1553308179556-
* Hubert Financial rates: https://www.happysavings.ca/rates/
* Oaken Financial rates: https://www.oaken.com/gic-rates/
Cheers,
Doug
7:26 pm
September 11, 2013
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Assuming "bulletproof" means 100% principal secured, and that "monthly return" does not mean you need monthly income, then I'd guess 5-year GICs.
7:33 pm
December 12, 2009
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Bill said
Assuming "bulletproof" means 100% principal secured, and that "monthly return" does not mean you need monthly income, then I'd guess 5-year GICs.
LOL Bill, I agree...it's hard to discern what she meant by "bulletproof," but I took it to mean she's got "guts of steel". 
Depending on what you meant Denise, you can modify mine as applicable, either by using the "Conservative" ETF Portfolio in place of either of the "Growth" or "Balanced" ones; using all GICs instead (from Hubert, Oaken, etc.); or some combination of the above.
Cheers,
Doug
9:07 pm
October 21, 2013
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"Bullet proof", to me, means an insured deposit, so you would likely do best with either spreading it around several CDIC-sured FIs or MB CUs, depending on which you think is more bullet proof.
Oaken is offering five year GIC with monthly payout at 3.3% as of today. Might be lower next week. You could probably safely put in close to 100K since you are taking out the interest monthly.
AlternaBank has monthly rates on some of its GICs, as follows:
"1 – 5 Year Term Deposits: Annual compound interest paid monthly or annually.
18-23 Month Term Deposit: Annual compound interest paid annually and at maturity."
However, the highest rate on this system is 2.5 for five years. You may do as well or better with daily rates if you rate-hop, but no guarantee. You might use this for another 100K as it does provide rate security, even if low.
You can probably get monthly returns at some other online FIs but you might have to ask them individually and you would likely take a cut for this privilege.
Hubert's one year GICs only pay out quarterly, so I don't think they would be suitable.
I'm pretty sure there is also some kind of mutual fund or ETF that spreads out the income and makes it come out equal every month, but not sure what it is exactly. Someone else likely knows. There may be some risk to capital involved, but I'm not sure of the details.
9:14 pm
February 9, 2019
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Guts of steel no, but a nice 6 pack. Not interest in taking any loss. Could do with some quately payments but mostly monthly. I know of Hubert 1 year GIC but don’t see it pays out quarterly but is fully cashable quarterly. And Oaken has short term. I am looking for easy too. This is not for me but is for a friend.
9:43 pm
December 12, 2009
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Loonie said
"Bullet proof", to me, means an insured deposit, so you would likely do best with either spreading it around several CDIC-sured FIs or MB CUs, depending on which you think is more bullet proof.Oaken is offering five year GIC with monthly payout at 3.3% as of today. Might be lower next week. You could probably safely put in close to 100K since you are taking out the interest monthly.
AlternaBank has monthly rates on some of its GICs, as follows:
"1 – 5 Year Term Deposits: Annual compound interest paid monthly or annually.
18-23 Month Term Deposit: Annual compound interest paid annually and at maturity."
However, the highest rate on this system is 2.5 for five years. You may do as well or better with daily rates if you rate-hop, but no guarantee. You might use this for another 100K as it does provide rate security, even if low.You can probably get monthly returns at some other online FIs but you might have to ask them individually and you would likely take a cut for this privilege.
Hubert's one year GICs only pay out quarterly, so I don't think they would be suitable.
I'm pretty sure there is also some kind of mutual fund or ETF that spreads out the income and makes it come out equal every month, but not sure what it is exactly. Someone else likely knows. There may be some risk to capital involved, but I'm not sure of the details.
Thanks Loonie, but if we're talking all GICs, I really don't think we need to be spreading the GICs around across institutions to reduce risk because, frankly, there's no risk.
I don't know why you're saying the Hubert 1-year GIC wouldn't be suitable? I know you don't find it helpful for your RRIF (still unclear why that is to me - as far as I know, there's no stipulation on when you must make your minimum yearly RRIF withdrawal as long as you make it at some point during the year). I actually think quarterly interest payments are a positive. 🙂
Cheers,
Doug
9:52 pm
December 12, 2009
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Denise Milani said
Guts of steel no, but a nice 6 pack. Not interest in taking any loss. Could do with some quately payments but mostly monthly. I know of Hubert 1 year GIC but don’t see it pays out quarterly but is fully cashable quarterly. And Oaken has short term. I am looking for easy too. This is not for me but is for a friend.
