Rate Increase | Page 3 | Oaken Financial | Discussion forum

Indeed, I agree with Loonie's additions. There are entire forums (e.g. FWF and CMF) that discuss virtually every wrinkle possible in these areas of interest.

As I said in my last post,
"There is some kind of risk in everything, but it comes down to what you can live with, in terms of income and also risk."

It is indeed a complex subject, and there are many more types of risk than Brian has mentioned or than can be covered in this thread or forum.

However, all risks are not equal or equally likely to have a bad result. That's why they get rated from low to high. It's a crude measure, not always accurate, but probably the best we can do.
There are also measures that can be taken to mitigate risk, such as real return bonds which will deal effectively with inflation without taking on stock market risk. There are various ways of essentially farming out the risk by selling it to someone else. I don't pretend to understand all of these, but they exist.

It is unfortunate, in my opinion, that the investment industry has in effect over-simplified the matter of risk. It has been reduced largely to a simplistic question on a "getting-to-know-you" initial questionnaire. The question that is usually asked is, "what is your risk tolerance?" The preferred answer, from the point of view of the person on the other side of the desk is, the higher the better. Many newbies, wanting to appear more knowledgeable than they are, and not wanting to appear too timid, have declared themselves to be far less risk averse than they actually are.
Riskier investments bring better commissions. But this whole exchange with the client fails to grapple with the bigger issue, namely that there are many different kinds of risk and that we may have a greater tolerance for some than for others - if we even understand them, which most beginners don't and many people never do.
Another factor that is intimately connected with risk tolerance is time horizon. It makes a huge difference if you are looking at 25 years or 5.
And so on.

And so, when all is said and done, this is why many sophisticated investors tell newbies to just buy a good cheap balanced fund and be done with it. What they mean is, average out your risks and hope for the best.

This is an interesting discussion, but I think we have gotten a long way off the track and should probably consider bringing this thread to a close.

dentgal said

I think that i brought up the subject of my advisor not offering me the same rate that i could get at oaken on my own. Just to clarify, apparently i am paying my advisor when i buy or sell mutual funds, but not a fee on GICs. However, they are not offering the same great rate from oaken--so of course they are getting their cut (or fee) one way or the other. This money was in my "cash" account, so i asked him to transfer to my chequing account and i bought the oaken GIC on my own. I did feel a bit guilty, but hey, it's better in my pocket than theirs. And, honestly, it pisses me off that i can find better rates than they can offer--even with the SAME financial institution. My problem will be the cash in my RRSP! I am slowly reducing the amount of exposure that i have in the markets and feel much more comfortable with my paltry 2 or 3% (but with NO RISK) vs. chasing small gains in the market and risking the markets going down. So i haven't totally left the markets, but when i am getting dividends, I am not re-investing them in the markets and am going to fixed assets. Going slightly off topic, my old financial advisor put most of my RRSP into rate reset preferred shares. OY. What a mistake they were. Once burned twice shy. Happy long weekend to all!

Firstly, do NOT feel guilty. If you enjoy using a full service advisor you have to know you are NOT getting the best bang for your buck. I have an advisor and have been removing funds via my RRIF to TFSA at much higher rates and non taxable. I keep under the wire and remain in the lowest income tax rate and try to make sure I also get full age benefits as well. I have mutual funds and ETFs with my adviser.....and sure the dividends are nice....and they set that up to pay your annual fees with. But I do not pay fees for buying or selling mutual fund although I have to pay $150 to buy or sell ETFs. I have be not trying to do a full exit from our adviser but the one ETF and one mutual fund just has not rebounded to a good number. I have been waiting for 3 years!!!!! Just imagine if I had to start to sell those funds at a loss when they move to a RRIF.

This subject sort of went sideways but I'm looking for some suggestions on what GIC terms people are signing up for. I've started to ladder at Oaken and have one GIC for 18 months and another for 2 years. Will get another one early in July but now I'm contemplating taking longer terms. BOC has said they don't anticipate raising rates till 2018 so I'm interested to see what term are others signing up for.

The offer at Oaken is certainly the best thing going right now.

There is, I think, a reasonable chance of a promo at a bit higher rate sometime in the next year, somewhere, but it's probably not worth waiting around for that possibility as you may lose in the meanwhile - depending on available savings rates at the time. Better to wait for your renewal date and hope something is better by then, or at least as good.

The other thing you can do, depending on how much money you are investing and on how long the offer lasts, is to put the money into smaller parcels and spread out the maturities a bit more, allowing you to potentially take advantage of better rates next time. This may be easier to accomplish if you have a combo of individual and joint accounts, giving you more capital to spread out. For example, I am gradually setting up one-years maturing every month at Hubert, so it serves a similar function to a savings account or LOC as I have access to extra money every month without losing anything.

Also remember that FIs will usually hold a rate for 30 days or so after it expires if you ask them, so that you can move your money.

I wouldn't mind so much if inflation were low, but it's high on my necessities.
there are often promo rates in Dec-Feb for RSPs and TFSAs, and sometimes these spill over into non-registered.

Bear in mind that we didn't anticipate this offer from Oaken.

BoC has been pushing forward the mythical date when rates will rise again literally for years now. It definitely doesn't mean that they will rise in 2018 or at any foreseeable time.