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Email this12:57 pm
October 21, 2013
Offline
I'm trying to help a relative figure out whether he should move to another brokerage.
The issue on the table at the moment is GIC rates in RSP. While he does have some in mutual funds, he is looking to ladder some GICs as well.
The RSP is currently with TD Direct.
Yesterday he inquired about GICs with the existing account and was given the following as "best rates":
1yr 1.61%, Canadian Western Bank
2yrs 1.8% Cdn Western or B2B
3yrs 2.0% Cdn Western
4yrs 2.06% B2B
5yrs 2.3% Cdn Western
I did not think these were very good rates, but it costs $135 to transfer out and then one has to learn a new system etc.
He is 65 years, semi-retired.
Questions:
Are these the sorts of rates he should expect through a brokerage like this?
Are there other brokerages that have better rates?
Would he be better off to take this portion of the RSP out of the brokerage altogether and just invest on his own with bank of his choice?
Is it worth moving or should he stay put and accept these poor rates?
thx
1:19 pm
October 27, 2013
Online
Firstly, I don't believe in chasing GIC rates with various online banks, especially in registered accounts as there will almost always be a fee to have RSP account transfers done when one wants to leave. One becomes 'stuck' with a particular institution.
I don't know if it is consistently so, but I believe Scotia iTrade and RBC DI sometimes have better rates and occasionally BMO IL may have the better rate. I have accounts at all 3 and right now iTrade has Concentra Financial 5 yr @ 2.4% and Zag Bank @ 2.35%. If I had to guess, I'd say iTrade more consistently has one issuer with a higher rate than either of RBC DI or BMO IL.
All 3 list their GIC rates online and all 3 allow online purchases.
Added: Not that it really matters at the moment, but most discount brokers have incentives from time to time (cash and/or free trades) to move accounts to them, with reimbursement of transfer out fees up to $150. Just have to watch out/google for them.
Added again: Checked RBC DI and BMO IL. The highest at both is 2.25% and follows the pattern at TDDI.
1:55 pm
October 21, 2013
Offline
That's helpful info, Altared.
You mentioned the difficulty of transferring RSPs and the fees involved.
I am wondering, if you have all the RSP GICs under the umbrella of one brokerage, but have individual GICs at more than one institution within that brokerage, are you still subject to transfer fees when you move from one to another within that brokerage?
Obviously one would want to choose the place where one could hope to stay put for a while, especially with GICs maturing at different times etc.
Might be able to get a special offer, especially reimbursement for transfer fee, by asking for it.
So far, sounds like iTrade may be the better bet? Does it have downsides?
2:23 pm
October 27, 2013
Online
Loonie said
That's helpful info, Altared.
You mentioned the difficulty of transferring RSPs and the fees involved.
I am wondering, if you have all the RSP GICs under the umbrella of one brokerage, but have individual GICs at more than one institution within that brokerage, are you still subject to transfer fees when you move from one to another within that brokerage?
Obviously one would want to choose the place where one could hope to stay put for a while, especially with GICs maturing at different times etc.Might be able to get a special offer, especially reimbursement for transfer fee, by asking for it.
So far, sounds like iTrade may be the better bet? Does it have downsides?
One's RSP account in the brokerage holds everything from GICs from any institution on offer to stocks to bonds to mutual funds to...... Pick and choose as one likes just like jelly beans in a jar. The beauty of the discount brokerage is you can buy your GICs from any of the listed issuers (perhaps from 10-15 different institutions) with full flexibility. When one matures, pick the highest rate one from the list available at that time, with the only thing to keep in mind is the CDIC insurance limit of $100k per institution. No fees to the client.
A discount brokerage may offer a cash incentive to bring an account to them and/or free trades (stocks), and I believe they will always offer up to $150 in compensation for transfer out fees from other institutions....this latter point may depend on how much business is coming their way. One should ask first by calling them. For someone who might mainly be in GICs and/or mutual funds, obviously free trades are useless but cash incentives might be offered, again depending on account size. Maybe in the order of $100-200 for accounts in the $100k-$200k range. Perhaps even as low as $50k account size. Have to google around to find out.
