GIC Rates ?

[sumdumguy]

Who is following the rates?

[ajl]

I do. Best I have seen so far: 5.5% @ gicwealth.ca These are the only investments that will be in the black for 22. Registered accounts deal with taxes. Not good if 7% inflation persists but better than the -15% of the stock market or the -30 of real estate. Inflation is dissipating and likely to turn to deflation soon if not already.

[shtferbrains]

What term do you see as attractive.

1yr or less?

They also have investments referred to as cashable?

Might be some higher rates in the near future?

[ajl]

The 5.5 is a 5 year rate. If you see a high rate for long term I see that as attractive. There are some high rates in the 1-2 year time frame but the banks are betting on interest rates declining soon and I think that will happen. Government and central banks have run out of ammo for economic stimulus and bit by bit the greater depression arrives and that will outlast our lifetimes unless you are a 20 something. Terms up to 10 years are covered by CDIC now. Used to be only 5 years or less. Yes I know that once the bank runs get going, CDIC is only going to last so long and I do expect bank failures. Some banks have already been merging and that will need to happen.

[AlbertaFarmer5]

That sounds like a really impressive rate. At least compared to recent years. But compared to the rate of inflation, wouldn't wouldn't be falling behind even faster today versus a few years ago with a gic?
Isn't the spread between measured inflation and that GIC rate bigger than what it would have been a few years ago?

[jazz]

I dont like tying up funds long term. Better off just buying an ETF. Lots yielding in that range after the market has fallen.

[ajl]

That sounds like a really impressive rate. At least compared to recent years. But compared to the rate of inflation, wouldn't wouldn't be falling behind even faster today versus a few years ago with a gic?
Isn't the spread between measured inflation and that GIC rate bigger than what it would have been a few years ago?

Comes down to your future expectations of inflation and what other investments will do. Inflation is hard to measure as it different items inflate at different rates. Machinery parts are the worst but oil is back under $80 and compared to the $146 in July 2008 is quite reasonable. Inflation has to do with social mood and demographics both of which are hugely deflationary. Right now we are in wartime (government at war against its own citizens) and that will depress the birth rate so low that demographic factors will be ugly. I have oats on my truck contracted for $4.25 vs $10 last spring and trying to get them to move so I can take advantage of a not bad offer for Dec wheat locally. Wheat market is inverted right now.

[sumdumguy]

So, I requested today’s rates from my investment guy and there’s 5.16% for a year at major CDN banks. Not bad, eh?

[biglentil]

So, I requested today’s rates from my investment guy and there’s 5.16% for a year at major CDN banks. Not bad, eh?

Not really, a return of less than the posted cpi rate while exposed to banking risk.

The Canadian Fractional Reserve Banking System in Canada
Many people believe that banks safeguard their deposits in their vaults and maintain a liquidity ratio on or about 100%; in other words, there is a cherished and widespread belief that banks only lend out the money which they have on deposits. This is a fallacy: today’s banking system reality is far different.

Today, most banks around the world, and if not all, operate under a fractional reserve banking system. ‘Fractional reserve banking’ allows banks to keep only a fraction of their deposits while lending out the rest with interest to other clients. Banks are therefore capable of loaning out money which they do not in fact possess. The assumption, of course, is that people will not all withdraw their funds from the banking system at the same time. If so, this will result in a bank runs, as seen in much of Europe in the last few years.

However, unlike the US banks, where they must maintain a liquidity reserve requirement of 10%, Canadian banks have a 0%reserve requirement, thus affording them the ability to create a virtually unlimited amount of money “out of thin air” (see: “Fractional Reserve Banking System“). In the end, when banks create money due to the fractional reserve system, debt is also created. For instance, when you are approved for a mortgage at a bank for $500,000, that artificial money was a digital entry into your bank based on the promise to pay it back with interest. It did not come from their reserves or deposits.

The problem with this system is that it exponentially increases credit–and consequently debt–while living in a finite world with finite resources. Credit has grown so significantly over the real hard cash that you carry in your wallet that our economy is dependent on credit for its necessary expansion. If credit doesn’t expand, the economy comes off its “high” and needs to return to equilibrium and rid itself of all the mal-investments. Sounds like a debt Ponzi scheme? That’s because it is.

The Canadian Deposit Insurance Corporation
What about the Canadian Deposit Insurance Corporation (CDIC) which insures your money at the bank up to $100,000? According to the CDIC’s 2011 Annual Report, the CDIC protects $604 billion CAD in total eligible deposits, and has $2.2 billion CAD in assets to meet insurance claims. This amount represents 0.36% of total eligible deposits.

Oh yeah, the Canadian banking system is “so secure.”