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Email this10:14 pm
August 5, 2014
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Loonie, we are always nervous having debt hanging over our heads. We want to sleep at night as life is already difficult with the cost of living from gas, electricity, food, heating costs, mortgage payments insurance to education costs, healthcare etc.
We may have to change strategies like looking outside Canada for higher interest rates but I don't know much about this. There could be currency costs and values to worry about and how safe would it be.
10:55 pm
October 21, 2013
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From what you posted earlier about interest rates in Europe, it doesn't seem like you'd do much better in any other relatively stable country. I even heard Kevin O'Leary say the other day that while he wanted to invest in one particular good Italian company, he was afraid of the instability of the country's economy etc.
That said, some form of currency diversification makes sense in theory, as we are such small players. But that requires a whole new set of learning, which I don't have. And it may well require investing in stocks rather than money. For example, how does one estimate which has a sounder footing? - Colgate, BMO, or the Australian dollar?
My own feeling, although I admit I don't understand all the workings of the economy (who does, really?), is that we are all somehow being made to pay now for the financial debacles of the last decade or so. It's my trickle-down theory. The losses are being spread around, and this is our (unfair) share - low rates. I think we just have to suck it in and wait it out. From what one reads, it seems that nothing much will change until the economies of the US and Canada are "stronger". With globalization, the playing field is rapidly changing, and there is no guarantee that any particular nation will rise to the top just because it has done so before.
11:22 pm
August 5, 2014
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Loonie, read this an article titled How to ladder GIC's- Money Sense, http://www.moneysense.ca/save/.....-your-gics.
Read the first comment especially, Loonie. Also, the most attractive 10 year bond that maybe worth a look to put say 5% of one's portfolio but I must confess I did not research this well is Brazil 10 year bonds rates of 11.62%.
It is just an idea and is not financial advice of any kind for anyone.
12:01 am
October 21, 2013
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You said you wanted to keep this money relatively liquid, so a strip bond, from any country, wouldn't fit the bill right now. However, it makes sense as you accumulate more and have a longer horizon. Doesn't work so well for those of us who are retired and need income.
Wild horses could not drag me to invest in Brazilian bonds, since I will probably never know enough to assess them properly. There is undoubtedly a very good reason why they have to offer such a high return, and it's not because the currency and economy are really solid. Too good to be true usually is, as they say. I suppose one could get the exposure through an ETF or mutual fund if that was what one wanted to do, but spread it around a number of currencies. Even 5% of portfolio seems to me to be too high for a single foreign currency such as this.
I think I'd find it safer to invest in large cap global companies that make their money in any number of currencies and economies than trust a single currency from an emerging economy that offers over 11% in bonds. And I don't hold them either - yet!
I realize you weren't necessarily recommending this strategy. These are just my thoughts.
Beware of the dangers of "chasing yield".
Helpful article: http://www.moneysense.ca/inves.....e-illusion
And for a sobering perspective, http://www.etf.com/sections/fe......html?iu=1
9:50 am
June 24, 2014
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With so low interest rate of 2.35% - 3%, it's simply not worth the effort for GICs. Low interest means what? Do you hear the cheering from neighbor room TSX?
11:02 am
October 21, 2013
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The faster they climb, the further they fall.
This may be where we have to think harder about a "balanced portfolio".
12:42 pm
October 21, 2013
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7 yr GIC at 3% at DUCA is starting to look attractive! Heck, why stop at 5 years? At least with GIC, as opposed to bonds, you can get annual payout of your miserable rate.
We could be in for a very long slump.
12:44 pm
October 21, 2013
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Brian said
Did you read Draghi's latest comments? Sounds like interest rates will drop more in Europe (if that is possible). Europe is not doing well at all.
Brian, do you see a direct connection between falling rates in Europe and whatever is likely to happen here in terms of rates?
2:55 pm
August 5, 2014
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Loonie, just to clarify, the Brazil bonds I mentioned above are regular coupon paying bonds that pay semi-annually or annually. They are not strip bonds, zero coupon bonds.
The other reason why I think they are paying 11.62% interest annually is because Brazil's reported inflation rate is 6.50% to 7.00% so it is not unusual to make 2.50% to 3.50% plus inflation for longer term bonds. This is historically what they should pay.
The other 1.50% to 2.00% extra bond rate maybe a risk premium for emerging bonds that are priced by the market.
I am not advising anyone to buy these or invest in these. It is just something I was looking at.
Brian and Loonie, as for stocks, equities, stock market, it has been at least 5 years since there was a 15%+ correction so just something to think about at these much higher levels.
Europe is currently in a worse place economically, deflation risk etc. than North America plus if you look at interest rates in the late 1990's and 2000's, most of the time they had lower interest rates, bond rates compared to Canada, U.S. anyway.
5:38 pm
February 17, 2013
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Rick said
Hoping CDF will offer the bonus rate for CDI customers again this winter/spring. Got a 5 yr for me and one for my wife @ 3.3% and 2 x 4 years for me @ 3.2 and 2.95% using the bonus rate.
BTW.. Checked with CDF about the bonus rate for CDI customers. On the phone they said it had expired. I wrote an email and had the check for sure and they replied that the CSR on the phone had erred. The .25% rate bonus is an ongoing promotion. Every little bit helps.