I can't tell you if Scotia iTrade would be the best for your relative but it sounds like a decently good option for someone with quite a lot of GICs.
3:15 pm
December 23, 2011
Offline
Find Dominion Securities rates here
http://www.rbcds.com/gic-rates.html
ck on the rate to buy.
Issuer 1 Year 2 Year 3 Year 4 Year 5 Year
DBRS Rating1
Purchase Minimum
Bank of Nova Scotia 1.500 1.750 1.800 1.950 2.250 AA $1,000
National Bank 1.400 1.550 1.650 1.750 2.050 AAL $5,000
Manulife Trust 1.250 1.500 1.800 1.950 2.150 AH $2,500
Canada Trust Co. 0.750 0.800 0.900 1.050 1.100 AA $5,000
NatCan Trust 1.400 1.550 1.650 1.750 2.050 AAL $5,000
BMO Trust Company 1.400 1.400 1.500 1.650 2.000 AA $1,000
Canadian Western Bank 1.550 1.800 1.960 2.050 2.250 AL $5,000
HSBC Bank Canada 1.400 1.600 1.800 1.950 2.250 AA $5,000
Pacific and Western Bank of Canada 1.460 1.760 1.860 2.060 2.250 N/R $1,000
Hollis Canadian Bank 1.500 1.750 1.800 1.950 2.250 AA $1,000
B2B Bank 1.400 1.760 1.860 1.960 2.200 AL $1,000
Toronto Dominion Mortgage Corp 0.750 0.800 0.900 1.050 1.100 AA $5,000
Bank of Montreal 1.400 1.400 1.500 1.650 2.000 AA $1,000
Manulife Bank 1.250 1.500 1.800 1.950 2.150 AH $5,000
CIBC 1.400 1.600 1.800 1.950 2.250 AA $5,000
Home Trust 1.550 1.750 1.850 1.950 2.200 BBB $5,000
Concentra Financial 1.400 1.740 2.000 2.100 2.400 AL $2,500
ICICI Bank Canada 1.400 1.700 1.800 1.900 2.100 N/R $1,000
Sun Life Financial Trust 1.050 1.250 1.550 1.700 1.900 AL $5,000
Bank of Montreal Mortgage Corp 1.400 1.400 1.500 1.650 2.000 AA $1,000
Scotia Mortgage Corp 1.500 1.750 1.800 1.950 2.250 AA $1,000
Equitable Bank 1.450 1.700 1.800 1.950 2.200 BBBL $5,000
General Bank of Canada 1.550 1.810 2.010 2.120 2.100 N/R $5,000
Montreal Trust Co of Canada 1.500 1.750 1.800 1.950 2.250 AA $1,000
Zag Bank 1.310 1.800 2.000 2.150 2.350 N/R $5,000
Home Equity 1.100 1.250 1.800 2.000 2.200 N/R $5,000
National Trust Co 1.500 1.750 1.800 1.950 2.250 AA $1,000
Royal Bank of Canada 1.300 1.500 1.600 1.700 2.000 AA $5,000
Toronto Dominion Pacific Mortgage Corp 0.750 0.800 0.900 1.050 1.100 AA $5,000
1 - Ratings as of 01/05/2013
Disclaimer
4:45 pm
September 11, 2013
Offline
A Google search revealed the following link showing RBC Direct GICs available today. I'm sure other searches can find out the same info for other discount brokers you might be interested in.
7:34 pm
April 6, 2013
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Loonie said
...
You mentioned the difficulty of transferring RSPs and the fees involved.I am wondering, if you have all the RSP GICs under the umbrella of one brokerage, but have individual GICs at more than one institution within that brokerage, are you still subject to transfer fees when you move from one to another within that brokerage?
Obviously one would want to choose the place where one could hope to stay put for a while, especially with GICs maturing at different times etc.
....
Those GIC's inside a self-directed TD brokerage RSP are ordinary GIC's. They are registered under the name of the trustee, The Canada Trust Company, in trust for the RSP account.
