Escalating GIC?

[tng11]

I'm considering buying an escalating GIC, would locking in for 3 years be a wise idea? I'm considering buying somewhere in the $20K range, about a quarter of my portfolio.

My advisor at CIBC offered to tack on an extra 0.5% to the posted rates, giving the GIC a yield of 4.6474%. I don't foresee myself needing the money for a while and I need a "secure" portion for my portfolio as I plan on re-investing 1/2 of my holdings in the stock market sometime in January, and also maxing out the TFSA with equities.

I also have the option of a 2-year GIC where I will get 3.6%+0.75 to get 4.35%.

[Rishi]

An effective yield of ~4.65% per annum for 3 years is pretty decent. GIC rates are going nowhere but down in the short term so I would advise you buy ASAP. I doubt that GIC rates will be significantly above their current levels at any point in the next 3 years.

[Thalo]

Those are good rates. I hope for your sake that your CIBC advisor isn't mistaken in their ability to bonus these types of GICs.

[CSIFan29]

Sorry to hijack your thread but is the following good for a 5-year rate?

1st year 2.40%
2nd year 3.75%
3rd year 4.25%
4th year 4.75%
5th year 8.00%

Effective Annual Yield 4.614%


TD 5-year Stepper

[tng11]

Those are good rates. I hope for your sake that your CIBC advisor isn't mistaken in their ability to bonus these types of GICs.

I hope so, my advisor said that Imperial Service advisors have the ability to bonus 0.75% for GICs 2 years and under, and 0.5% for GICs over 2 years.

I'm just not too sure about a 3 year term as who knows how long rates will remain low, and I'm leaning more towards the 2 year option as 4.35% seems like a very good rate

[Thalo]

I hope so, my advisor said that Imperial Service advisors have the ability to bonus 0.75% for GICs 2 years and under, and 0.5% for GICs over 2 years.

I'm just not too sure about a 3 year term as who knows how long rates will remain low, and I'm leaning more towards the 2 year option as 4.35% seems like a very good rate

TD can bonus on all standard GICs, but not on special products, like steppers. This is why I wonder if the CIBC guy can actually bonus these.

I actually didn't notice that TD raised the rates on the 5yr stepper. 8% in the 5th year is pretty damn good. Of course, they're banking on you cashing out for one reason or another in the next year or two.