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Email this9:47 am
December 7, 2016
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OAKEN IS TELLING ME THAT I COULD HAVE 100K IN OAKEN HOME BANK AND 100K IN OAKEN HOME TRUST AND BOTH WOULD QUALIFY FOR CDIC INSURANCE. HAS ANYONE GOT INFO ON THAT?
9:58 am
April 7, 2017
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Correct. But let's be clearer.
For non registered funds.
You could have funds in Home Bank CDIC insured for $100,000 INCLUDING interest accrued.
And a another $100,000 in Home Trust.
For registered funds ie RRSP.
You could have funds in Home Bank CDIC insured for $100,000 INCLUDING interest accrued.
And a another $100,000 in Home Trust.
And you could put more in than $100,000 but that "over amount" would not be insured.
I would only invest 90,000 per bank or account type . That way with accrued interest, you will be fully covered for CDIC.
10:00 am
April 7, 2017
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See here for CDIC.
10:31 am
December 20, 2016
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Additionally, if you happen to be married, you and your spouse would be separately insured, as would a joint investment be separately insured.
11:43 am
December 12, 2009
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My understanding, and I've worked in banking, is on that's not correct on your "accrued interest" point. You're covered for $100,000 in principal (which includes interest paid) plus "accrued interest". Yes, once the interest has been paid, now you're over your limit but, guess what!? CDIC limits only apply if the government has to bail the bank out and the bank doesn't even have the funds on hand while CDIC owns & manages the bank. That won't happen - banks are fully audited quarterly and very likely monthly, privately, by the federal regulator, OSFI. OSFI even conducts random, "on the spot" audits of their banks that are independent, too. In all likelihood, if it came to that point, CDIC & OSFI would find another bank (or credit union) to assume its outstanding loans & mortgages at a substantial discount to their "book value" and all of their deposits.
You can actually have:
- $100,000 in an Oaken GIC with Home Trust in your name
- $100,000 in an Oaken GIC with Home Bank in your name
- $100,000 in an Oaken GIC with Home Trust held jointly with your spouse
- $100,000 in an Oaken GIC with Home Bank held jointly with your spouse
- $100,000 in an Oaken GIC with Home Trust held by your spouse
- $100,000 in an Oaken GIC with Home Bank held by your spouse
- $52,000 in an Oaken TFSA GIC with Home Trust held in your name* (*subject to available TFSA contribution room)
- $52,000 in an Oaken TFSA GIC with Home Trust held by your spouse* (*subject to available TFSA contribution room)
- $100,000 in an Oaken RSP/RIF GIC with Home Trust held in your name* (*subject to available RSP contribution room/RIF balance)
- $100,000 in an Oaken RSP/RIF GIC with Home Trust held by your spouse* (*subject to available RSP contribution room/RIF balance)
and it'd all be CDIC insured, in the highly unlikelihood that CDIC's deposit insurance regime even had to be tapped. CDIC/the Government of Canada can also waive insured deposit limits, at their discretion, too. That's a total of $904,000 in fully CDIC insured money. If you have even more, you and your spouse could start creating separate joint accounts with your children, held with a "two to sign" rule on withdrawals if you don't trust your children, creating a number of other insured deposit combinations. 😉
Cheers,
Doug
12:10 pm
December 17, 2016
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Readers would be reminded that this is an anonymous forum and to exercise caution and due diligence whenever investing ...
exceeding CDIC limits is NOT sound advice.
1:56 pm
October 21, 2013
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Actually, with Oaken offering rates like 3.25 on five year term, you need to put in even less than 90K to be fully covered. About 85K would be good, assuming you are compounding the interest and not taking it out. Last week, when you could get 3.5, it would have been best to put in even less.
Best to do the math yourself for whichever term you have chosen.
4:19 pm
April 7, 2017
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I'm with you Loonie. Reverse engineer the interest to be earned for the rate and term and add it to the principal to be no more than $100,000. Why put yourself in the position of losing out on any portion of interest. And let's face it, while GICs are conservative the rates suck.
5:28 pm
November 7, 2014
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Another option is to take a 10 point rate cut and get the interest monthly. Then you can invest a full $100,000. If the company defaults, you'll only miss a month's interest. CDIC says they get cheques out very quickly when a bank defaults.
10:53 pm
October 21, 2013
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gicjunkie said
Another option is to take a 10 point rate cut and get the interest monthly. Then you can invest a full $100,000. If the company defaults, you'll only miss a month's interest. CDIC says they get cheques out very quickly when a bank defaults. Â
Yes, that's an option that I considered. When I worked it out, it seemed that you'd still be very slightly better off the other way, but it depends on what you do with the rest of the money if you only invest the smaller amount and on what you do with the interest the other way.
It also depends on whether it's registered or not. If it's a TFSA or RSP, you probably wouldn't want to be taking the interest out regularly.
The exception is the RIF, from which withdrawals are taken by law annually. That requires a different calculation which looks at your mandatory withdrawal rates, which vary annually and depend on age. It's significantly more of a nuisance to figure out, but it means that the amount that is invested declines regularly so that as long as your withdrawal rate is equal to or greater than your interest rate, you can start with 100K with no worries. As long as you or your spouse are at least 60 years, this should not be a problem at 3.25% as the withdrawal will absorb the interest. This is something to consider if you buy a RSP GIC that will convert to an RIF during the course of its term: at first, it's value will go up, but then it will start going down, so you need to base your investment on its peak value.
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