To the GIC issuer, they are regular GIC's with an in-trust ownership registration. Upon maturity, a cheque or electronic funds transfer is made to the trustee. No RSP transfer paperwork.
7:51 pm
October 21, 2013
Offline
Thanks, people. Some helpful info here.
Anyone have any opinions about any other brokerages, either specifically in relation to GiCs or in general as a company to deal with? I'm wondering about Questrade.
8:02 pm
December 23, 2011
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Loonie said
Thanks, people. Some helpful info here.
Anyone have any opinions about any other brokerages, either specifically in relation to GiCs or in general as a company to deal with? I'm wondering about Questrade.
Loonie I still have not answered about my decision to dissolve all stocks. BUT iTRADE for a TFSA account with GICs only is completely free.
I think if you have a minimum in a cash account it is free too. Just email them.
8:28 am
October 27, 2013
Online
Loonie said
Thanks, people. Some helpful info here.
Anyone have any opinions about any other brokerages, either specifically in relation to GiCs or in general as a company to deal with? I'm wondering about Questrade.
Discount brokerages are mostly set up for trading equities, options, mutual funds, bonds, etc. and GICs are an afterthought.
The smaller independents may not deal with GICs. You would need to phone Questrade and ask them specifically if they do, whether they show the issuers online and whether they can be purchased online or not.
8:34 am
October 27, 2013
Online
kanaka said
BUT iTRADE for a TFSA account with GICs only is completely free.
I think if you have a minimum in a cash account it is free too. Just email them.
Every brokerage will have different account minimums in order to avoid an 'account fee'. For iTrade, a TFSA has no minimum. But for other accounts, one needs to have an aggregate total of $25k in all accounts to avoid an account minimum.
9:12 am
December 23, 2011
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AltaRed said
Loonie said
Thanks, people. Some helpful info here.
Anyone have any opinions about any other brokerages, either specifically in relation to GiCs or in general as a company to deal with? I'm wondering about Questrade.
Discount brokerages are mostly set up for trading equities, options, mutual funds, bonds, etc. and GICs are an afterthought.
The smaller independents may not deal with GICs. You would need to phone Questrade and ask them specifically if they do, whether they show the issuers online and whether they can be purchased online or not.
On iTRADE you can find, select, and buy all online. They rate the seller, show rates, and list minimum purchase. The only time you need human help is to dissolve a cashable GIC. I plan on buying some in February.
12:55 pm
October 21, 2013
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This is for an RSP. It will be in the 6 figures altogether, but not all in GICs.
I know thes kinds of accounts are normally for people who have a more diversified portfolio, but he wants to keep his couple of mutual funds and I am not sure if he will diversify further. It just seemed to me that he might be better to stay with some kind of brokerage, all under one roof etc., but perhaps one that generally offered better deal for GICs. Otherwise, he could end up adding more institutions, which, at this age, seems less desirable.
1:06 pm
December 23, 2011
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Loonie said
This is for an RSP. It will be in the 6 figures altogether, but not all in GICs.
I know thes kinds of accounts are normally for people who have a more diversified portfolio, but he wants to keep his couple of mutual funds and I am not sure if he will diversify further. It just seemed to me that he might be better to stay with some kind of brokerage, all under one roof etc., but perhaps one that generally offered better deal for GICs. Otherwise, he could end up adding more institutions, which, at this age, seems less desirable.
I "was" going to move my RRSP from Manulife to iTrade BUT they won't accept one of my Mutual Funds. Some funds are exclusive to brokers only. So you need to know what he has and if the discount broker will transfer them in.
iTrade said they had a large list of mutual funds but I had to be very specific with what I had and asked for a direct answer.
You don't have to be diversified to use a discount broker...they don't care...they just want the fees. And all decisions are yours....no help at all.
6:52 pm
October 11, 2015
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Just switching to a new advisor.
He wants to put some of the portfolio into GICs but says the most he can get is 2% for 2 yrs. I want zag for 2.5%. Let's see if he can match it.
