A year ago, we decided to divide our emergency fund into 12 parts, and invest the money in a series of GICs that would mature one per month for a year. We knew we wouldn’t need the emergency money all at once but rather in monthly amounts to replace a pay cheque. We looked for GICs offering a good interest rate with CDIC insurance and easy online purchase access. We chose to buy our GICs from Oaken Financial and now the first GIC is maturing and I wondered what will happen.
Setting the Instructions for a GIC with Oaken Financial
When I purchased a GIC from Oaken, both online and by phone, I was asked what I wanted to happen to the principal and the interest when the term ended. I decided to have both the principal and interest deposited to our Oaken Savings account. This instruction was listed on the confirmation certificate I received in the mail for my GIC.
Why Did I Get a Letter from Oaken Asking Me to Send Them Instructions for My Maturing GIC Investment?
I was a bit surprised to receive a letter in the mail from Oaken a few weeks before my first GIC matured. It correctly described the instructions on file to pay out my GIC at maturity, both principal and interest, to my savings account. But it also said “Please indicate your instructions for your maturing investment.” And in the fine print under PLEASE NOTE it said “If no maturity instructions have been received…the mature investment may be…renewed for the same terms and conditions as the existing investment…”
Red alert! I hate having GICs rollover. I like to re-invest the funds myself if and when I choose.
Were my instructions properly on file? Or did I need to check a few boxes on this form and return it in the provided pre-paid return envelope? I phoned Oaken Financial to check.
The Renewal Letter is a Courtesy to Customers
I was reassured to find out that the renewal instructions letter is primarily a courtesy to customers. It reminds them that they have a GIC maturing (which could be forgotten after 5 years!) and offers them the variety of choices at maturity such as reinvesting at various terms in both cashable and non-redeemable GICs, or re-investing only part of the funds, or sending a partial or total payment by mail.
Because I already have the instructions I want on my file, I do NOT need to send in the letter.
So it’s all good.
I will watch my Oaken Savings account, however, later in the month to see if the principal and interest are paid out as instructed. If so, I will probably just re-invest the principal for another year: but I will enjoy the security of choosing at that time.
UPDATE: The results are in; the first GIC has matured.
Does your bank or trust company warn you in writing (no annoying phone calls!) that a GIC is maturing? Is it easy to get your instructions on file? Please share your experience with a comment.