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Email this2:58 pm
November 4, 2014
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I was just looking, Googling different information on interest rates and I came across this strange ad that has nothing to do with Canadian Savings Bonds.
Google Canadian Savings Bonds and it is the first Google ad. It is about Mutual funds and different income funds from Mackenzie Investments discussing that a GIC only provides 10% income today of what it did in 1980.
This meaning 10 cents of every dollar of interest income that a GIC used to provide.
It has nothing to do with Canadian Savings Bonds. It seems to me that it is just to get people with GIC's to look and conive them to buy their funds.
I remember when interest rates on GIC's where 8% to 9% around 20 years ago and they started dropping to 7% and then 6%, 5.5% etc. in 1997, 1998 etc. and that that many were reassured they they could get 7%, 8%, 9% again by buying mutual funds for their RRSP's and non-registered accounts.
Those that did this were called GIC refugees in many financial articles and the financial media.
This looks very similar that many of these mutual fund companies and advisers as still trying get people with GIC's maybe getting 2.80%, 2.95%, 3.00%, 3.10% at most and switch so that they can get 5%, 6%, 7% a year.
After 2007, 2008 financial, economic deepest downturn in decades, I think the more older, nearing retirement, in retirement crowd are still bruised by putting alot of their money in higher risk funds, low fee or not.
I could be wrong but this method of putting ads that look like one thing but turn out to be another is not going to change what most people think they should do with their money.
By them doing this, it looks like they are having more and more difficulty in getting new clients!
3:10 pm
November 4, 2014
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I don't know if this link will work but try this, http://www.talkliveit.com/en-i.....MgodQmMa-g.
9:39 pm
November 4, 2014
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The link works and it is the same information about why GIC's are disadvantaged according to their mutual fund presentation and information.
It is hard not to think that interest rates on savings accounts, savings bonds, term deposits, GIC's, bonds and dividend yields on the safest, highest quality equities are going to stay low because let's face it, it is in their best interest to make sure they can keep the status quo going.
6:33 pm
April 6, 2013
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Looks like what author John Lawrence Reynolds calls "investment pornography." Gets people hot and excited but doesn't lead to anything productive.
About their Mackenzie Investment Grade Floating Rate Fund:
• Income enhancement with high yield exposure while maintaining overall A- or higher
• Active management to find best value for risk across the floating rate spectrum for the current environment
Are we excited? Well, let's have a look at the Portfolio page to see what a juicy yield one will get from the active management and income enhancement. This is on the right side, partly down the page:
Bond Portfolio Details
Duration 2.70 years
Yield to Maturity 0.50%
All that for a management expense ratio of 1.78%.
7:13 pm
October 21, 2013
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...not to mention inflation and income tax.
Net is squarely in negative territory.
This makes a market-liinked GIC from, say, Alterna, look attractive! - not that I would normally recommend them. I think one of them has a guaranteed 1.5% over 3yrs, with potential for more.
I enjoyed Reynolds' Skeptical Investor.
1:11 am
November 4, 2014
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Why would anyone in their right mind put money in these almost, no yield mutual funds when their are so many better alternatives.
Their are 1.75% to 2.10% higher interest savings accounts that are fully liquid, accessible, cashable GIC's at Oaken Financial for 1.75%, 2.00% fixed rate for 1 year but cashable after 30, 90 days with no interest lost and no penalties.
1:22 am
November 4, 2014
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There are other financial institutions that usually have short term higher interest term deposits, GIC's like Alterna Credit Union, Alterna Bank's 2.10% 120 day fixed rate term deposit.
Promotional deals that come up time to time at 2.50% was 3.00%, 3.10% from Tangerine Bank, PC Financial etc. for 3 to 4 months.
There is a TFSA savings accounts that pay much higher than non-registered higher interest savings accounts at 2.50% and some for 1 year as high as 2.60%, GIC's, RRSP's for 2.40% if liquidity, accessibility is not needed which are both available at Peoples Trust.
DucaCredit Union has a 2.75% 40 month flex GIC that after 6 months can be cashed for 1.75% but the rate is fixed for 40 months at 2.75% if money not needed.
There are also 3 year 3.00% TFSA rates at CFF Bank and 3.00% TFSA savings account until March-31-2015.
1:36 am
November 4, 2014
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There are GIC specials out there for 30 months at 2.60%, 2.50% at many credit unions usually Manitoba credit unions.
There are 18 month GIC rates from 2.25% to 2.50% like Oaken Financial, Comtech Credit Union, Luminus Financial etc.
There are even lower paying shorter term fixed rate term deposits from 1.25% to 1.70% at other financial institutions but higher rates of 1.75% to 1.90% at Oaken Financial.
The 3 posts I listed many better options that are CDIC, DICO or backed by some other government deposit insurance, provincial that is and some large private insurance fund like Manitoba credit unions and some say by Manitoba too if needed but not guaranteed by them.
I am sure there are many more better options that I did not even mention here that exist. On top of this, a 1.78% annual MER, management expense ratio or annual management fee.
This is very high, excessive in a much lower, interest rate, yield world when short term rates were at 4.25% to 4.75% back in 2006, 2007 and these annual management fees were set as the norm.
This means with this very high 1.78%, current annual management fee with their low yield, fixed income funds, you would have to earn anywhere from 3.25% to 4.28% looking at the least better options to the best options just to break even.
Their short term bond funds or income funds of theirs that pay more than 0.50% annual yield is most likely in most or some high yield, higher risk fixed income investments, bonds etc. that is not at all CDIC, DICO , CUDIC etc. government deposit insurance or some stronger backing by insurance of another kind like Manitoba credit unions.
2:04 pm
April 6, 2013
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Loonie said
...not to mention inflation and income tax.
Net is squarely in negative territory.
This makes a market-liinked GIC from, say, Alterna, look attractive! - not that I would normally recommend them. I think one of them has a guaranteed 1.5% over 3yrs, with potential for more.I enjoyed Reynolds' Skeptical Investor.
For sure, +1.5% over three years or +0.498% per year is much better than the actively managed, income enhanced, 0.50% - 1.78% = -1.28% per year.
Haven't read Reynolds' The Skeptical Investor. I did read his earlier book The Naked Investor: Why Almost Everybody but You Gets Rich on your RRSP.
I couldn't help but think of The Naked Investor book when I saw the 0.50% yield-to-maturity and 1.78% management expense of the Mackenzie Investment Grade Floating Rate Fund.
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