Thanks, Denise. That's helpful. Find out from your friend if they require the income and on what frequency. For instance, would quarterly or annual payments be fine? Can the interest be compounded? It's entirely possible the interest could be paid annually and they could set up a scheduled transfer, monthly, of that annual interest payment divided across the 12 months in a given year
In terms of simplicity, that makes sense - I assume you mean not to scatter it across multiple FIs. In that case, I would pick an FI and go with that. Make sure they're aware, if going with a credit union, the deposits are insured by the Deposit Guarantee Corporation of Manitoba (a provincial Crown corporation) versus CDIC. In my view, DGCM insurance versus CDIC insurance is like chocolate versus vanilla ice cream. CDIC has per depositor limits; DGCM is an extension of a provincial government versus a federal government. Both CDIC and DGCM have implicit, but not explicit, backing of the federal and provincial governments. In short, the differences are not significant.
To Loonie's point about an income-focused ETF, this is an option. Your friend may want to consider HFR - the Horizons Active Floating Rate Bond ETF. Keep in mind, of course, it's not a deposit and thus not insured, but is ultra short term in duration and Horizons does a good job of trying to maintain a constant $10.00 net asset value per unit. It's currently paying between 2.30-2.65%, I believe, assuming the ETF was held for the next 12 months. It pays the payments monthly. I would recommend setting up a limit order, if your friend ultimately puts some of it in that, with a "good thru" expiry date of a couple weeks, of around $10.00-$10.02. When they're ready to sell it, do the same, but set the limit as close to what they paid for it so they don't lose much, if anything, on the buy/sell prices paid.
(Loonie, was that what you were thinking of?)
Cheers,
Doug
3:17 am
October 21, 2013
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Yes, that's probably the kind of thing i was thinking of, Doug. Maybe there is also something that involves dividends? - but that is beyond my knowledge.
I don't agree with putting any of the money in iShares or whatever, simply because it is not bullet-proof, especially not over only five years. I wouldn't consider any of that for less than 25 years, preferably longer.
Hubert's one-year GICs definitely pay interest quarterly. I've been using them for several years. That's why the four separate rates are listed. First you get the first rate, then the second, etc., one per quarter. The default is that interest is compounded, but I don't see why you couldn't arrange for it to go to savings. Best to ask.
The reason I don't like Hubert for RIF is simply because they do not offer any kind of one-year GIC available to RIFs. You can have daily interest, 2 yr, 3 yr, 4 yr, 5 yr, but no 1 yr.
I don't agree that there is no need to spread the funds among several FIs. I would not invest more than was insured, personally. There was a lot of nail biting a couple of years ago, including by some on this forum, when it looked like Oaken might go under, because some had deposited more than was insured into GICs.
However, if you put it all into Hubert one-year GICs, it would all be insured.
If simplicity is the main thing, I would recommend putting it all into Hubert one-year GICs. If monthly interest is important, here's how they can be made to work: Divide up the total and deposit a portion every month for 3 months. In the fourth month, you will get your first quarterly interest payment; and so on, so that you get interest every month. Setting aside the variable rate through the course of the year, you will be getting 1/12 of your annual interest every month. Make sure you make the amounts of those 3 deposits slightly different, to make them easier to track. These GICs roll over automatically unless you intervene. If rates should go up, you can pull your GIC and reinvest it at new rates at the end of any quarter. The quarters are measured from date of deposit, not calendar quarters. You just need to check with them to make sure there is an easy way to get the interest out monthly. If you have to do that manually, it would be a nuisance. The only other reason I can think of to hesitate is if you don't want your money in MB or don't feel confident in their insurance system.
You could do 200K at Oaken. I forgot about the second channel.
6:56 am
September 15, 2017
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For Hubert's one year GIC, I don't think you have the option of taking out the quarterly interest. I believe the only interest option is quarterly compounding added to principal. Better to check directly with Hubert.
8:30 am
May 25, 2017
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CIBC is offering 3% for 5 year GIC with annual payout, 2.875 for half yearly and 2.75 for monthly payout. Best option if you want no hassles !
