GIC Rates Decreasing | Page 2 | Oaken Financial | Discussion forum

Alexandre said
People who've chosen very attractive 5yr GICs at 2% two years ago still have three years left to enjoy that superior in 2021 rate.

Just saying.  

Yes hindsight also always 20/20 too.

You won’t see 5y rate at 2% for the next 5 years, nor 5y rate rising much about 6% for the next 2 years. U can mark my words

Rail Baron said

The rate is with Habib. I'm not sure whether that is the name of a person, or a bank. It could be both.

In any case, Habib does not work over Christmas or Boxing Day, so everything is in limbo till later next week.  

The Habib family originally founded Habib Bank in Pakistan and it has become a multinational bank. I believe it is one of the leading Islamic banks in the world.

Rail Baron said

But they still close for Christmas.   

Of course, in Canada - Dec 25 is a statutory holiday here - but unlikely they close in Pakistan, Iran and other Islamic countries where they operate.

savemoresaveoften said

You won’t see 5y rate at 2% for the next 5 years, nor 5y rate rising much about 6% for the next 2 years. U can mark my words  

Turkey benchmark interest rate in 2013: 4.5%.
Turkey benchmark interest rate in 2023: 42.5%.

Someone who bought 10yr GIC in Turkey in 2013 must be counting days to its maturity.

savemoresaveoften said

It’s an insult comparing Canada to Turkey, just saying  

What Savemoresaveoften said ⬆

They're two Completely different Birds . . .

Dean

P.S.
Or if you're taking about the Country,
it's spelt like this ➡ Türkiye

Real Estate guy here.. I don't see the press mentioning this much, But if you could tell the future in the Nov/2020-March/2021 period and needed a mortgage, a 10-Year Fixed was in the low 2's, like 2.14%!

Alexandre said

Turkey benchmark interest rate in 2013: 4.5%.
Turkey benchmark interest rate in 2023: 42.5%.

Someone who bought 10yr GIC in Turkey in 2013 must be counting days to its maturity.  

The inflation rate in Turkey in 2023 is close to 60%
https://www.inflation.eu/en/inflation-rates/turkey/historic-inflation/cpi-inflation-turkey-2023.aspx

So purchasing a 40% equivalent of a GIC in Turkish currency is a losing bid
The Real interest rate is what matters more than the Nominal interest rate
Canada isnt doing so well on the real interest rate either (see graph)

Graph source: https://qualityappraisals.ca/a-look-at-real-interest-rates/

Surely there will be those taking longer bets at those interest rates in Turkey, gambling that the inflation rate gets lower and the real interest rate becomes positive.

So If someone wanted to reduce currency risk and stay in CDN$ or US$ (and therefore reduce some of the potential returns) is there a way to play those high Turkish interest rates?

Asking for a friend

Alexandre said

You are right: comparing The Ottoman Empire to some British colony is insulting to the Empire.

OK, fixing that.

Canada benchmark interest rate in August 1972: 6.0%.
Canada benchmark interest rate in August 1981: 22.75%.

That 10yr 7% GIC in September 1972 must have sounded darn good.

---------

No, I don't want to see 20% or 40% benchmark interest rate in Canada in next decade (or two), just saying that we went quite rapidly from toying with idea of negative interest rates to what is today, and who knows what will another 5-10 years bring.

I wouldn't lock my funds into 5-10yr GIC, but it is just my opinion. Feel free to ignore it, I am not telling you what to do with your money.  

Your guess is as good as mine, not better or worse.

Btw what’s the benchmark rate in jul 1992 ? Oh it’s back at 5% from 22% 10 years ago. That 10y GIC in 1982 did sound pretty darn good.

It’s just silly to pick 2 data points to support an argument. Too easily done, zero skills required. Until the Time Machine is readily available, I care about the future. Famous financial disclaimer: past performance is not indicative of future performance.

althisa said
The inflation rate in Turkey in 2023 is close to 60%
 

Coincidentally, according to the Canada Real Estate association, between January 2020 to March 2022, the average home price Canada-wide increased 59.86%.

If you were like me (still) looking to buy a house, and saw during those times that all listings were always sold over asking price, and sometimes by as much as 40%. It is insane for someone who just asks for a roof with 4 walls and a door.

StatsCan said the CPI in Novmeber 2023 was 3.1%. That's about right for those who don't need shelter, don't eat, and don't need gas.

Yeah, every nation measures CPI differently. Just one number doesn't always tell the whole story. There is no point to compare inflation of Canada to Turkiye (got it, Dean).

Just to close out an earlier part of this discussion, I now hold a 2 year GIC @6.05% from Habib Canadian Bank. Between holiday closures at both Habib and GIC Wealth Management, it took all of the last week of December to set this up. But one good consequence is that with the GIC issued on Jan. 2, I will only have to start paying tax on the interest received in 2026. I believe no interest will get credited until January 2025, so that pushes the income onto the 2026 income tax filing.