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Email this12:39 pm
July 18, 2017
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If I post this on Reddit or RFD, I'm going to get attacked for my prehistoric thinking. So, I thought I'd spare myself the noise by posting this missive in what I hope are friendlier waters: I love GICs.
Seriously, I love them. Are they taxed at marginal rates? Yup. Are they currently at/below inflation? You bet. Are they boring as hell? Absolutely.
But...
Have I ever lost a minute of sleep wondering that some insane politician's Tweet could, literally in a matter of hours, torpedo my very (and I mean very) hard-earned money? No. Do I pay administrative fees of any kind? No. Do I print out my GIC certificates and roll around in them like a pile of leaves? Of course not -- what do you think I am?!
I fully understand why some people avoid -- and others just plain hate -- GICs. And I appreciate that there are many other ways to invest. But GICs work for my personality and lifestyle. And over the years, I've learned -- especially in reading horror stories from other people --that this is the most important and profitable thing about investing. It's not enough to know about the investment. You have to know about YOURSELF.
If you're very risk adverse, then that's OK. It's not evil. It's not a defect. It's just how some people are.
Stupid post, I know. But it's something I've always wanted to share. 
12:44 pm
September 11, 2013
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Totally agree, cristunity, you seem like a positive, relatively-happy person so mission accomplished.
12:57 pm
July 18, 2017
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Bill said
Totally agree, cristunity, you seem like a positive, relatively-happy person so mission accomplished.
Kind of you to say sir, thank you. I'm actually trying to work harder on the "positive, relatively happy person" file.
I guess other than just venting (but not in a bad way), my purpose was to let some other people out there know that it's OK to like GICs. The way that some people discuss them -- obviously not here, but on other sites -- you'd think that they were the worst creatures in the investment kingdom. I mean, in some people there is a real, visceral hatred of them that I don't quite understand.
Again, I think it all comes back to knowing who you are. There are people (including many on this site) who have a much higher risk tolerance than me, and they have made a tremendous amount of money over the years. My opinion on this? MORE POWER TO YOU! Seriously -- I hope they make much, much more money. Why not? I enjoy making money, and why should I want others to miss out on the fun?
But I know myself -- at least as far as investing goes -- and I understand where my lane is. There are benefits of being in this lane. There are drawbacks.
What I see a lot of, is people like me who spend years diligently saving and protecting their wealth, and then they get so riled up by the "GICs are stupid how dare you invest in them" mob, that they snap one day and throw a whole whack of cash into some meme stock or sketchy company that hasn't made money for 5 years and probably never will. And then they get financially and psychologically crushed.
I also find that some people -- again, I'm not referring to people here who seem very rational and reasonable -- who are "in the market" are flat-out OBSESSED with it. I mean, they think about it all the time. They go to sleep thinking about it. They wake up thinking about it. Throughout the day they think about it. They justify this by saying that they're "actively involved in their investment." But they're like helicopter parents who think that they're "actively involved in parenting." No. They're neurotic and need therapy. And so do a lot of investors.
I don't want to think about my investments. I have too many other things to think about! My hard drive needs the space 
1:43 pm
January 12, 2019
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cristunity said
. . .
Stupid post, I know. But it's something I've always wanted to share.
Hardly a stupid post, Cristunity ... we need more threads like this ❗
Yes, GIC's are boring. They're as boring as Watching Dishes Dry 
, but they serve their purpose well.
Keep up that 'Positivity' ❗
- Dean
" Live Long, Healthy ... And Prosper! "
2:10 pm
February 17, 2013
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cristunity...I am right there with you. I have dabbled in the market in my younger days, but those days are long over. I was burned in 2008 when I was convinced by a money manager at our new bank that I should invest in bank stock...."banks never lose money". That was 2008. Banks never lost money - *bailout* - but I did. Now that I have worked for 45 years, I have my nest egg and don 't want to risk it on some sheik in the middle east catching the flu and sending oil prices into the dumpster in an effort to make obscene profit I don't need. The whole system seems like gambling to me. Have more fun at the casino.
