Hubert Increasing Savings Accounts and Some GIC Rates | Hubert Financial | Discussion forum

interesting, 4 year rate is higher than 5 year rate.

davidgeorge said
interesting, 4 year rate is higher than 5 year rate.  

Yes, 5-year GICs are seemingly becoming the "ugly step-child" of the GIC world. Lots of B.C. credit unions, including Coast Capital Savings as I mentioned elsewhere, are increasingly offering higher 1-4 year rates and leaving their 5-year rates largely untouched, with only incremental increases with the BoC rates.

In a rising rate environment, I fail to see how the old fashioned "all 5 year GIC terms" works out better in the long run. When your shorter term GICs mature, there will be higher rates for you to roll them into.

Perhaps, just like bonds, the strategy could be simplified in the following IF/ELSE statement:

IF BoC rates go up, then choose either 1-3 or 1-4 year GIC terms

ELSE BoC rates go down, then choose traditional 5-year GIC terms, subject to shorter term cash flow needs.

Cheers,
Doug

Jon said

However, I think it also imply FI is expecting a recession is on the horizon and rate will climb down again to a much lower level in a few years.  

You don't need to scare people by saying "recession". We can expect not as strong economy as we have now but recession is too much. Maybe a correction. It can't be worse than what falling Oil caused.

Loonie said
The original message from Hubert referred to a limited time rate special. So I don't think we should assume that these rates necessarily reflect a trend.

A year or two (or more?) ago, when pundits were re-evaluating investment return expectations, they suggested that in future, for some years to come, one shouldn't expect more than 4-8% range (depending on who you talked to.) Most were on the more conservative end, around 5%. That was for an overall ROI on balanced portfolio, as I recall. If forecasts are any good, this should still stand.
Interest rates are not likely to continue indefinitely in an upward spiral as they did in the 1980s.  

I think they're calling it a "limited time only offer," to give them an easy "out" to retract it. That being said, if the BoC goes again with a rate increase in April or July, I think we'll see these lopsided interest rates on the short end, but not necessarily in HISAs. Banks and CUs are finding a new "love" for GICs again. 🙂

You're right that interest rates aren't headed drastically up, though. I suspect, at most, the BoC has maybe another 100-125 bps over the next 5 years of "room to run". 🙂

Cheers,
Doug

Sky said
Currently I use the financial post link to check best GIC rates. Does anyone have better site? http://www.financialpost.com/p.....l.html  

Sky,

Welcome to the Forum! I've always had difficulty for the Financial Post page to display for me so I use several others:

http://www.globeinvestor.com/s.....ndicator=N

http://www.cannex.com/public/t.....rm02e.html

http://moneyguide.ca/mggold/gi.....nual.shtml

http://www.fiscalagents.com/ra.....sort.shtml

The last two also list offers available from brokers (agent).

Additionally it can be worthwhile to form a relationship with a good GIC broker so you can move quickly when they may have special offers, not available directly from the financial institution itself.

Stephen