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Email this8:04 pm
October 5, 2009
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Over the years, this Forum has served well to educate us on the best investments in high interest savings accounts; and the information offerred here has favourably altered my bottom line. With big numbers invested over the years in Manitoba GICs at 5.25+%; that all comes to an end in a couple of months. :=(
As an old retired guy with lottsa $$$ to invest, maintaining the standard of my old age lifestyle which I would prefer to continue to enjoy, depends a whole lot upon getting the best return for my $$$ without engaging in risky behaviour; and utilizing a meager 2% savings account, or a 3% GIC account, just doesn't cut it when there are so many preferable options out there!!
While I enjoyed the no brainer easy days of 5+% GICs etal, that day has now passed into history.
So . . . aggravating as it might seem, it is apparent that I have to go back to work, looking for a better return on my investments. 
I'm not an expert on any of this kind of stuff, but my brief internet surfing education, led me to believe that I could expect 2X to 3X return over mere bank account offerings.
As a neophyte, my investment strategy in the stock market has been pretty simple. I hooked up with TD Waterhouse for a cheap online trading account; and my stock selection has been pretty much the invulnerable kind of blue chip stuff most often recommened by ANALYSTS (not by certified idiot financial planners who failed to qualify for a job flipping hamburgers) for old folk.
These are the stocks I chose to invest a large part of my retirement $$$, along with the basic annual yield% for each stock:
Bell Aliant 7.04%
Bank of Montreal 5.01%
Bank of Nova Scotia 4.30%
Enbridge 2.92%
Royal Bank 4.35%
Toronto Dominion 3.98%
BCE 5.42%
Canadian Imperial Bank 4.95%
Manitoba Telecom 5.37%
Trans Alta 7.90%
While I have a whole lot more to say, I always do; the time has come for this forum to address a new forum subject header addressing the new investing reality! Perhaps we can all learn from each other.
The whole idea of 2% high interest savings accounts is dead!
The purpose and longivity of this forum would be well served by introducing a forum subject addressing alternative investments superior to the flagging 2% savings account rate.
Stan
11:42 am
December 23, 2011
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Hi Stan. I am in the same boat as you. While the younger folks are protected from high mortgage rates by the feds...they didn't to that for us with our unheard of 18% mortgage did they? I agree GIC's and High Interest Bank accounts are not an effective investment for retirees, nor will they be, as long as the feds protect the mortgage rates . At this point I still believe in having some mutual funds, shares, and GIC's. Since my investment adviser did not have the capability of selling any TFSA product when the program was initiated I am managing the TFSA investments myself while my RRPS's are with my adviser.
I am contemplating a few things:
Remove $5000 per year from RRSP and invest into TFSA (GIC or??) as the amount after a few years will be the same as what it would have been in the RRSP BUT will be excluded by any Government claw back policies.
Buy long term TFSA GIC's for both registered and non-registered accounts (3-5 years) (higher interest rates) and have the interest deposited to my account annually.
I don't put all my eggs in one basket so my TFSA contributions are in my Itrade account and in GIC's in Manitoba. But I am thinking about People's Trust (CDIC insured) for a 3% TFSA Savings account.
Similar to you I have an online brokerage account but with Itrade (Bank of Nova Scotia). It is for TFSA's only. Currently Itrade is charging an annual fee of 150 for any account under 25,000 EXCEPT TFSA only accounts. Will that change in 5 years (5000 annual allowance x 5 years), I don't know? I am a no-fee driven guy!!!
I have read here, I believe, that maybe one should invest in Bank shares instead of GIC interest rates. I have reviewed my investments with my financial guy who is know changing over to Manual Life...no big deal to me...same investments...same adviser....and no cost to move investments. But what I did find is I have an Ishare ETF called XDV and much to my surprise it has made 12%, by my calculation, over 2 years when I combine the growth and dividends paid. Much to my surprise it is a blend of banks, insurance companies, and others. Most of the companies I recognize as being good investments.
Right now I am in the process of selling off all of my losing and barely making any money shares in Itrade and buying XDV in my account.
Take a look http://ca.ishares.com/product_.....ew/XDV.htm
I hope by sharing this information it may be of some help.
