Deposit Rates: ING etc. (2009)

Banking and Saving strategies, maximizing interest rates, budgeting, GICs, HISAs.
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CROCKD
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Post by CROCKD »

My son's cheque finally showed up at ally.

Considering the starting up pains chronicled here and elsewhere for ally, I find it interesting that they seem to have mounted a massive publicity campaign. They have had full page ads on the back of the business section of the Toronto Saturday Star for the last two weeks. I have also seen several prime time TV ads.

By contrast internet Citizens Bank now shutting down retail savings never seemed to conduct any advertising, perhaps explaining why they only had a subscriber base of 30,000 in Ontario at windup.

If it had not been for snowback's original post here I would not know about CDF as I have not seen any advertising from them.

Still paying the top savings rate Peoples Trust does not advertise the fact although they show up in interest rate comparisons. Of course they do not have internet banking.

ING current interest 1.05% continue to advertise as does RBC with their 'Hi Interest' esavings of 0.75%
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CROCKD
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Post by CROCKD »

For anyone interested, the transfer and other problems at Ally seem to be resolved, per posters here and elsewhere.

As a follow-up to my complaint to the ombudsman about the transfer screwups

post Sept.29

I received a letter by courier from the Managing Director, Ally dated Oct.7.
This seems to indicate that they take such correspondence seriously.
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Post by NOVICE99 »

HSBC non-redeem 5-yr GIC at 3.7%

https://www.hsbc.ca/1/2/en/personal/tod ... ment-rates

Anyone know any other 5-yrs better rate?
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Post by 83_gemini »

I finally succeeded at signing up to Ally too. I look forward to seeing how well that works.
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Post by IdOp »

PC Financial has chopped the anniversary bonus interest rates they pay on certain of their accounts by up to 60% effective later this month. When you log in there's a chart detailing the changes.
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Post by AltaRed »

I guess I have to seriously think about dumping PC Financial and look at the alternatives (no CU or QC based stuff for me though). PCF has been my ISA haven for about 3 years.
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deposit rates

Post by atchgwb »

Attn: novice 99

Maxa financial is holding it's slight edge with 3.8% for 5 yrs, 4% for 7 yrs

http://maxafinancial.com/bins/page.aspx?cid=1719
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snowback96
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Post by snowback96 »

For those that have signed up for Canadian Direct Financial's KeyRate Savings Account, it looks like they're also adding a Chequing Account:

https://www.canadiandirectfinancial.com ... tChequing/

Not sure there is a compelling reason to switch my chequing account from PC Financial but I think this is worth monitoring. Nice to see them building their product offerings. Next thing I need to see is online transfers and account statements.
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Post by Contrarian »

Does anyone know the expected/implied inflation rate for the coming year and average for next 5 yrs? The past 9 months is supposed to be negative .9%, I think. Also, what is the yield curve like? Real return bonds seem to be offering a nominal return of around 3.7%. For some reason I'd rather take a 5yr GIC with a 3.8% nominal return.(especially since I assume anticipated inflation is low over next 5yrs)
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Post by bones1 »

Contrarian wrote:Does anyone know the expected/implied inflation rate for the coming year and average for next 5 yrs? The past 9 months is supposed to be negative .9%, I think. Also, what is the yield curve like? Real return bonds seem to be offering a nominal return of around 3.7%. For some reason I'd rather take a 5yr GIC with a 3.8% nominal return.(especially since I assume anticipated inflation is low over next 5yrs)
You normally buy RRBs on the long end of the curve, not the short end. So, you're comparing apples and oranges. If your need is 5 years, then stick with a GIC. If your need is 30 years, then compare RRBs and nominal long-bonds.
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Post by Contrarian »

bones1 wrote:
Contrarian wrote:Does anyone know the expected/implied inflation rate for the coming year and average for next 5 yrs? The past 9 months is supposed to be negative .9%, I think. Also, what is the yield curve like? Real return bonds seem to be offering a nominal return of around 3.7%. For some reason I'd rather take a 5yr GIC with a 3.8% nominal return.(especially since I assume anticipated inflation is low over next 5yrs)
You normally buy RRBs on the long end of the curve, not the short end. So, you're comparing apples and oranges. If your need is 5 years, then stick with a GIC. If your need is 30 years, then compare RRBs and nominal long-bonds.
rrb's have zero inflation risk so are more comparable to short term gics.
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Post by queerasmoi »

Contrarian wrote: rrb's have zero inflation risk so are more comparable to short term gics.
No they aren't because you can't necessarily get out risk-free after a short period of time. RRBs still have duration risk. When expectations of inflation change, this affects the real yields on RRBs, and the effect of this rate shift on bond prices will be amplified with long-duration RRBs.

Look at the behaviour of XRB from September 2008-September 2009. In three months we lose 17% and then gain it all back. With a weighted average duration of about 16 years, and the rule of thumb that you multiply rate change by duration to get the change in bond price, we'd estimate this comes from a 1% spike in RRB yields followed by a return to prior levels - and I believe this is roughly what happened.

Duration still matters! If there existed an RRB with shorter maturity (say 1-5 years) then we'd get the inflation protection without the same duration risk. With long RRBs, you get protection from short-term changes in inflation but large exposure to long term *expectations*...
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Post by Contrarian »

queerasmoi wrote:
Contrarian wrote: rrb's have zero inflation risk so are more comparable to short term gics.
No they aren't because you can't necessarily get out risk-free after a short period of time. RRBs still have duration risk. When expectations of inflation change, this affects the real yields on RRBs, and the effect of this rate shift on bond prices will be amplified with long-duration RRBs.

