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Email this12:07 am
October 21, 2013
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Greg Franklin said
Since I can't correct my prior second post above at 9:04 P.M, November-6-2014 because there is no edit button displayed, I meant to say I am talking about GIC's and savings bonds. This is in context of the steep, relentless falling rates from 8.25% to 3.05% at best. Sorry for any misunderstanding.
FYI, the moderator has recently decided to disallow edits if someone has already responded to the post in question. I disagree with this, as it makes the thread more difficult to read when revisions appear much further down. I normally do a lot of edits, almost entirely to improve the clarity and grammar of what I said, as I think it makes a thread much easier to read and the meaning clearer. I usually do them quite soon after my first post, but sometimes other people respond first, and then I would not be able to edit, which annoys me. Also, I don't think any of us wants to read outdated or erroneous information which could have been corrected. I hope this forum doesn't end up as messy as RedFlagDeals, which has an awful lot of junky posts.
Since this decision was made, I decided to try to reduce the number of posts that I make, as I find this new ruling a nuisance that interferes with my writing style. Every decent writer makes revisions.
6:24 am
August 4, 2010
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Loonie said FYI, the moderator has recently decided to disallow edits if someone has already responded to the post in question.
Just to clarify, that would be the "Admin"/owner of the site, Peter, responsible for all good things here. I've got a "moderator" tag status mainly because I volunteered to help clear spam attacks awhile ago, but I'm just an ordinary fellow board member... 
I'm assuming the feature was turned off to prevent a couple of the problematical (former) members of late go back and clear/redo previous posts, causing confusion. I don't know if retro-editing can be applied per-user or not. Some board software allows editing for a certain time period before turning it off, but I don't know about this SimplePress.
7:02 am
May 15, 2007
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NorthernRaven said
Loonie said FYI, the moderator has recently decided to disallow edits if someone has already responded to the post in question.
Just to clarify, that would be the "Admin"/owner of the site, Peter, responsible for all good things here. I've got a "moderator" tag status mainly because I volunteered to help clear spam attacks awhile ago, but I'm just an ordinary fellow board member...
I'm assuming the feature was turned off to prevent a couple of the problematical (former) members of late go back and clear/redo previous posts, causing confusion. I don't know if retro-editing can be applied per-user or not. Some board software allows editing for a certain time period before turning it off, but I don't know about this SimplePress.
Unfortunately there is no time-based setting, although perhaps I could extend the current setting to add that feature. I could also consider creating a new user group for users who have been long-time contributors to the forum -- that group would have the full edit permission.
9:31 am
November 4, 2014
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I did not mean to cause any possible attention about the edit button but I just wanted to correct a mistake I made which would of not made sense about what I was stating in my post, GIC's and savings bond rates falling alot...63% to be exact.
Either way it is fine with me as I can always add a correction to my post to make sure everything is understood. Thanks for clarifying Loonie, NorthernRaven, Peter.
10:03 am
November 4, 2014
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Loonie, as you can see laddering takes a lot of work and transferring money around with fees associated with all RRSP's, TFSA's, LIRA's.
Laddering may work or not work but I can't emphasize more that since I am disabled and only receiving a $1,212 a month C.P.P. disability versus others I know that worked for other employers receiving $2,000 or more a month in C.P.P., long term disability, we can't risk losing today a minimum $200 a week which over 260 weeks is $52,000.
This is equivalent to losing about 40 months of my C.P.P. disability of $1,212 a month when adding in annual C.P.I. inflation increases. We can't afford to take that chance.
Actually, if rates fall more in 5 years, say a 2.5% or 2.25% Oaken, Comtech Credit Union, ICICI Bank of Canada, State Bank of India Canada 5 year GIC, TFSA, RRSP we will lose even more and laddering will of lost us more money.
Loonie, the main problem is interest rates are in a funk now for at least 4 to 4.5 years GIC's below 4.00% and there is no real reason that will change for a sustained time. There maybe a 3 or 4 month blip up in rates like the last 4 years but it is not going to help us for long term income protection.
Actually, my adviser went through many scenarios from laddering to long term bonds and a mixture of GIC's 5 years and he brought up Japan which freaked us out with 0.10% to 1.7% interest rates for 1 year to 30 year interest rates, Japan bonds. They are getting squeezed for at least 15 years now according to him.
