High interest rates for savings, GICs and MMFs (2017)

Banking and Saving strategies, maximizing interest rates, budgeting, GICs, HISAs.
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adrian2
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Re: High interest rates for savings, GICs and MMFs (2017)

Post by adrian2 »

Hogwild wrote: 27 Apr 2017 14:56 Adrian:

I get the first part, but where have you/do you specify the font or whatever else? Can you be more explicit (not removing clothes, just with this) :D
Just use [ code ] (without blanks) and the corresponding closing tag. The font is predefined.
Use the preview function to get it right.
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Re: High interest rates for savings, GICs and MMFs (2017)

Post by DenisD »

There are some ideas about using [ code ] in this old thread: http://www.financialwisdomforum.org/for ... 656#p12656
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Re: High interest rates for savings, GICs and MMFs (2017)

Post by Pickles »

Hogwild wrote: 27 Apr 2017 14:35 Well, with all the excitement and intrigue going on with Home Capital Group, I thought I'd take a peek at the webpage of one of their rivals-Equitable Bank. Equitable is a deposit institution but also a mortgage lender on the spread.

EQB100 and EQB200 fundserv HISA accounts raised their yields today by 50 basis points! Anyone know if this is just to assuage the market, or if there is something else going on?

https://www.equitablebank.ca/hisa

Home Capital's Oaken raised its HISA rates to 1.75% yesterday. Also, I suspect, Equitable has also experienced a smaller run on its bank by depositors. Its stock was a target of short sellers yesterday.
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Re: High interest rates for savings, GICs and MMFs (2017)

Post by ig17 »

A run on Equitable must be in progress. That's quite a jump in rates on two consecutive days:

Image

https://equitablebank.ca/hisa
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Re: High interest rates for savings, GICs and MMFs (2017)

Post by gsp_ »

ig17 wrote: 28 Apr 2017 23:34 A run on Equitable must be in progress. That's quite a jump in rates on two consecutive days:
Already posted by hogwild 33 hours earlier in this thread.
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Re: High interest rates for savings, GICs and MMFs (2017)

Post by ig17 »

gsp_ wrote: 29 Apr 2017 08:18
ig17 wrote: 28 Apr 2017 23:34 A run on Equitable must be in progress. That's quite a jump in rates on two consecutive days:
Already posted by hogwild 33 hours earlier in this thread.
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Re: High interest rates for savings, GICs and MMFs (2017)

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May-be some of the split preferred shares look a lot more attractive then chasing HISAs which pay interest at such low rates you need a microscope to see them. I have never figured the attraction for these accounts. Figure in tax ,plus inflation you are actually losing money. Despite CDI protection many are now in panic mode and are pulling money out of these accounts. Again I don't understand the logic or lack of logic. Another alternate is something like Vanguard ST Corporate bond ETF. You are getting excellent exposure to high quality bonds and getting close to 3%. Yes it costs $6.95 to get in and the same to get out. About the cost of 2 big macs with fries.
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Re: High interest rates for savings, GICs and MMFs (2017)

Post by ig17 »

Thegipper wrote: 29 Apr 2017 13:36 May-be some of the split preferred shares look a lot more attractive then chasing HISAs which pay interest at such low rates you need a microscope to see them. I have never figured the attraction for these accounts. Figure in tax ,plus inflation you are actually losing money. Despite CDI protection many are now in panic mode and are pulling money out of these accounts. Again I don't understand the logic or lack of logic. Another alternate is something like Vanguard ST Corporate bond ETF. You are getting excellent exposure to high quality bonds and getting close to 3%. Yes it costs $6.95 to get in and the same to get out. About the cost of 2 big macs with fries.
You are not getting 3%. Yield to maturity is 1.8%.