9:46 am
February 9, 2019
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Hi everyone. Thanks for your suggestions. I think I will just go with GICs.
10:08 am
September 11, 2013
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If you want interest income and 100% principal security the answers are always the same: GICs and/or high interest savings accounts. You can use the latter for money you need access to in the next year and the former in various terms for the rest.
3:09 pm
October 21, 2013
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GR said
For Hubert's one year GIC, I don't think you have the option of taking out the quarterly interest. I believe the only interest option is quarterly compounding added to principal. Better to check directly with Hubert.
If that's the case, you could still use them. There are two ways.
(1) Put all the money into savings there at 2.5%. Each month, take one-twelfth and put it into a one year GIC. For the first year, you can get monthly interest from the portion in savings, although it will decrease over course of the year. Starting in the second year, you will have one GIC maturing every month, with interest. Take out that interest and reinvest for another year.
(2) Cash in the GIC every quarter, take out the interest, and reinvest in new GIC. The weakness of this approach is that you will always be at the lowest quarterly rate (currently 2.95). Still, it's not a bad rate.
Hubert has the best one-year rate right now , and tends to have superior rates. This would enable you to take advantage of any rise in rates but is not so good if rates fall.
The alternative is a five-year GIC such as Oaken offers, with monthly interest payments. Next week, their rate is scheduled to drop to 3.20%. I would not put more than 200,000 there, personally.
I would imagine that if you bought a five year GIC at one of the MB CUs, they would allow monthly interest payments at a slightly lower rate in the same way that Oaken does (or maybe even at the same rate for seniors), but you'd need to ask. They are mostly paying 3.5% right now. This would be the best way to go if it's available and if you are OK with MB CUs as it would be one-stop shopping. MAXA will guarantee the rate for 21 days while you get the money there.
For such a large amount of money, it might also be worthwhile talking to a GIC broker. Just make sure you keep it within insurable limits, for "bullet proofing". The advantage of using a broker, apart from their broad access to rates and FIs, is that they will make it easy for you by doing the paper work etc. As of last Friday, for example, GICWealth was offering five years at 3.55%, but I don't know if monthly interest available.
3:38 pm
February 9, 2019
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Due to friends age 5 yr GICs all invested at once will do as will need funds the next month. They might never get renewed.
12 month laddering is a real good idea! If you can wait for the 2 years to take full effect.
I invest quarterly but doubt if I have each group (TFSA, RRSP, non registered) equally divided. Darn, I guess I have to revise my excel tracking to report that back to me! Part of a good plan for future needs.
4:15 pm
February 24, 2015
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Denise Milani said
Due to friends age 5 yr GICs all invested at once will do as will need funds the next month. They might never get renewed.12 month laddering is a real good idea! If you can wait for the 2 years to take full affect.
I invest quarterly but doubt if I have each group (TFSA, RRSP, non registered) equally divided. Darn, I guess I have to revise my excel tracking to report that back to me! Part of a good plan for future needs.
You can complete your ladder in 6 months. Every month buy a 1 year GIC and an 18 month GIC.
3:04 am
October 21, 2013
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So, what you are looking for is essentially the best five year rate which provides monthly interest.
It also sounds like this person is elderly. I hope they have enough other money to deal with any extraordinary expenses such as caregivers etc., should they be needed, beecause a five year GIC will not allow that.
The remaining question is whether they want to put all their eggs in one basket if it is not fully insured.
I think it's time to call some of the MB CUs and ask if they will do monthly interest pay. I have never asked but would be interested in the answer.
I have found it difficult, however, to convince elderly people (i.e. in their 80s and 90s) that alternative banking is the way to go. If that's the case, then perhaps just go with the CIBC option mentioned above, although you can do better elsewhere for rate. Every 10 bps is worth about $54/month.
Something else to consider is, what does this person intend ultimately to do with the capital. If heirs and care costs are not a factor in this money's disposition, then a single person life annuity will, by far, bring in the greater monthly income. They would be relieved of all future decision-making in regards to this money. If interested, one should shop around, but this calculator is helpful to get a rough idea: https://www.sunlife.ca/ca/Learn+and+Plan/Tools+and+Calculators/Annuity+Calculator?vgnLocale=en_CA
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