He showed us some long term provincial coupon bonds that pay interest semi-annually which would of help us with cashflow instead of waiting every year like GIC interest but even more telling was the difference between these 22 to 26 year bonds and 5 year GIC's was about $377 a month or $87 a week.
If these are in zeros that are compound interest bonds semi-annually, it is $11,024 or $212 a week. This is compared to 3.05% and 3.00% GIC's, TFSA's, RRSP's but if rates drop alot over the next 5, 10 years etc. like a Japan economic deflation malaise, this would be easily $300 a week and more.
Our adviser is with us for 16 years now and spends at least 1 to 2 hours with us and multiple metings when important, life changing events like these occur.
It is possible that if we go all out and GIC ladder or even stick with GIC's of 5 year terms paying the highest so far, we will lose $300 or $400 a week in total lost interest over the next 15, 20 years. This is $300,000, $400,000 or more that we will never get back.
Loonie, we are still not really able to sleep really easy even with 5 year GIC, RRSP, TFSA interest income protection. Hopefully things don't get worse because it has been at least 10 years since 2004, anything government guaranteed, safe, CDIC, DICO etc. insured that a saver, bond investor could get a 5.00% interest rate which is normal and is not a high, excessive savings rate for those that worked and saved so hard for 25, 30, 35 years etc.
It is scary times and I don't know what others are going to do with much less than the roughly $600,000+ total investments that we have and it is much harder for us than we would ever expected.
10:17 am
November 7, 2014
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Just wondering if any of you try independent brokers to get better GIC rates? Some of them have special deals with credit unions, etc. for higher, unpublished rates.
11:15 am
November 4, 2014
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Gicjunkie, I never used them before but I checked the internet and could not find GIC brokers, GIC agents of other companies that shop for GIC's with current higher rates than Oaken Financial.
I can't find anything more with our adviser, online or anywhere else with 5 year GIC rates more than 3.05% and CDIC, DICO or other deposit insurance coverage. If anyone knows anything better than this, please share with us.
You can use http://www.cannex.com, http://www.fiscalagents.com to see what I am mentioning here about GIC rates.
1:20 pm
November 7, 2014
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Although I do check the Globe and Mail, National Post and Cannex sites for their GIC chart rates, I often find that I have to check the regular credit union websites (across Canada) for the best rates, and sometimes look for odd investment periods, eg. 18 months, 30 months, 45 months, etc. Manitoba (Steinbach, Hubert, Achieva, Outlook, Maxa, etc.), Ontario (Comtech, Kawartha, etc.) and sometimes BC credit unions tend to be the best. Having said that, there are brokers with special rates (3.10% for 5 years and 2.55% for 18 months) if you look hard enough.
1:23 pm
October 21, 2013
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Greg, I truly appreciate that you don't want to take unnecessary risks.
My proposal is intended to minimize them, not increase them since, as BrimleyChen said, it is impossible to predict rates, even though we know they will almost certainly continue to be low.
I have no idea why you think you would lose $200/wk., or anything close to it, from laddering. No matter how you arrange your money, you will have to reinvest it periodically at prevailing rates, whatever they may be. Laddering will allow you to spread out that risk while getting maximum available returns at all times after the first 3 years, as I explained earlier.
Ii have laid it out as best I can and you have not responded to any of the specifics, so I will leave it there.
Good luck!
1:30 pm
October 21, 2013
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Peter said
Unfortunately there is no time-based setting, although perhaps I could extend the current setting to add that feature. I could also consider creating a new user group for users who have been long-time contributors to the forum -- that group would have the full edit permission.
Anything you can do, Peter, to make my editing easier would be appreciated! Others may feel differently.
2:16 pm
November 4, 2014
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Loonie, I don't know if you did not understand about my points about our adviser showing different scenarios even in more in depth than what you laid out from GIC laddering to 5 year GIC rates to longer term government bonds, government zeros etc.
We have pages and pages from our adviser that we are looking at for days now, 10 days looking over and over them recalculating them and going through them and the bottom line is savers, GIC and government bond investors will lose and continue to lose.
The different amounts of lost interest from $200 a week which is immediate for the coming 5 years to as much as $300 a week to $400 a week for the next 10, 15, 20 years may seem a forecast that many do not think they can make but the trend is low rates and everyone that is thinking that interest rates can go up dramatically to GIC's that is 3.75% to 5.00% will be sorrily disappointed.
