Motive 6-10 year rates up ~.25% | GIC discussions | Discussion forum

Probably not. This increase is already the market responding to the anticipated BoC increase on June 1.

Dean I had been thinking somewhat the same… but re thinking it, if you had 5 -10% committed to 10 yrs that’s not really that much risk of rates being much higher 5 yrs from now.. it’s 5% of what you got.. and because it’s the highest we’ve seen in a decade it’s hard not to lock something up in my mind. I think if they are able gov’ts will do what they do best and get themselves to a point where they can create a lot of money at no carrying cost.. they do not know what the word restraint means. That’s my view anyway.

If considering a very long GIC, you might want to ask what is their policy if the purchaser dies during course of GIC.
I have found some variation in this which could be significant.
Some will break the GIC but by seriously discounting the interest, others will pay interest-to-date and break it. It's possible some may simply refuse to do anything, but I haven't run into that yet. Could be a pain for an executor. I don't know what Motive's policy is.

Other things that may help: make it joint; take annual interest. Some FIs can accommodate 3 joint owners, allowing for 2 spouses and a child with smooth transition as long as there is trust.

MattS said
Loonie, didn’t know you had a second wife.. now that’s risky!
Seriously everyone on this board , friendly bantering and debate aside, as a 47 yr old I’ve learned a lot and gained from your wisdom aquired over a life time… but reading about some of you older guys planning your eventual death Has me feeling like I’m losing a friend soon… so before I never get to express it I just wanted to say I appreciate all of you on this board.. (some a little more than others 🙂 )  

At your age, while you may have seen much higher rates, but you were not directly impact by it as you were too young. And that also lead to my comment re you mentioning "highest rate in the last decade". Actually since 2009, I can say rates are exceptional low and this time it is the first test to see if the new normal of low rates is no longer a new normal. No one has the crystal ball obviously, and no one has experienced what the CBs are trying to achieve this time either (the ballooning of the CB balance sheets due to covid, the amount of QE that needs to be unwound, etc) its all brand new even for an old goat like Greenspan who has seen it all.
The balance sheet and QE even before covid hits is already much larger than what a "normal" would look like, all from the aftermath of the 2009 financial crisis.

Every move is a guess...

NCC1701Z said

If the GIC is a RRIF the FI will have to payout the minimums each year. I wonder what the minimum would be after the annuitant dies???  

The RRIF is collapsed upon the death of the RRIF annuitant, and the RRIF assets are transferred on a rollover basis to the registered plan of the spouse. The minimum payments paid to the successor annuitant will be based on the same terms as when the RRIF was originally set up.

Loonie said
And if there is no spouse, it is collapsed anyway and fully taxable.  

Yes - I have seen RRIFs collapsed on the death of a single holder. Since the whole RRIF balance came into income in the "final year", the taxes were at the highest marginal rate. A nice windfall for CRA.