GIC Recommendations

Hi all

I'm looking to lock away 10K in relatively secure investment.... GICs.

Could someone summarize what are good buys now-a-days?

tia

Originally Posted by roguechameleon

Hi all

I'm looking to lock away 10K in relatively secure investment.... GICs.

Could someone summarize what are good buys now-a-days?

tia

$10k is a descent amount.
Most banks would offer 2% (At most) for a fixed GIC.

I would suggest checking out ING Direct. THey are currently offering 2.65% for 1 year fixed. This is higher than most banks right now.

Yeah... I think I'm going to end up with ING. I was hoping, since I'll be locking the money away for 5 years or so, that I could get a better rate. Looks like ING's 5 year rate is 3.6, which is decent.

Originally Posted by roguechameleon

Yeah... I think I'm going to end up with ING. I was hoping, since I'll be locking the money away for 5 years or so, that I could get a better rate. Looks like ING's 5 year rate is 3.6, which is decent.

Since a lot of people are speculating rates are going to rise, why not put 2K in for a 1 year, 2K in for a 2 year, 2K in for a 3 year, .... 2K in for a 5 year, then roll over the 1, 2, 3, 4 years over when they come due back into a 4, 3, 2, 1 year GIC respectively?

You'd get higher if you put it in a ETF that tracks the SC Universe bond index. Not guaranteed - but you'll do better than 3.6%/year for sure, which just earning a real return of 1.6%ish percent.

That said, ING does have higher GIC rates than most banks. Also, keep in mind that their regular bank account pays 2.4% per year...

Originally Posted by Powderworker

Since a lot of people are speculating rates are going to rise, why not put 2K in for a 1 year, 2K in for a 2 year, 2K in for a 3 year, .... 2K in for a 5 year, then roll over the 1, 2, 3, 4 years over when they come due back into a 4, 3, 2, 1 year GIC respectively?

That's exactly what I was planning on doing... excellent.

My prof totally ditched the idea of GIC when I mentioned I have some of them
He said bonds are better choice, even though I argued that bonds is so much work, and with commission/broker
Note: bank buy 0-coupon bonds to cover their GIC's (and usually they take 1% i.e. if you get 2.65% in GIC, they probably get like 3.65% from bonds)

Keep in mind ING's 2.4% is basically on par with annual inflation, so you're not losing money in real terms, that's it. I have a 1yr, 2yr, 3yr with ING GIC

Originally Posted by jerryhung

My prof totally ditched the idea of GIC when I mentioned I have some of them
He said bonds are better choice, even though I argued that bonds is so much work, and with commission/broker
Note: bank buy 0-coupon bonds to cover their GIC's (and usually they take 1% i.e. if you get 2.65% in GIC, they probably get like 3.65% from bonds)

Keep in mind ING's 2.4% is basically on par with annual inflation, so you're not losing money in real terms, that's it. I have a 1yr, 2yr, 3yr with ING GIC

In terms of risk, GICs are almost risk free.
Bonds are great as well but it does require some calculations.

If you're willing to be exposed to risk, invest in Mutual funds, something along the lines of a Money Market Fund. You may want to speak with a personal banker to get the full details.

GICs are pretty much risk free, except for inflation risk. Your principal and the interest earned is guaranteed. But if inflation spikes to 4% (not likely), you're earning negative returns.

Remember, with greater risk comes greater reward. And with great power comes great responsibility...LOL.

If you want zero risk, just do the GIC ladder. If you want to play around a little but still be very secure, go with no-load indexed mutual funds or ETFs - heavy on bonds.

Forget about the money market funds - ING's savings account would be the better deal - no management fees, deposits are guaranteed by CIDC, and interest rates are comparable to those of MM funds. There's another bank out there paying higher rates than ING, forget the name though.

Achieva Financial.
5 YR compound GIC pays 4.55%. AVG return over 5 YR is @4.9%. Check it out: www.achieva.mb.ca

Originally Posted by Webhead

Achieva Financial.
5 YR compound GIC pays 4.55%. AVG return over 5 YR is @4.9%. Check it out: www.achieva.mb.ca

Thanks! I've sent them an email requesting more information

if you are riskful.. and don't want to lose the principal.. go for the TD Canada Trust Market GICs..

they are tied to the performance of the stock market.. and there is a chance to get upwards to 100% return if you are lucky..

Originally Posted by rdtx2002

if you are riskful.. and don't want to lose the principal.. go for the TD Canada Trust Market GICs..

they are tied to the performance of the stock market.. and there is a chance to get upwards to 100% return if you are lucky..

Up to 100% return!!? Any proof of this type of performance. If so, I'll be signing up very soon.

Originally Posted by rdtx2002

if you are riskful.. and don't want to lose the principal.. go for the TD Canada Trust Market GICs..

they are tied to the performance of the stock market.. and there is a chance to get upwards to 100% return if you are lucky..

So not true. These market indexed GIC's guarantee your principal, but always limit the potential return you can earn. One that I was looking at capped your annual return at 6.7%, which is still decent mind you. They do have their place in some people's portfolios, but you must read the fine print!

http://www.outlookfinancial.com/products/rates.asp

Completely insured due to Manitoba laws

Easy transfers online to and from PC Financial chequing accounts (to Outlook's savings account)


Today's Rates
Effective: 02/01/2005

High Interest Savings Account
Savings 2.85%

RRSP Savings Account
Savings 2.85%


Cashable GICs
1 year Cashable GIC 3.00%
2 year Cashable GIC 3.50%
3 year Cashable GIC 3.80%
4 year Cashable GIC 4.30%
5 year Cashable GIC 4.55%

Cashable RRSP GICs
1 year Cashable RRSP GIC 3.00%
2 year Cashable RRSP GIC 3.50%
3 year Cashable RRSP GIC 3.80%
4 year Cashable RRSP GIC 4.30%
5 year Cashable RRSP GIC 4.55%


Escalator GICs
3 year Escalator GIC
1st Year 3.05%
2nd Year 3.75%
3rd Year 5.05%

5 year Escalator GIC
1st Year 3.05%
2nd Year 3.75%
3rd Year 4.30%
4th Year 5.00%
5th Year 7.00%

Escalator RRSP GICs
3 year Escalator RRSP GIC
1st Year 3.05%
2nd Year 3.75%
3rd Year 5.05%

5 year Escalator RRSP GIC
1st Year 3.05%
2nd Year 3.75%
3rd Year 4.30%
4th Year 5.00%
5th Year 7.00%