DIY investors get stuck on CDIC protection for their GICs

DIY investors get stuck on CDIC protection for their GICs

Misreading the rules of deposit insurance can deprive some online investors of full protection for the money they put into secured investment certificates.

One of the advantages of buying SECs from an online broker is that you have a selection from many third-party issuers, including large banks and alternative banks. It is very possible that you will end up building a five year GIC ladder in your account with two different issuers for periods ranging from one year to five years.

Test question: If the five different GIC issuers are members of Canada Deposit Insurance Corp. What is the maximum amount of coverage you will get?

Answer: $100,000 in principal and combined interest for each of the five GICs.

Some recent reader inquiries about deposit insurance indicate there’s some confusion about how the $100,000 limit applies if you’re dealing with multiple GIC issuers within the same investment account, whether that’s an unregistered account, a tax-exempt savings account, or a registered retirement account.

You do not have to limit the total amount invested in all of your GICs from different issuers to $100,000 in principal interest. Each GIC in your account, provided it is from a different bank, gets its own limit of $100,000. “The GIC from Bank A in your TFSA will be covered separately from the GIC from Bank B that is also in your TFSA, for a total coverage of $200,000,” CDIC said in an email response to a question.

If you have ever used an online broker to buy GICs, you will know that a particular bank sometimes shows the highest prices for several different terms. In this case, you may need to accept a lower rate and go with a competitor for some terms to ensure that every GIC in your account is fully covered.

For example, HomeEquity Bank had the best three-, four-, and five-year rates on an online brokerage platform recently. You can choose HomeEquity for three years, then search for the next best rates for four and five years.

Right now, rates are competitive enough that there isn’t much of a gap between banks offering high rates. For example, HomeEquity Bank offered 4.73 percent for four years on the broker’s online GIC application page, with General Bank of Canada at 4.65 percent and Versabank at 4.6 percent. HomeEquity, Versbank, and General Bank are CDIC members.

– Rob Carrick, personal finance columnist

See also:

Rob Carrick: Why take on stock market risk if you can reach your goals with low-risk bonds and bonds?

Ian McGugan: What they won’t tell you about GICs

This is the Globe Investor’s newsletter, published three times each week. If someone forwards this newsletter by email to you or you are reading it on the web, you can sign up for our newsletter and more on our website. Newsletter subscription page.

Stocks to think about

TC Energy Corp. (TRP-TCanadian pipeline operators are struggling to expand their networks amid environmental concerns about fossil fuels, making the rupture of TC Energy’s Keystone Canal in Kansas this month look like a setback for the company. Why did investors adjust it? David Berman He has some ideas.

the rundown

Stock Market Gift Guide: Picks for the Dividend Lovers, Growth Lovers, and Thrill Seekers on Your Shopping List

It’s that time of year again, when we think about how to reward friends, loved ones, and acquaintances with stocks of companies that will add to the warmth and glow of the holiday season. But how should we match the inventory to the recipient? We are here to help you Globe and Mail Gift Guide, 2022 Edition – Where we put the stock in the stocking stuffer.

What Colin Stewart, JC Clarke fund manager, is buying and selling

Money manager Colin Stewart is holding plenty of cash for clients this holiday season, in anticipation of more stock market discounts that he believes will come in the new year. “We think there will be some great opportunities in the future,” says Mr. Stewart, CEO and portfolio manager at JC Clark in Toronto, which manages about $300 million in assets focused on the small and medium sectors. However, he has recently been selectively buying some stocks. The Globe and Mail recently spoke to Mr Stewart to know more.

Wrapping up a mixed year for my earnings portfolio

John Heinsell wouldn’t wear it. It’s been a tough year for him Dividend growth portfolio model. Not catastrophic, but disappointing. With interest rates and inflation alike soaring, many dividend stocks have struggled just to walk through water. How bad is it — and are there any silver linings? John shares his thoughts.

Five ETF investment topics to watch in 2023

High inflation, rising interest rates and the heightened risk of a recession significantly affected the performance of exchange traded funds in 2022 – a scenario that experts believe is likely to continue into 2023. Joel Schlesinger reports on Five trends predicted by ETF experts It will shape the landscape of the ETF in the new year.

See also: Retail investors are turning to ETFs as recession fears send Meem shares crashing

US bank stocks stumble as recession fears spread

US banking stocks took a hit in December, as concerns about an expected recession and weak profit margins dampened the industry’s appeal. Should investors stay away from it in 2023? Reuters’ Lewis Krauskopf reports.

Other (for subscribers)

The most overbought and oversold stocks in the TSX

Analyst promotions and downgrades on Monday

Globe advisor

The economic outlook is to create “severe headwinds” for insurers but profits are sustainable

Are you a financial advisor? Globe Advisor registration (www.globeadvisor.com) to get free daily and weekly newsletters, in-depth industry coverage and analysis, and access to ProStation – a powerful tool to help you manage your clients’ portfolios.

What’s new in the coming days

Billionaire investor Ken Fisher will present his predictions for 2023. In addition, Tom Chetron will tell us about his biggest mistakes as a CFO.

Click here to view Globe Investor’s earnings report and economic news.

More Globe Investor coverage

For more Globe Investor stories, follow us on Twitter @employee

Collected by Globe Investor staff


#DIY #investors #stuck #CDIC #protection #GICs

Leave a Comment

Your email address will not be published. Required fields are marked *