TD Direct Investing GIC Rates | GIC discussions | Discussion forum

That doesn't sound out of place.

On BMO InvestorLine, the best 5-year rate is 3.76% from issuer Canadian Tire Bank.

Equitable Bank is offering 5-year GIC's there at 3.71%. They are 3.85% through its own EQ Bank site.

Bank of Montreal and related issuers are offering their 5-year GIC's there at 3.60%.

Through the deposit brokers channel, Home Trust is offering 5-year GIC's at 3.74% and not at the 4% through its own Oaken Financial channel.

i must be missing someting. Why would you want to buy a five year GIC through an investment broker?

Brokers offer a buffet of issuers, some people prefer to spend their time doing other than transferring money around, opening accounts at various fi's, etc, etc, i.e. convenient and time-saving.

Also large choice of issuers useful if up against CDIC limits, can diversify among fi's easily.

Probably other reasons too.

Some folk (like me) only want ONE account of each kind such as a RRSP or TFSA, in which case, that account could have a range of investments from stocks to ETFs to mutual funds to bonds and GICs where a GIC ladder may well represent all or most of their fixed income allocation. GIC rates often beat bond yields, especially bond yields in the A+ credit rating range.

I've had GICs on and off for 30+ years in my DIY investment brokerage accounts. Since they typically are at most 5 year terms, they can be the shortest held securities in a brokerage account where buy and hold investors hold some securities for decades at a time.

The interest rate spread between brokerage accounts and online banks and CUs often is in the range of 20-30 bp due to the commission paid by the GIC issuer to the order taker (brokerage) but more recently, the spreads have been close to zero or perhaps even inverse. Some GIC issuers may prefer to work with brokerage channels to avoid having to deal directly with the investing public, both in time and resources. I have seen the spreads vary from year to year and from issuer to issuer. There is no set spread.

As of this moment, there are 12 GIC issuers on Scotia iTrade with an Apr 15th yield of 3.7% or higher. CT Bank is 3.76%, Home Equity 3.75%, and Home Trust 3.74%. Scotia companies are 3.7%. I am guessing some will be higher on Monday where there can be a day or two lag relative to the retail postings here on HIS.

I agree, if GIC yield was a focus of my overall investing activity I'd not use an investment broker, I'd have to take the time to chase max yield. It's always been a supplemental, minor part of my picture, so doing it via discount broker accounts works easiest me.

I've not noticed what AltaRed has, i.e. over the years GIC yields have been consistently lower via the investment brokers, at least whenever I looked, though at times of rapidly rising rates like now it's true that you can now find today's best rate at the investment broker if one of the fi's they carry is among the leaders in raising rates this week.

"Maybe it works better for registered accounts"

I think there is a problem if one buys a GIC in a RRIF at an investment dealer. The problem is that the investment dealer will not "break" an unmatured non-redeemable GIC to meet the mandatory minimum payout for those clients older than 71 years old. Yes? No?

I'm not so sure the brokerage would or even could ensure that.

I think the annuitant of a self-directed RRIF is responsible for ensuring that the minimum annual withdrawals can be made, either in cash or in-kind.

That's a beauty of a self-directed RRIF. One has control to decide how the minimum annual withdrawals are funded and aren't tied to some fixed formula, like accrued interest from the least yielding GIC's first followed by principal from the least yielding GIC's.

I don't know whose responsibility it is to actually withdraw from RRIF's. I do have the conversation every year with our financial advisor to set the amount if I want more than the minimum which hasn't been the case yet and it it doesn't look like that is going to change for quite some time.

Once we turn 71, both of us in the same year, shifting our RRSP's 100% into RRIF's, I'm guessing we'll want/need less than the minimum. But that is not gong to be possible.

However, with all of our RRSP's, and all of our RRIF's, in one place we'll at least have the ability to choose where the withdrawals come from.

It "appears" that those who have RRIF's in more that one institution need to take minimums from each of those.

cgouimet said
However, with all of our RRSP's, and all of our RRIF's, in one place we'll at least have the ability to choose where the withdrawals come from.

It "appears" that those who have RRIF's in more that one institution need to take minimums from each of those.  

I am not sure about the first part (maybe yes, maybe no depending on institution) but the second part is definitely required. As one example I googled, RBC Direct Investing says the minimum must be taken out of each RRIF.

As regards posts #13, #14, #15, I am guessing CRA makes the FI responsible for ensuring the minimums are withdrawn. The FI's ability to do so is probably in the terms and conditions 'fine print' when the RRIF was opened. I have never checked for that in my own RRIF.

AltaRed said

…

As regards posts #13, #14, #15, I am guessing CRA makes the FI responsible for ensuring the minimums are withdrawn. The FI's ability to do so is probably in the terms and conditions 'fine print' when the RRIF was opened. I have never checked for that in my own RRIF.

The definitions in Income Tax Act 146.3 (1) requires the RRIF carrier to enforce the minimum withdrawals.

Definition of RRIF:

registered retirement income fund means a retirement income fund accepted by the Minister for registration for the purposes of this Act and registered under the Social Insurance Number of the first annuitant under the fund; (fonds enregistré de revenu de retraite)

Definition of retirement income fund:

retirement income fund means an arrangement between a carrier and an annuitant under which, in consideration for the transfer to the carrier of property, the carrier undertakes to pay amounts to the annuitant (and, where the annuitant so elects, to the annuitant’s spouse or common-law partner after the annuitant’s death), the total of which is, in each year in which the minimum amount under the arrangement for the year is greater than nil, not less than the minimum amount under the arrangement for that year, but the amount of any such payment does not exceed the value of the property held in connection with the arrangement immediately before the time of the payment. (fonds de revenu de retraite)

For Scotia iTRADE, the RIF declaration of trust allows the carrier, The Bank of Nova Scotia Trust Company, to liquidate self-directed RIF property, if needed, for making minimum payments, without no liability for any resulting losses:

8. Making Payments

Payments from your Plan begin no earlier than allowed by applicable pension legislation and no later than the last day of the year after the year in which you open the Plan.

We [The Bank of Nova Scotia Trust Company] pay you the amount you choose on your Application provided that (a) if this is a Scotia Self-Directed RIF, Saskatchewan PRRIF or Manitoba PRRIF, the amount must fall between the required minimum amount and the total value of your Plan, ….

…

In order to make payments to you, we may have to withdraw, liquidate or sell all or part of one or more of your investments prior to their maturity date. We assume no liability for any losses that result.