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Email this6:30 am
September 30, 2017
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Not sure exactly when it changed, 1-yr APY now 5.00% (was 4.50%) ... ok, chart dated July 21st
* Annual percentage yield (APY) - the effective interest rate, illustrating the effect of compounding, or earning of interest on interest.
Use 4.889% for non-compounding monthly pay.
On 2nd thought, is it fair to use Simplii's APY on the chart for comparison? I think all other FI's rates are *annual* rates.
7:33 am
April 6, 2013
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Chart is correct.
Smplii GIC's compound or pay interest monthly. A one-year monthly-compunded 4.889% Simplii GIC will return 5.00% on maturity.
7:44 am
September 30, 2017
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Does your comment also apply to the longer terms, 2 to 5 yrs, on the chart?
8:15 am
April 6, 2013
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Yes.
For example, the Simplii five-year 3.929% monthly-compounded GIC is equivalent to a five-year 4.0005% annually-compounded GIC:
1.2166839633 = (1 + 3.929%/12)5 * 12
1.2166839625 = (1 + 4.000531%)5
Their quoted 3.929% rate is a "simple annual interest rate":
1 Simple annual interest rate. Your interest rate is guaranteed and fixed for the duration of the investment. Interest is calculated daily based on the simple annual interest rate and is paid or compounded monthly (depending on the interest option chosen).
3:11 pm
September 30, 2017
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It is complicated but it is fair.
I picked the 1 yr term with monthly payout. For my case, 4.889% is my real return from Simplii.
5:13 pm
June 6, 2023
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why not just use the same calculation as most others ? is the intent to confuse people
this is marketing at it best . if they want offer a high rate . why not just do that straight up as other do ?
honestly ?
12:40 pm
April 6, 2013
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Simplii has, for some reason, decided not to offer annual compounding for their GIC's. The choices are monthly payout or monthly compounding.
Two rates are published for each term: The simple annual interest rate and the APY rate.
The simple annual interest rate is for comparing with other GIC's that pay out interest monthly and with daily interest, monthly paying savings accounts.
The APY rate is for comparing with GIC's that compound annually when one choses to have the monthly interest reinvested instead of paid out.
10:48 am
June 6, 2023
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The reason is a marketing reason to make them selves less easy to compare against other GIC products so they do not have to have higher rates
If you go too a full service stock broker . their is much less of this marketing foolishness
all though I do see TD principal protect notes as some thing much the same . has any one had a full service broker recommend . and what was the circumstance in term of investment goals and time line .
12:17 pm
November 18, 2017
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Many financial institutions set payout and compound rates so that the total interest earned by maturity is the same in both cases. I don't consider that sleazy or deceptive.
When I am offered monthly compounding at the same rate as annual, I consider it a nice bonus. Ally was particularly accommodating when they were still around - they let me have monthly compounding and payout at 4% over five years back when that was a very good rate. I could deposit up to $100K and never risk anything but one month's interest sitting outside CIDC limits.
RetIrEd
RetirEd
1:33 pm
March 14, 2023
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I don't see it as marketing. If it is, the marketing team needs to be fired. It's marketing at its worst - there's no long term success in confusing potential customers.
Anyway, quoting a lower interest "rate", as they do for their GICs, doesn't make them look more competitive. The "APY" is the true annual compounding rate but what small percentage of the population knows what that really means? I would expect people to compare "rates", which makes Simplii look worse than they actually are competitively.
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