We are even considering moving some money to 3.70%+ longer term government bonds because even if rates were to go to 5.00%, the way government finances are going, income taxes will be going up and the extra interest made will not be as great as many think.
Our adviser suggested us to buy some corporate bonds with higher rates but we are not sure if these are as safe as most are suggesting.
I don't want to sound like a broken record but I am disabled with a bad back and can't work and if I was getting an extra $800 to $900 a month in disability pension that someone I know are getting in my similar situation then we could take some interest rate risk with GIC laddering, bond laddering and shorter term maturities or a mixture of these and more if these low rates were to finally sustain 4.00%, 5.00%, 6.00% GIC, bond rates like back in 1990's, early 2000's.
Loonie, once again I appreciate you taking the time of explaining GIC laddering and giving me some books, resources to look at about bond investing also but we are getting older and losing time and money which has gone on too long which we can't afford it anymore with our tougher situation.
Good luck and I hope you are well financially as well as your family!
9:53 am
November 4, 2014
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Gicjunkie, you can go to http://www.financialpost.com/p.....nnual.html, http://www.gicdirect.com, http://www.gicwealth.ca, http://www.gicmax.ca, http://www.themoneybroker.ca, http://www.mrgic.ca, http://www.gpwealth.ca/best-rate.aspx, http://www.onesourcegic.com/gi.....a-rrif.php, http://www.hgfs.ca/about.php, http://www.comparemyrates.ca/b.....uebec/gic/. There is also http://www.ratesupermarket.ca.
There are so many of them using Google but you can see that they are not as competitive as they say they are.
1:34 pm
October 21, 2013
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Greg, it's true that I can't for the life of me understand why you would think that laddering GICs 1-5 years would cost you a loss of $200/month over the next 5 years, let alone over the longer term when interest rates are a matter of conjecture. You have not really explained it as far as I can see.
However, you seem satisfied with your conclusions,, so I guess that's what matters, and you are not obliged to justify it to me.
I remain concerned about your situation. You sound somewhat desperate, to my ears. Disability, especially when unforeseen, is very scary, no doubt about that.
People often make bad decisions when they are feeling highly anxious about the future, so I would just urge you to be sure you are not making assumptions about the future which cannot be validated. Everything that is not certain is a risk, and it can go both ways.
You have probably already considered this and rejected it, but, since your strategy seems to be to hold out for rates around 3% for the longest possible term, I thought you might want to look at the 7yr rate at DUCA CU which is 3.0%. I know there is some issue around insuring deposits longer than 5 years. I think DUCA has a workaround for that, but I am not sure and have never inquired, so you would have to reassure yourself on that front.
Similarly, Accelerate is offering 2.9% on 7 years (just went up from 2.85%), which is insured without any limits by Manitoba Deposit Insurance Corp. In fact, 5, 6 and 7 year rates have all recently gone up by 5 basis points at Accelerate, as well as the daily rate of which you are aware.
I agree that deposit brokers are not a reliable source, only a general guide. One can almost always do better on one's own, and also the rates on those sites are often not up to date. I had money with one of those deposit brokers for years until I got wise and have been gradually removing it, so that it is all out now.
2:25 pm
November 4, 2014
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Loonie, thanks for your concern but it is $200 a week in lost interest comparing the $600,000+ in investments over the next 5 years.
I said it before that our adviser has everything on paper with pages at different scenarios and interest rates over 5, 10, 15, 20, 25 years etc. We looked at it, recalculated it many times and it all works out. We have copies of everything.
It is 11 days now that we have done this and we are making informed decisions and are not taking this lightly or at the word of our adviser. Even with 3.70% to 3.75% longer term bonds that seem low today, this can easily cost us $300 to $400 a week over the next 15, 20 years.
Remember, I am only getting $1,212 a month in C.P.P. disability payments which is $280 a week. We have a decent amount of investments but if we are making an overall 2.00% to 2.40% a year in GIC ladders which after year 1 and year 2 etc. there is no rate and income protection than even if for example rates rise and we lose less than $200 say $150 or $100 a week over 260 weeks, that is $26,000 to $39,000 in total loss interest.