https://www.vanguardcanada.ca/individua ... tfoliodata

https://beta.theglobeandmail.com/globe- ... m&page=all

"The correct measure of the return on a bond ETF is yield to maturity, which can be found on the product profiles that all companies selling exchange-traded funds offer on their websites. Yield to maturity is an estimated number because of various assumptions that go into the calculation. Still, as one ETF industry person puts it, "it's the best you can do" to determine your yield. One further step: Reduce the displayed yield to maturity by the management fee to get a net return."
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Re: High interest rates for savings, GICs and MMFs (2017)

Post by AltaRed »

But as discussed elsewhere, YTM is not all that representative either since bonds keep getting replaced in the ETF. I tend to look at the average of current yield and YTM for a 1-2 window proxy on actual yield received (less MER of course when the fund doesn't net out the MER). I'd like to find a chart sometime that compares YTM with current yield at various points in time.
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Re: High interest rates for savings, GICs and MMFs (2017)

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ig17 wrote: 29 Apr 2017 13:40 "The correct measure of the return on a bond ETF is yield to maturity, which can be found on the product profiles that all companies selling exchange-traded funds offer on their websites. Yield to maturity is an estimated number because of various assumptions that go into the calculation. Still, as one ETF industry person puts it, "it's the best you can do" to determine your yield. One further step: Reduce the displayed yield to maturity by the management fee to get a net return."
One further step: add the "riding the yield curve" factor. This, usually, at least counterbalances the MER of Vanguard bond ETS's.
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Re: High interest rates for savings, GICs and MMFs (2017)

Post by Thegipper »

ig17 wrote: 29 Apr 2017 13:40
Thegipper wrote: 29 Apr 2017 13:36 May-be some of the split preferred shares look a lot more attractive then chasing HISAs which pay interest at such low rates you need a microscope to see them. I have never figured the attraction for these accounts. Figure in tax ,plus inflation you are actually losing money. Despite CDI protection many are now in panic mode and are pulling money out of these accounts. Again I don't understand the logic or lack of logic. Another alternate is something like Vanguard ST Corporate bond ETF. You are getting excellent exposure to high quality bonds and getting close to 3%. Yes it costs $6.95 to get in and the same to get out. About the cost of 2 big macs with fries.
You are not getting 3%. Yield to maturity is 1.8%.

https://www.vanguardcanada.ca/individua ... tfoliodata

https://beta.theglobeandmail.com/globe- ... m&page=all

"The correct measure of the return on a bond ETF is yield to maturity, which can be found on the product profiles that all companies selling exchange-traded funds offer on their websites. Yield to maturity is an estimated number because of various assumptions that go into the calculation. Still, as one ETF industry person puts it, "it's the best you can do" to determine your yield. One further step: Reduce the displayed yield to maturity by the management fee to get a net return."
I take my monthly distribution which has been consistent since I bought and do a simple calculation and I get something like 2.6%.
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Re: High interest rates for savings, GICs and MMFs (2017)

Post by AltaRed »

Thegipper wrote: 29 Apr 2017 16:46 I take my monthly distribution which has been consistent since I bought and do a simple calculation and I get something like 2.6%.
That does not mean much. Have to look at it over a multi-year period. For virtually every bond ETF, annual distributions have been dropping slowiy year after year. From https://www.vanguardcanada.ca/individua ... ##overview this alone, it shows that 12 month trailing yield is 2.87% and current yield is 2.54%. Next year, current yield could be another 0.3% lower, etc, etc. That will turn around once the yield curve starts rising, but we've had a few false starts so far.
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Re: High interest rates for savings, GICs and MMFs (2017)

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AltaRed wrote: 29 Apr 2017 18:07
Thegipper wrote: 29 Apr 2017 16:46 I take my monthly distribution which has been consistent since I bought and do a simple calculation and I get something like 2.6%.
That does not mean much. Have to look at it over a multi-year period. For virtually every bond ETF, annual distributions have been dropping slowiy year after year. From https://www.vanguardcanada.ca/individua ... ##overview this alone, it shows that 12 month trailing yield is 2.87% and current yield is 2.54%. Next year, current yield could be another 0.3% lower, etc, etc. That will turn around once the yield curve starts rising, but we've had a few false starts so far.
That also applies to HISAs and GICs. Interest rates can go up they can go down. I can't predict the future.
Last edited by Thegipper on 30 Apr 2017 11:12, edited 1 time in total.
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Re: High interest rates for savings, GICs and MMFs (2017)

Post by Mordko »

People worry about all sorts of real and made-up things, so what?

