Is Investing In GICs More Risky Than Investing in the Stock Market?

I never have heard anyone say that investing in guaranteed investment certificates, or GICs, is more risky than investing in shares of companies in the stock market, but now I’m beginning to wonder if it’s true?

Why Does It Seem Investing in GICs Might Be Risky and Make Me Lose Money?

First, I’ll clarify that I’m not actually worried about losing any money—but other people seem to be.

I have part of our emergency fund money invested in 1-year-term GICs with Oaken Financial. Each month, 1/ 12 of that money is invested in a new 1-year GIC just after the previous year’s GIC matures. That means if interest rates ever start to go up, I should gradually be re-investing at a higher rate. We chose this procedure because we knew that if we needed our emergency funds to pay our bills, we would only need a steady stream of money each month, not one big lump sum of money.

Oaken Financial has been very good to work with. Their telephone support is courteous and prompt. They send me a letter confirming each GIC purchase and a free monthly statement for our high interest savings account. It’s quick and simple to buy my GICs online and to transfer money in and out of our savings account.

Are My GICs at Oaken Financial at Risk?

The problem isn’t directly with Oaken Financial. The problem is that the company that owns them is having some legal and financial difficulties. They may have loaned money in the form of mortgages to people who were not honest about the value of the properties, if I understand it correctly.

That means the company that owns them is at risk. Right now, many investors are selling their shares in the company. Some small investors with cash deposits with Oaken and Home Trust are also withdrawing their savings.

It’s kind of like that scene in the movie It’s a Wonderful Life where everyone tries to take their money out of the Savings and Loan business at the same time. The business could fail because of a lack of faith.

However, my GICs are Oaken Financial are not at risk. They are insured by the CDIC. I checked before I bought them. So if something happens to the company, my money will be re-paid by insurance. I’m sure that would not happen instantly and there would be paperwork but I’m also sure it would happen eventually.

Will I Keep Buying GICs from Oaken Financial?

Recently, to encourage people to keep their cash at Oaken, they have increased the rate they offer on GICs.

Since I was planning to re-invest our next maturing GIC in May in for a new one year term, I will be doing just that. It’s still CDIC insured. And I am hopeful they may weather this storm. If not, they will likely be purchased by another financial institution and life will go on. Either way, I have no concerns I will lose our money.

Should I Try to Get My Money Out of my GICs at Oaken Financial?

Only you can tell what is best for your finances. Discuss your options with a financial advisor. Talk to CDIC and Oaken about your concerns if you want. I can’t tell you what you could or should do.

Personally, I’m going for a nature walk.


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What To Do With the Cash in My RRSP and TFSA Brokerage Accounts

The great thing about the stocks I own in my TFSA and RRSP is that they pay dividends monthly or quarterly. That cash starts to pile up though after a few months, especially if I don’t see anything I want to invest in for the long term. If I put in a new contribution without having a plan for it, my stack of cash can grow into the thousands. That’s what happened recently in both my TFSA and my RRSP brokerage accounts and I decided to park the cash temporarily until I decide how to use it.

What Cash Savings Options Does BMO InvestorLine Offer for TFSA and RRSP Accounts?

You can have a RRSP with investments in Canadian dollars or American (US) dollars at BMO InvestorLine. So they offer two ‘high interest’ savings account mutual funds, one in USD and one in CAD. They also offer a cashable GIC.

What Interest Rates Are AAT770 and AAT780 Paying on Cash Investments at BMO InvestorLine?

Today, on March 18, 2017, the rates are

  • AAT770 0.75% on Canadian dollar, CAD, investments UPDATE 2017 10 03 It’s now 0.95%.
  • AAT780 0.50% on American dollar, USD, investments

The money is deposited as if you are buying a no-fee mutual fund. It takes the trading day plus one business day to settle.

What Interest Rates are Cashable GICs Paying at BMO InvestorLine?

Today, on March 18, 2017, they are offering

  • a one-year GIC, cashable after 30 days, which pays an annual interest rate if held to maturity of 0.85%.

For reference, a one-year-fixed-term GIC (which cannot be cashed before the year is up) is paying an annual interest rate of 1.25%.

What Cash Savings Options Does RBC Direct Investing Offer for TFSA and RRSP Accounts?

RBC Direct Investing offers two ‘high interest’ savings account mutual funds, one in USD and one in CAD. They also offer a cashable GIC.

What Interest Rates Are RBF2010 and RBF2014 Paying on Cash Investments at RBC Direct Investing?

Today, on March 18, 2017, the rates are

  • RBF2010 0.75% on Canadian dollar, CAD, investments
  • RBF2014 0.45% on American dollar, USD, investments

What Interest Rates are Cashable GICs Paying at RBC Direct Investing?

Today, on March 18, 2017, they are offering

  • a one-year GIC, cashable after 30 days, which pays an annual interest rate if held to maturity of 0.70%.

For reference, a one-year-fixed-term GIC (which cannot be cashed before the year is up) is paying an annual interest rate of 1.40%.

What Cash Savings Options Does CIBC Investor’s Edge Offer for TFSA and RRSP Accounts?

You can have a RRSP with investments in Canadian dollars or American (US) dollars at CIBC Investor’s Edge. So they offer two ‘high interest’ savings account mutual funds, one in USD and one in CAD. They also offer a cashable GIC.

What Interest Rates Are ATL5000 and ATL5500 Paying on Cash Investments at CIBC Investor’s Edge?

Today, on March 18, 2017, the rates are

  • 0.75% on Canadian dollar, CAD, investments
  • 0.55% on American dollar, USD, investments

What Interest Rates are Cashable GICs Paying at CIBC Investor’s Edge?

Today, on March 18, 2017, they are offering

  • a one-year GIC, cashable after 30 days, which pays an annual interest rate if held to maturity of 0.5%.

For reference, a one-year-fixed-term GIC (which cannot be cashed before the year is up) is paying an annual interest rate of 1.26%.

So now I know my options, I can park my cash. It doesn’t look like I should leave it sitting idly by for too long at those rates though!


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Do you have some cash parked in one of your brokerage accounts? Have you found a better way to make money with your cash while waiting to invest? Please share your experiences with a comment.