7:29 pm
October 21, 2013
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Rick said
Rick said
Hoping CDF will offer the bonus rate for CDI customers again this winter/spring. Got a 5 yr for me and one for my wife @ 3.3% and 2 x 4 years for me @ 3.2 and 2.95% using the bonus rate.
BTW.. Checked with CDF about the bonus rate for CDI customers. On the phone they said it had expired. I wrote an email and had the check for sure and they replied that the CSR on the phone had erred. The .25% rate bonus is an ongoing promotion. Every little bit helps.
So, on a 5yr, that would currently be 2.55 + .25 = 2.8% ? Have I got that right?
It looks like you can still get 3.0 in RSP/TFSA at ICICI, at least today - something worth considering too, although some people have reported negative experiences there.
9:22 pm
August 5, 2014
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Loonie, Canadian Direct Financial has a 57 month GIC special for 2.65%+0.25%=2.90%. I don't know if that 0.25% bonus promotion would apply with this 2.65% rate.
ICICI Bank Canada has 5 year GIC's at 2.85% which is slightly higher than Oaken Financial's 2.80% 5 year rates.
My wife got a raise recently paid retroactively from May-1-2014 which was $650 after taxes and a few GIC's that came due yesterday of $5,000+interest at Duca C.U. in a non-registered account.
We decided on a $6,000 3.00%, 7 year annual compound interest GIC. The total interest of $1,379.25 is satisfactory for us in the times we are living in.
Loonie, I heard on Bloomberg that 10 year German bond rates will fall to 0.60% in few months which he said a 2.00% 10 year U.S. bond rate will be coming too.
9:35 pm
August 5, 2014
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Loonie, we are all topped up for our RRSP's and TFSA's so we can't take advantage anymore of ICICI Bank Canada's 5 year TFSA, RRSP rates but are a customer and had a problem or two but it was fixed in a few days.
Yes, 3.00% GIC's, RESP's, RRSP's, TFSA's are getting more and more scarce. It looks like 2014 is going to be a low GIC, bond interest rate time.
10:18 pm
February 17, 2013
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Loonie said
So, on a 5yr, that would currently be 2.55 + .25 = 2.8% ? Have I got that right?It looks like you can still get 3.0 in RSP/TFSA at ICICI, at least today - something worth considering too, although some people have reported negative experiences there.
Yes...rates just went down. About a week ago 5yr was 2.7, then 2.6 now 2.55. Promo offer is NOT good on special offer rates, so no, can't add to the 57 month term. CDF does seem to move their rates around quite a bit. Earlier in the week the promo was 30 months @ 2.5
10:34 pm
August 5, 2014
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Rick, it looks like CDF is trying to match Oaken Financial's 5 year 2.80% with this bonus interest promotion. Steinbach C.U. still has specials of 2.60% 30 month and 2.85% 50 month GIC's, RRSP's, RRIF's, TFSA's but not RESP's.
10:52 pm
October 21, 2013
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I have an RRSP GIC coming due towards the end of Sept. I think I might move it to ICICI if rates hold. It's hard to imagine anything better coming up in these dismal circumstances!
Jack, do you have to deal with ICICI in person, or can it be done online?
Will also consider DUCA for 7. I have some more RRSP money in daily that I need to do something with. It would create a sort of "ladder". I have one with 4 1/2 to go, then this would add 5 and 7 yrs. I hate to lock into the shorter terms with such underwhelming rates.
11:06 pm
October 21, 2013
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Oops! It doesn't look like ICICI offers RiFs, so I am not going to move my RRSP there. Also, they do not seem to offer any possibility of annual interest payouts for any kind of GiC, so that would not work for me either. They do not seem to be interested in retired people.
They do offer RESPs, Jack, and I see no evidence that the rates would be discounted, although it is not clear.
11:28 pm
August 5, 2014
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Loonie, We have only RRSP's and TFSA's with them but no regular GIC's. I dealth with them in person at one of their branches. We have no savings or checking accounts with them.
I noticed on their website that they have online banking, telephone banking and by mail. I never looked into RRIF's with them so I don't understand when someone turns 71 at RRIF time what do they do.
Loonie, I never knew they offered RESP's so I might look into that and see what rates they offer and how it works with them.
Loonie, Duca's 3.00% 7 year rate is available for RRIF's. I think their 3.00% 7 year rate will be gone in the next 2 to 3 weeks if 5 year Canada bond rates keeping declining and other financial institutions keep dropping their higher 5 year like Oaken, CDF etc.
11:48 pm
August 5, 2014
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Loonie, ING Direct did not offer RRIF's either so I don't know why that is. There has to be some way for their clients to convert RRSP's to RRIF's.
If they could not then they would have no choice but transfer their RRSP to another financial institution that has RRIF's.
I guess they did not want that type of retired client and did not care about these eventually transfers out.
12:05 am
August 5, 2014
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Loonie, just to give you an idea, Accelerate Financial has 7 year rates for RRIF's but at lower rates of 2.85%. They do offer RRSP's, TFSA's, GIC's as well at 2.85%, 7 years but no RESP's.
I think Duca C.U. maybe the last paying 3.00% RRIF's for maybe 1 year, 2 years etc. Crosstown Civic C.U. also has 7 year 2.85% RRIF's but also offers LIRA's, LIF's for locked-in money.
I believe Crosstown Civic C.U. is owned by Accelerate Financial.
Please write your comments in the forum.