The fact is that HISA are backstopped by the taxpayer, so up to $100K per account the risk of losing capital as a result of a "default" is far smaller than with corporate bonds.

I do have $100K with EQ bank, which has actually been their limit in recent months. No plans to withdraw for the reasons given above. Suspect that the risk of a run on their funds is low; setting a 100K HISA limit was a wise move.
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Re: High interest rates for savings, GICs and MMFs (2017)

Post by Thegipper »

Thegipper wrote: 29 Apr 2017 19:18
AltaRed wrote: 29 Apr 2017 18:07
Thegipper wrote: 29 Apr 2017 16:46 I take my monthly distribution which has been consistent since I bought and do a simple calculation and I get something like 2.6%.
That does not mean much. Have to look at it over a multi-year period. For virtually every bond ETF, annual distributions have been dropping slowiy year after year. From https://www.vanguardcanada.ca/individua ... ##overview this alone, it shows that 12 month trailing yield is 2.87% and current yield is 2.54%. Next year, current yield could be another 0.3% lower, etc, etc. That will turn around once the yield curve starts rising, but we've had a few false starts so far.
That also applies to HISAs and GICs. Interest rates can go up they can go down. I can't predict the future.
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Re: High interest rates for savings, GICs and MMFs (2017)

Post by Thegipper »

Mordko wrote: 30 Apr 2017 10:48 People worry about all sorts of real and made-up things, so what?

The fact is that HISA are backstopped by the taxpayer, so up to $100K per account the risk of losing capital as a result of a "default" is far smaller than with corporate bonds.

I do have $100K with EQ bank, which has actually been their limit in recent months. No plans to withdraw for the reasons given above. Suspect that the risk of a run on their funds is low; setting a 100K HISA limit was a wise move.
You make perfect sense. I don't understand the run on deposits at Home or Equitable. I suspect it is based on ignorance rather then knowledge. I f the Canadian universe of high quality corporate bonds should collapse I wonder about the CDI guarantee.
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Re: High interest rates for savings, GICs and MMFs (2017)

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Thegipper wrote: 30 Apr 2017 11:16
Mordko wrote: 30 Apr 2017 10:48 People worry about all sorts of real and made-up things, so what?

The fact is that HISA are backstopped by the taxpayer, so up to $100K per account the risk of losing capital as a result of a "default" is far smaller than with corporate bonds.

I do have $100K with EQ bank, which has actually been their limit in recent months. No plans to withdraw for the reasons given above. Suspect that the risk of a run on their funds is low; setting a 100K HISA limit was a wise move.
You make perfect sense. I don't understand the run on deposits at Home or Equitable. I suspect it is based on ignorance rather then knowledge. I f the Canadian universe of high quality corporate bonds should collapse I wonder about the CDI guarantee.
Totally agree that there's no need to worry about amounts up to the CDIC limit. But, amounts over the CDIC limit is a whole other story.
Got a bit of a scare when ig17 alerted us of the drop in EQB stock as Mrs. Schmuck and I were maxed out before they lowered their account limits, and after a lot of humming and hawing, decided to withdraw the amounts that exceeded the CDIC limit. Might have hesitated after today's 35% bounce in EQB stock, but no regrets. Hard to see how these secondary lenders could survive a major housing correction which (IMHO) is a growing possibility.
-26% of the proceeds have been transferred to our various Tangerine accounts. While they regularly manage to annoy me, I'm not that concerned about exceeding their CDIC limits as I don't believe Scotia Bank would ever allow them to default.
-21% to our Zag Bank accounts (up to CDIC limits) as their rate is slightly lower, but they have the backing of the Desjardin Group.
-53% to TDDI with hopes of finding some suitable FI investments...not crazy about bonds in general in a rising rate environment, but will probably go with an ETF like VSC, enough cash for any stock opportunities, and definitely some more high yield bond ETFs as they are the least likely to be affected by higher rates in a healthy economy. Will probably go with SHYG which Scomac uncovered for us a while ago.
Any other ideas would certainly be welcome.
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Re: High interest rates for savings, GICs and MMFs (2017)