Look at the behaviour of XRB from September 2008-September 2009. In three months we lose 17% and then gain it all back. With a weighted average duration of about 16 years, and the rule of thumb that you multiply rate change by duration to get the change in bond price, we'd estimate this comes from a 1% spike in RRB yields followed by a return to prior levels - and I believe this is roughly what happened.

Duration still matters! If there existed an RRB with shorter maturity (say 1-5 years) then we'd get the inflation protection without the same duration risk. With long RRBs, you get protection from short-term changes in inflation but large exposure to long term *expectations*...
Duration should'nt matter to most people. If yields go up and your rrb goes down in value , you will sell at a lower price but your new investment will have the new higher yield. Duration should be irrelevant for most people. I dont know how inflation expectations would change real returns unless you mean changes in the predictability of inflation. Regardless, real returns don't change much. a 1% change in real returns is a once in a lifetime kind of thing.
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Post by queerasmoi »

Contrarian wrote: Duration should'nt matter to most people. If yields go up and your rrb goes down in value , you will sell at a lower price but your new investment will have the new higher yield. Duration should be irrelevant for most people. I dont know how inflation expectations would change real returns unless you mean changes in the predictability of inflation. Regardless, real returns don't change much. a 1% change in real returns is a once in a lifetime kind of thing.
Umm... I sell an RRB at a lower price, okay, and then how exactly would I be sure my new investment will have a higher yield?

I've run out of energy to respond to this but maybe someone else could step in :)
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Post by Contrarian »

queerasmoi wrote:
Contrarian wrote: Duration should'nt matter to most people. If yields go up and your rrb goes down in value , you will sell at a lower price but your new investment will have the new higher yield. Duration should be irrelevant for most people. I dont know how inflation expectations would change real returns unless you mean changes in the predictability of inflation. Regardless, real returns don't change much. a 1% change in real returns is a once in a lifetime kind of thing.
Umm... I sell an RRB at a lower price, okay, and then how exactly would I be sure my new investment will have a higher yield?

I've run out of energy to respond to this but maybe someone else could step in :)
Real returns should go up for all interest bearing securities , right? You should be no better or worse off. Your income stream will remain constant as long as you don't procrastinate reinvesting in another interest bearing security. If you need the proceeds to buy a house that would change things. The yield is only 1.6 percent on rrb's. It cant be a risky investment.
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Post by ghariton »

queerasmoi wrote:No they aren't because you can't necessarily get out risk-free after a short period of time. RRBs still have duration risk.
True. But I believe that the funny business a year ago was a spike in liquidity risk and some "novelty" risk. Every investment that was not thoroughly familiar to investors was heavily discounted. While the liquidity risk may happen agan (the next time the financial system faces complete meltdown), I expect the novelty risk to slowly diminish over time.

Yes, real rates do fluctuate. On nominal bonds, they can go negative. RRBs give some protection against this.

There was an old, old discussion here or on the predecessor forum, about picking the term of RRBs. The consensus, as I remember it, is that one should match them with one's spending/life expectation. Thus, I intend to annuitize at 75. If I plan to live until 90, then I should invest in RRBs maturing in 2036. If interest rates are low in 2021, when I sell and annuitize, then I will get a good price for the RRBs. But the annuity will also have a low interest rate, and so it will be expensive to get the payout I want. Conversely, if interest rates are high in 2021, I will get a low price for my RRBs, but my annuity will also cost less.
If there existed an RRB with shorter maturity (say 1-5 years) then
Oh, it exists all right. It's called a strip. Strips can be used to completely eliminate interest rate risk, even from real rate changes. Unfortunately, the price is dramatically lower liquidity -- see above for liquidity risk.

George
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Post by queerasmoi »

ghariton wrote: Oh, it exists all right. It's called a strip. Strips can be used to completely eliminate interest rate risk, even from real rate changes. Unfortunately, the price is dramatically lower liquidity -- see above for liquidity risk.

George
Fair enough. Compare though to the US case where TIPS of shorter maturities are readily available in ETF form - thus much more liquid.
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Post by IdOp »

PC Financial's Interest Plus savings account rate up to 1.0 % from 0.75 % (on amounts over $1000, otherwise 0.5 % (unchanged)).

Ka-Ching.
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Post by sydney2 »

Canadian Direct Financial still 2% daily. :lol:
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Post by snowback96 »

Kudos to PC Financial!

If they double their rate from here, they'll once again become a compelling choice! :roll:
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Re: Deposit Rates: ING etc. (2009)

Post by tightwad »

Just noticed CIBC has a new high-interest savings account, eAdvantage Savings Account. At a glance it appears to be a mirror image of Scotia's Power Savings Account. Currently they both pay 1% interest on balances of $5,000 and more.
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Re: Deposit Rates: ING etc. (2009)

Post by WishingWealth »

Quick question for the po' QCers around 'ere.

A good number of the 'institutions' that give some decent rates are not open for business in QC: ex PCF, CT, ALLY ...
We won't get into the politics of the whys but does anyone have a list of those QC places that are better than RB or Caisse Populaire; :lol: rate wise.

thanks,

WW
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Re: Deposit Rates: ING etc. (2009)

Post by queerasmoi »

www.bankrate.ca seems to believe that Achieva is available in Quebec. Can't find any confirmation on this.
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Re: Deposit Rates: ING etc. (2009)

Post by sc101 »

The interest rate of ING savings account has been increased to 1.20%,
while MIP510, ATL5000 stay at 0.75%
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Re: Deposit Rates: ING etc. (2009)

Post by nightbird »

For your information, MFC298 (Mackenzie cash management) reported inflated return rate from April 1 to Sept 15 2009. They've now adjusted their rate down to 0% and took back all the deposited dividends. Most fund holders should have seen adjusted share counts on their broker accounts in November.
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