3:29 pm
October 5, 2009
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kanaka said
Right now I am in the process of selling off all of my losing and barely making any money shares in Itrade and buying XDV in my account.Take a look http://ca.ishares.com/product_.....ew/XDV.htm
I hope by sharing this information it may be of some help.
kanaka,
I have a really strong aversion to having an investment advisor, and actually *paying* them to deplete my portfolio! You don't need to pay someone to advise you on investments, when this kind of information is *ALL* available in various sites online. One I use most is:
http://moneycentral.msn.com/st....._portfolio
While I use it to track my portfolio, they also provide detailed information on various stocks; and apart from the charts, yield, et al, they provide lists of major players, including investment funds, who are investing in this particular stock, and the amount they have invested. And the cute thing you will find about where banks invest: they invest primarily in other banks!!
I really got a kick outta the ishares website, and their 30 focus investments. Their investments are almost identical to mine:
CANADIAN IMPERIAL BANK OF COMMERCE
TORONTO-DOMINION BANK/THE
BANK OF NOVA SCOTIA
ROYAL BANK OF CANADA
BCE INC
MANITOBA TELECOM SERVICES INC.
TRANSALTA CORPORATION
This pretty much represents the generally accepted invulnerable blue chip line paying the best dividends. The only difference in our two portfolios, is that in addition to the above, I also hold shares in Bell Aliant and Enbridge.
5:38 pm
November 15, 2012
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While I have to admit I enjoyed reading this discussion stream and didn't initially feel inclined to comment, a couple of points were raised that I do feel is worthy of some additional commentary. Firstly, I don't think one needs to make an all or nothing investment decision. In fact, maintaining a balanced investment philosophy across a number of asset classes is prudent regardless of current interest rates. While I do hold the major portion of my fixed income assets in the form of laddered GICs (with only a couple of corporate class bonds), I too am invested directly in equities, selecting a relatively broad range of blue chip companies that span across a number of industries (not all financial services or resource based) and a mix between preferred (dividend paying) shares and common stock. As a whole my investments are split roughly 70% fixed income to 30% equity and I follow a pretty disciplined buy & hold mentality.
This strategy is not for everyone...investing in equities has a fair amount of risk and a whole lot more volatility. While I get your point Stan...why pay for advice when all the information is available, I do caution people that information is one thing (do you really know what to look for?) and good advice is another (what level of risk do you want to accept, where will you invest your hard earned savings, at what point do you buy & sell, etc). I'm not advocating for advice, simply cautioning readers to really think through their objectives, understand how much risk they can handle, develop a smart plan that keeps you sleeping at night and keep your money diversified across asset classes and sectors.
Just one guy's observation. Ohh ya, let's also remember in 1981 when interest rates were 18%, inflation in Canada was also running at 14% --- as much as we were loving the return, we were also feeling it in the economy and in the price of products!
11:00 am
December 23, 2011
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Hello Stan and Cmore.
I agree that this site should look at some alternative forums to discuss other safe methods of making a reasonable return of invested dollars.
I also believe that the 3 of us have the potential of bringing those investment vehicles to light.
I feel comfortable with the mix of controlling my TFSA accounts and using an adviser and admire any one who takes control of there complete portfolio. I have embarked upon a program of removing dollars from my adviser to build our TFSA accounts. At this point of retirement I do not need the RRSP money for supplementing my pensions. Although I do have funds outside of my RRSP account I feel it is important to slowly (and maybe never complete the process) remove RRSP dollars to TFSA to reduce any government claw backs. As I took care of my mothers stay in government subsidized care I realize there is some degree of importance to reduce claw back to protect your estate.
And yes, I had one of those great 18% mortgages...and an 18% Canada Savings Bond too. Unfortunately a 500 bond did not offset the mortgage. We never had a mortgage for under 9%. I had the mortgage for about 9 months and the mortgage was with a Life Ins Company .... there were very helpful of letting me re arrange finances at a bank at a much lower rate as they were no longer offering mortgages. The process certainly made us think what we need and what we didn't...that was for sure. And like most of us in that era, we focused to pay off our mortgages to make sure it had minimal or no impact if 18% happened again.
Currently I have an Excel program that rolls my different investments into one summary as I have about 6 monthly statements that I need to input. I have reviewed MSN Portfoio Tracking and plan to try it out.
4:35 pm
October 5, 2009
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Cmore. said
Firstly, I don't think one needs to make an all or nothing investment decision. In fact, maintaining a balanced investment philosophy across a number of asset classes is prudent regardless of current interest rates. While I do hold the major portion of my fixed income assets in the form of laddered GICs (with only a couple of corporate class bonds), I too am invested directly in equities, selecting a relatively broad range of blue chip companies that span across a number of industries (not all financial services or resource based) and a mix between preferred (dividend paying) shares and common stock. As a whole my investments are split roughly 70% fixed income to 30% equity and I follow a pretty disciplined buy & hold mentality.This strategy is not for everyone...