Wondering if I should cash out of the mutual funds given the turmoil in the economy. But it will cost me quite a bit to cash out. My previous advisor ripped me off and put me into DSC funds:(
AND, put me into rate reset preferred shares. These are a nightmare.
7:30 pm
October 21, 2013
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He probably can't match Zag as that deal is aimed at the retail markt. If he's only "advising" you - i.e. you are paying him straight-up for advice and nothing more, you can do what you want with the GIC and could decide to put your money with Zag.
However, it's more likely that he is getting paid through your investments, in which case you are limited to what he can offer.
You could move some of the GIC money out and invest it on your own at Zag, but the question is whether it's worth it when all is said and done. You may have to pay a fee to get the money out - particularly if it is a registered fund. Also, you would be making your account with him smaller, which makes you less worthwhile as a client. And then you will face the same problem 2 years from now. Your decision may depend on how much would be going into this GIC.
DSCs are bad news for sure. Theoretically, they are supposed to force people to not do something "foolish" such as failing to "buy and hold". With markets in turmoil, as they are now, you could be tempted to sell at the "wrong" time, but the DSC might discourage you from doing that.
The best advice I have read so far about whether/when to sell is this: Ask yourself if you would buy this item at its current price today. (You will need to factor the DSC into the cost as you ask this question.) If the answer is "yes", then you should hang onto it; and if it is "no", you should sell it. This approach will help you to focus on the key question, namely, is it a good investment now?, and steer you away from looking at short term results.
Other factors will also come into play, such as how old you are.
7:35 pm
December 23, 2011
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dentgal said
Just switching to a new advisor.
He wants to put some of the portfolio into GICs but says the most he can get is 2% for 2 yrs. I want zag for 2.5%. Let's see if he can match it.Wondering if I should cash out of the mutual funds given the turmoil in the economy. But it will cost me quite a bit to cash out. My previous advisor ripped me off and put me into DSC funds:(
AND, put me into rate reset preferred shares. These are a nightmare.
Just checked Zag on iTRADE 2.25 for 5 years and most others are 2.25 as well for 5 years. The best is 2.4 with Concentra for 5 years. I would imagine your adviser would get the same cut as iTRADE. Zag 2 year is 1.8.
DSC is not all that bad. http://business.financialpost......les-charge Hopefully you are young and the fee is only for no more than 7 years. You can find advisers that don't do FE or DSC.
See Dominion Securites Rates here http://www.rbcds.com/gic-rates.html . Also look here http://www.globeinvestor.com/s.....ndicator=N
Lol....I see what you are up to now!
You can sell and buy GICs...not a good idea for the loss plus the fees. I have waited out the storm a couple of times but have been negligent in selling off all. This is the last storm for me...when they move up to the figure I want, will sell and buy GICs. In hindsight ETF and Mutual Funds are a wasted effort. You may gain 4-5% in dividends but you MUST make a gain when you sell the stock as well.
9:25 pm
October 21, 2013
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kanaka said
I have waited out the storm a couple of times but have been negligent in selling off all. This is the last storm for me...when they move up to the figure I want, will sell and buy GICs. In hindsight ETF and Mutual Funds are a wasted effort. You may gain 4-5% in dividends but you MUST make a gain when you sell the stock as well.
But, kanaka, haven't you heard the mantra? "The best holding period is forever". I believe it was Mr Buffet himself who said that. This may work for funds that are meant to last forever, but alas I myself am mortal. It assumes that your money is like a decorative plate, always to be admired but never used, and definitely not when you need it. I prefer something I'll be able to use when I'm still alive. And who knows how long that will be?
7:19 am
April 6, 2013
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"The best holding period is forever" is a mantra/mindset for stock portfolio management. It is not the mindset for financial planning.
Similar a natural person, Buffet's Berkshire Hathaway has monthly bills to pay and claims that need to be paid on the insurance policies that they sell. Not all of their assets are invested "forever" in stocks. They too have money in low-yielding deposits, treasury bills, and bonds that mature in time to meet their short and near term commitments.
Please write your comments in the forum.