This equals 21.5 to 32 months of my C.P.P. disability. Remember, Loonie, this is not compared to 3.70% to 3.75% longer term bonds which would be at least $300 a week in lost interest or $78,000, equivalent to 64 months of my C.P.P disability. This means for more than 5 years it is like I never got that money for my bad back.
We can't take chances like we have done for the last 20+ years of falling interest rates. You know how many times I heard that interest rates would be higher but after every 5 year period they are always lower. This was at least 10 times that I can recall. It is more frustration and not desperation we are experiencing, Loonie.
I hear in the financial media that many investors are taking too much risk buying 5.50%+ high yield bonds, high credit risk corporations through ETF's and bond funds. We can't do that either. We worked to hard to take chances like that. I my opinion, they are making desperation make their decisions.
If you can show me otherwise but I don't know how you can say we will not be losing hundreds a week which we have pages and pages that points of clearly what I am saying.
We would not cheat ourselves with $600,000+ of investments. The interest rate market is already transferring trillions from savers, bond investors and dividend investors to borrowers, governments, corporations. This is their policy for making the so called recovery.
GIC laddering exposes 20% of the principal and interest to interest rate risk so far for the last 20 years it has cost many not locking into long term bonds or every 5 years to a lower extent.
We are not desperate but you can't tell me that the way interest rates are going you are not concerned about getting nothing on your hard earned money.
If we go the way of Japan, many will be in real trouble, what we are trying to avoid is giving our money away for free 0% to 1.70% rates like in the land of the rising sun, Japan.
We could put money in 7 year 3.00% GIC's at Duca but it will not make a huge difference because we can't have most or all of our money there.
Thanks again, Loonie for the discussion and I hope GIC laddering works out for you.
6:11 pm
October 21, 2013
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I would still be interested in knowing, specifically, with reference to the plan I outlined in post #20 above, what, precisely, it is that you would do differently, which would gain you an extra #200+ per week over the next 5 years.
I'd also find it helpful to know what you plan to do with your GICs when they mature in 5 years.
I obviously don't have access to the many pages of information which you have been reading which came from your advisor, but I am following my own advice with at least a portion of my money, so, if there is something wrong with it, I'd like to know, specifically, what it is.
9:46 pm
November 7, 2014
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Hi Greg,
Regarding higher rates:
And if you go to one of your quoted sites, http://www.gicwealth.ca/, you will see a higher rate for 5 years and 18 months.
9:57 pm
October 21, 2013
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gicjunkie said
Hi Greg,
Regarding higher rates:
And if you go to one of your quoted sites, http://www.gicwealth.ca/, you will see a higher rate for 5 years and 18 months.
Have you ever dealt with this company, gicjunkie? It says 3.1% for 5 years through a DICO-protected institution, so that means it's an Ontario credit union, but they don't tell us which one.
Also, there is a minimum $75,000 investment.
6:33 am
November 7, 2014
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Hi again Greg,
The 3.10% company is a DICO listed credit union. I have used the broker numerous times and with good results. Just call them if you want details.
Regards.
3:18 pm
April 6, 2013
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Loonie said
I would still be interested in knowing, specifically, with reference to the plan I outlined in post #20 above, what, precisely, it is that you would do differently, which would gain you an extra #200+ per week over the next 5 years.
...
I suspect the $200 per week over the next five years on $600,000 is the difference between (1) placing the money into five-year GIC's and (2) placing the money into 22- to 26-year provincial government bonds or provincial government strip bonds.
5:26 pm
October 21, 2013
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Norman1 said
Loonie said
I would still be interested in knowing, specifically, with reference to the plan I outlined in post #20 above, what, precisely, it is that you would do differently, which would gain you an extra #200+ per week over the next 5 years.
...I suspect the $200 per week over the next five years on $600,000 is the difference between (1) placing the money into five-year GIC's and (2) placing the money into 22- to 26-year provincial government bonds or provincial government strip bonds.
You may be right, Norman. If that's the case, then his strategy has changed from what he was talking about in his original post. It's not very clear.
Cunningham recommends supplementing and extending the ladder beyond 5 yr GICs with gov't and corporate bonds to 10 years, but I have not read most of his book yet. Do these pay out annually, then? I'm not very familiar with bonds yet.
Please write your comments in the forum.