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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.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
You are not getting 3%. Yield to maturity is 1.8%.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.
One further step: add the "riding the yield curve" factor. This, usually, at least counterbalances the MER of Vanguard bond ETS's.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."
I take my monthly distribution which has been consistent since I bought and do a simple calculation and I get something like 2.6%.ig17 wrote: ↑29 Apr 2017 13:40You are not getting 3%. Yield to maturity is 1.8%.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.
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."
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.AltaRed wrote: ↑29 Apr 2017 18:07That 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.
Thegipper wrote: ↑29 Apr 2017 19:18That also applies to HISAs and GICs. Interest rates can go up they can go down. I can't predict the future.AltaRed wrote: ↑29 Apr 2017 18:07That 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.
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.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.
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.Thegipper wrote: ↑30 Apr 2017 11:16You 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.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.
They seem to have targeted offers. This is what I received today:
And I thought only Tangerine played games.
Do "new deposits" include cash transfers from an existing TFSA ?
They don't say.optionable68 wrote: ↑03 May 2017 20:26Do "new deposits" include cash transfers from an existing TFSA ?