I have 4 ladders going with RSPs and TFSAs (1 of each for me and my wife) that we are not drawing on yet, a substantial emergency fund, and a "mad money" fund each, and sleep quite soundly.
I only wish I had the option of TFSAs 30 years ago. My kids, despite my advice, seem to think it's a savings fund for toys and trips. Squandering the advantage of long-term compounding that I can no loner take advantage of.
Keep doing what works for you.
2:53 pm
July 18, 2017
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Thanks guys -- it's nice to know that there are some of us who invest in GICs because we actually want to. We aren't stupid or lazy. We just believe that protecting one's principle is a fundamentally sound.
Maybe it's also because I've worked hard in my life (way harder than I expected to I must admit), and the possibility that some of my money might get vaporized by the decisions of people I do not know, will never meet, and might not respect or like irks me. I mean, it's one thing to get shafted by your well-meaning but staggeringly incompetent brother-in-law. It's another to get shafted by some startup CEO who used your money to fund his ego trip (complete with Ted talk).
I'd also like to point out that for years Rob Carrick at G&M has been advocating for GICs as legitimate vehicles. While I don't always agree with his advice, I have a tremendous amount of respect for his fortitude -- because G&M commentators routinely use him for target practice whenever he mentions GICs.
3:55 pm
October 27, 2013
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GICs (aka one form of fixed income) have a place in every diversified portfolio. Return OF capital rather than a real return ON capital at a rate better than savings accounts. I've had some for 40 years or more for the purpose of providing both ballast (reduction of volatility) and certainty to backstop everything else.
9:06 pm
April 6, 2013
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cristunity said
… And over the years, I've learned -- especially in reading horror stories from other people --that this is the most important and profitable thing about investing. It's not enough to know about the investment. You have to know about YOURSELF.If you're very risk adverse, then that's OK. It's not evil. It's not a defect. It's just how some people are.
…
People can be trained, not only intellectually, but also emotionally. By remaining in a echo chamber, one is giving up an opportunity for growth, both personal and financial.
The examples provided are examples of incompetent speculation and not informed investing.
It is actually okay and expected to lose money while investing! Very different from the money parking GIC world.
The idea is to control the losses, not to avoid them. When gains from the winners eclipse the losses from the losers, one is a successful stock investor.
The mathematic asymmetry also helps. Maximum loss on a stock is 100%. But, there is no maximum gain!
GIC's have their role for short term money. But, one is really giving up a lot by parking money not needed for 10, 15, or 20 years in GIC's.
6:19 am
March 30, 2017
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Norman1 said
cristunity said
… And over the years, I've learned -- especially in reading horror stories from other people --that this is the most important and profitable thing about investing. It's not enough to know about the investment. You have to know about YOURSELF.If you're very risk adverse, then that's OK. It's not evil. It's not a defect. It's just how some people are.
…
People can be trained, not only intellectually, but also emotionally. By remaining in a echo chamber, one is giving up an opportunity for growth, both personal and financial.
The examples provided are examples of incompetent speculation and not informed investing.
It is actually okay and expected to lose money while investing! Very different from the money parking GIC world.
The idea is to control the losses, not to avoid them. When gains from the winners eclipse the losses from the losers, one is a successful stock investor.
The mathematic asymmetry also helps. Maximum loss on a stock is 100%. But, there is no maximum gain!
GIC's have their role for short term money. But, one is really giving up a lot by parking money not needed for 10, 15, or 20 years in GIC's.
Norman is right, GIC has a place in every portfolio, but it should not be 100% of it. This is especially true for someone who started investing say in their 30s. Imagine a young couple and all their savings being invested at the current GIC rates. They will not have a successful retirement.
No matter how risk averse one is, one just have to learn to take/manage risk, whether its investment risk or others. Driving or walking on the sidewalk has risk,
but one does it without thinking much about the risk involved.
I do agree if someone has the tendency to panic sell, especially with blue chip names, maybe best to have a investment advisor do the investment for them.