Cmore, for the most part, I also follow your general idea of carefully diversifying investments. I currently have my investments diversified pretty much on a 30/30/30 basis:
- Stock market 30%
- Fixed income 30%
- Fixed assets 30%
But in January, all of those Fixed Income 5.25% GICs mature.
Do I intend to reinvest my Fixed Income at 2%; or tie it up for five years in a GIC with a modestly augmented rate of return?? Nope! Absolutely not! No way!!
So . . . what to do??
It has been a lo-o-o-ng time since I retired carefree. But it seems that my carefree retirement has been complicated by a lot of bad stuff I never expected nor understood. So . . . back to work, attempting to understand the new ecomomy! 
With 30% of my (fixed income) retirement portfolio coming due in a couple months; I really don't have a clue as to where to go from here.
5:05 pm
December 23, 2011
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Hi, I know it may be too late.
Have you considered laddering your GIC's on a 3, 4, or 5 year basis.
Probably better explained here than I could http://www.rbcroyalbank.com/pr.....adder.html
Then you would obtain better rates than 2% .... well not too much better.
7:22 pm
October 5, 2009
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kanaka said
Hi, I know it may be too late.
Have you considered laddering your GIC's on a 3, 4, or 5 year basis.
Then you would obtain better rates than 2% .... well not too much better.
For sure, I am familiar with laddering, but I've now reached the top of the ladder, and from here, the only remaining direction is DOWN!
I was really lucky five years ago, in suspecting that interest rates were about to go on a big downward spiral; and locked over a half mil in 5.25% GICs. Now that they are all coming due, I am stuck with a big wad of cash that I don't know what to do with! 
Having more retirement funds than I will ever need, I have chosen the coward's way out. I just finished presenting my kids with cheques for a hundred thou each, figuring: that's at least a few $$$ I no longer have to deal with! A rather selfish endeavour on my part, but, so far, I haven't received any complaints from any of my heirs and successors. 
8:03 pm
November 15, 2012
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I hear you Stan and have seen a steady stream of my laddered GICs come due over the past year, however, I'm sticking with my laddering plan, as I have multiple GICs renew every year and I'll catch the upswing when rates begin to rise --- which they will in time.
As for gifting your kids...that is an excellent strategy, especially if you're helping them pay off any consumer debts which can range between 4% for a mortgage to 18% if it is credit card debt. I'm sure they very much appreciated your very generous gift...way to go dad!
8:37 pm
November 21, 2012
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Just be careful when it comes to Canadian bank stocks. Some say that they are overexposed to Canadian real estate, and Moody's has recently threatened to cut their ratings. The last thing you want to do is to chase what looks like a juicy dividend just to have your shares take a big haircut when real estate corrects.
9:08 pm
October 5, 2009
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Jim said
Just be careful when it comes to Canadian bank stocks. Some say that they are overexposed to Canadian real estate, and Moody's has recently threatened to cut their ratings. The last thing you want to do is to chase what looks like a juicy dividend just to have your shares take a big haircut when real estate corrects.
Hi Jim!
I am not all that convinced that Moody has necessarily threatened to cut Canadian bank stock ratings. So far, all Moody has suggested, is that they merely intend to review Canadian bank stock ratings. Good, bad, or indifferent; Canadian banks are still regarded world-wide as the most reliable and solid corporate banking entities in the entire Universe!
10:11 am
November 21, 2012
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Stan said
I am not all that convinced that Moody has necessarily threatened to cut Canadian bank stock ratings. So far, all Moody has suggested, is that they merely intend to review Canadian bank stock ratings. Good, bad, or indifferent; Canadian banks are still regarded world-wide as the most reliable and solid corporate banking entities in the entire Universe!
I should've just included a link the first time here . The most reliable, solid, other accolades etc. etc. doesn't address the value of the stock. Are the banks overvalued right now given the real estate risk and from people chasing dividends? As an investor, you have to be the judge of that. I think they are.
3:39 pm
October 5, 2009
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Jim said
I should've just included a link the first time here . The most reliable, solid, other accolades etc. etc. doesn't address the value of the stock. Are the banks overvalued right now given the real estate risk and from people chasing dividends? As an investor, you have to be the judge of that. I think they are.
That was a month ago, and still nothing from Moody's . . .
And today: Nov 22 (Reuters) - Canada's housing market appears to be cooling at a moderate pace rather than crashing, Finance Minister Jim Flaherty said on Thursday in an interview with the Business News Network.
Notwithstanding, my financials have gone crazy this week, along with just about everything else.
Please write your comments in the forum.