Post by deaddog »

Email received today;

Now is a great time to have a President’s Choice Financial® Interest PlusTM Savings Account (IPSA). Enrol to take advantage of 2%* interest on all new deposits until August 31, 2017.
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Re: High interest rates for savings, GICs and MMFs (2017)

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deaddog wrote: 03 May 2017 14:15 Email received today;

Now is a great time to have a President’s Choice Financial® Interest PlusTM Savings Account (IPSA). Enrol to take advantage of 2%* interest on all new deposits until August 31, 2017.
They seem to have targeted offers. This is what I received today:
Hotel-Banner-PC-Financial-Travel-2.5-percent.png
*How it works: Offer Period: May 1, 2017 – August 31, 2017. To participate in the President’s Choice Financial® promotional interest offer (the “Offer”), an Eligible Account (define below) holder must enrol during the Offer Period by calling 1 866 674 5610, visiting an in-store President’s Choice Financial pavilion to speak with a personal banking representative or by accepting the online offer through online banking. The Offer is available by invitation only to select President’s Choice Financial Interest PlusTM Savings Accounts and/or Interest First® Savings Accounts (“Eligible Accounts”) during the Offer Period. The special annual interest rate of 2.5% is a combination of the regular annual interest rate on an Eligible Account balance (“Regular Interest”), plus promotional interest (“Promotional Interest”) that is calculated for the Offer Period on the Additional Balance (defined below). The Promotional Interest is calculated on the portion of the Eligible Account’s average daily closing balance during the Offer Period that exceeds the closing balance as at April 30, 2017 (the “Additional Balance”) to a maximum of $500,000 in Additional Balances aggregated across all of a primary account holder’s Eligible Accounts. Promotional Interest will not be paid on existing funds that were in a PC Financial Account as at April 30, 2017, and are transferred to an Eligible Account. Promotional Interest will be paid in September 2017 into a single Eligible Account held by a primary account holder. Rates may change at any time. Offer is non-transferable.
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Re: High interest rates for savings, GICs and MMFs (2017)

Post by AltaRed »

They obviously don't like my loyalty. I pull everything out at the end of a promo except for maybe $20.
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Re: High interest rates for savings, GICs and MMFs (2017)

Post by amphitryon »

Interesting, same ''Exclusive new rate'',picture and all, but my offer was also only for 2 % . Perhaps they're still sore I closed the account a while ago. :)
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Re: High interest rates for savings, GICs and MMFs (2017)

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I got the same offer as Adrian. 2.5%
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Re: High interest rates for savings, GICs and MMFs (2017)

Post by deaddog »

ig17 wrote: 03 May 2017 15:21 I got the same offer as Adrian. 2.5%
And I thought only Tangerine played games. :?
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Re: High interest rates for savings, GICs and MMFs (2017)

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ig17 wrote: 03 May 2017 15:21 I got the same offer as Adrian. 2.5%
Do "new deposits" include cash transfers from an existing TFSA ?
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Re: High interest rates for savings, GICs and MMFs (2017)

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optionable68 wrote: 03 May 2017 20:26
ig17 wrote: 03 May 2017 15:21 I got the same offer as Adrian. 2.5%
Do "new deposits" include cash transfers from an existing TFSA ?
They don't say.

http://www.banking.pcfinancial.ca/mkt/c ... ay-en.html
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