6:32 am
September 7, 2018
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cristunity said
I'd also like to point out that for years Rob Carrick at G&M has been advocating for GICs as legitimate vehicles. While I don't always agree with his advice, I have a tremendous amount of respect for his fortitude -- because G&M commentators routinely use him for target practice whenever he mentions GICs.
I am a pay subscriber to G&M online - I also very much enjoy following Rob Carrick as well as other G&M commentators daily. While I have seen his references to HISAs, I do not remember much of his writing about GICs - certainly not recently. I have never seen where other G&M commentators "use him for target practice whenever he mentions GICs." .....target practice??????
7:28 am
May 24, 2016
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I’ve really enjoyed reading your posts, Christunity. You’re so obviously happy with your GICs. I must admit, I love mine too!
8:11 am
July 18, 2017
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JenE said
I’ve really enjoyed reading your posts, Christunity. You’re so obviously happy with your GICs. I must admit, I love mine too!
Thanks Jen, I like your posts as well. Yes, collecting GICs is satisfying. I mean, why collect puzzles or license plates when you can collect GICs?
Norman1: Yes, you make a good point. I think the stereotype (not coming from you or anywhere here, but just in general) is that GIC folks are risk adverse in everything. Like, they take two umbrellas when it rains, and they bubble wrap their kids, etc. I'm actually very open to risk and change...just not with my savings. Or to put it more accurately, I enjoy what I get from GICs. Part of the price I'm paying for GICs (i.e. the potential gains I'm giving up) is to buy this enjoyment.
And while I do think about retirement, I don't worry about it. I have found that people who worry about their retirement cannot turn off that worry once they retire. They just shift that worry to something else. It's not their fault...it's just the way worry works. It's a kind of energy. It manifests one way or another.
Besides, worst case scenario I'll come live with one of you guys.
8:18 am
October 27, 2013
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canadian.100 said
I am a pay subscriber to G&M online - I also very much enjoy following Rob Carrick as well as other G&M commentators daily. While I have seen his references to HISAs, I do not remember much of his writing about GICs - certainly not recently. I have never seen where other G&M commentators "use him for target practice whenever he mentions GICs." .....target practice??????
I've not seen GIC bashing either. In recent times, there has been a lot of fixed income bashing but the reference is usually to bonds. As Norman and a few other recent posts have said, GICs have a place in the portfolio but they are not an entire portfolio.
Even in the case of my mother in her late 80s and early 90s, she was 85% GICs and 15% equity, having come down from about 50/50 allocation in her early 70s. Equity appreciation and GIC interest was enough to fund all her needs. GIC capital remained intact.
12:14 pm
September 11, 2013
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Re "vaporization", it's been noted on here that non-registered GICs get some of their value vaporized every year due to inflation and taxes, so I guess you pick the kind of vaporization you can ignore. Also, I'm guessing most folks that are 100% into GICs are very careful savers, i.e. their $100K GIC portfolio might only have purchasing power of $98K next year but in the meantime they've saved another $10K to buy another GIC so they stay ahead of the game while they're working as their pile is still growing numerically and in spending power due to more savings set aside every year. Hopefully by retirement their pile is big enough that it won't run out or lose all its purchasing power during their remaining years.
5:44 pm
April 6, 2013
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That is one of the illusions of fixed income. Interest received seems good. But, one was really not getting ahead much after taxes and inflation.
This is from an earlier post about a time when Canada Savings Bonds and GIC's seem to be good "investments":
| Series | Issue Date | 1981 | 1982 | 1983 | 1984 | 1985 | 1986 | 1987 |
| S36 | 01/11/1981 | 19.50 | 12.00 | 10.50 | 11.25 | 10.50 | 10.50 | 10.50 |
| Inflation (CPI) | 12.50 | 10.90 | 5.80 | 4.30 | 4.00 | 4.10 | 4.40 | |
| 5-year GIC | 15.36 | 14.57 | 11.52 | 11.97 | 10.80 | 9.73 | 9.61 | |
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