Category Archives: Finances

How to Buy a GIC in a BMO InvestorLine Account

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UPDATE: In late 2015, BMO InvestorLine changed its GIC purchase procedures. Please see the newest article: How to Buy a GIC at BMO InvestorLine with the New (2015) Fixed Income Investment Screens

If you keep a base of GICs in your RRSP portfolio like I do, you may decide to buy and manage them through your online brokerage account. Doing so makes renewals simpler and helps ensure you get a competitive rate without phoning your bank time and again to complain. There is no fee or commission to purchase GICs through a BMO InvestorLine account. The rates, perhaps surprisingly, are the same as those offered directly from the same financial institutions. For a list of which institutions InvestorLine lets you buy from, please check the article Comparing GIC Rates for BMO InvestorLine, CIBC Investor’s Edge. When you’re ready to spend your money, here’s how to buy a GIC from InvestorLine.

How to Purchase a GIC in your BMO InvestorLine Account

Sign in to BMO InvestorLine

  1. Go to https://www.bmoinvestorline.com/
  2. To sign in, type your User ID or Account Number, and Password and click on the Go button.
  3. If you have more than one trading account, from the drop-down list select the account within which you want to buy the GIC. For example, I selected my RRSP account.

Review the List of Available GICs and the Terms of Sale

  1. From the Trading Tab, select Fixed Income.
  2. From the Inventory Search column, select GICs.
  3. Unless you have some specific search criteria you wish to use, on the Inventory Search – GICs screen, click on the Search button. This will generate a list of all available GICs. For details on what types are offered look near the end of this article.
  4. If you don’t remember the details, read through the conditions which apply to GIC purchases. For example, the trading hours are 9:30 a.m. to 3:45 p.m. except on early closing days. GIC purchases close the next business day. (T+1)
  5. The list is sorted by Type and Cashable, then by Term, then by Interest Rate.
  6. When you spot the GIC you want to purchase, click on the corresponding name of the financial institution offering the GIC in the column on the left.
    For example, I selected a 1 year annual interest GIC from Home Trust Co at 1.85%.
  7. If you are not sure who the financial institution is, it’s worth taking a minute to visit their website and look at the company details. Also, you can always check whether they are covered by CDIC insurance by checking the list on the CDIC website, www.cdic.ca/.

To Order a Listed GIC

  1. On the GIC Order Entry screen,
    In the Amount box, type the amount of the face value of the GIC you wish to purchase. The minimum is usually $5000. You can choose odd amounts like $5023 if you wish, for instance if you are re-investing interest, income or dividends.
  2. In the Contact Phone Number, type the number you can be reached at to discuss this purchase.
  3. Click on the Review Order button.
  4. The GIC Order Review screen will open.
  5. Please note: Once submitted GIC orders can NOT be cancelled! If you choose a non-cashable GIC (which is most of those offered) your money will be locked in for the term of the certificate. Most GICs are not cashable!
  6. Review the amount, term, interest rate, interest payment terms, and issuing company.
    If everything looks fine, in the Please Enter Your Password to Submit This Order field, type your password.
  7. Click on the Submit Order button.

Be aware that the money will not be removed from the display of your Cash account until the second next business day! Be careful not to spend the same money twice, accidentally.

What Happens After You Purchase a GIC from BMO InvestorLine

You will receive confirmation that the order is filled in your Transaction History in 2-3 business days.

Usually, you will also receive a paper statement in the mail confirming the purchase and its terms.

When any interest is payable, it will appear in the Cash section of your trading account. It usually appears one business day after it was payable, but is back dated to the date it was paid. For example, if the certificate matures on April 10, 2013 (a business day), the cash will be in your account on April 11, but the posted date in the transaction history will say April 10. NOTE: BMO states that interest payments can take 1-5 business days to be received.

When the certificate matures, the original principal will be returned to your Cash balance in your trading account. Certificates do NOT rollover or re-invest. You will receive a message on your MyLink secure email about a week before a certificate matures to remind you to reinvest the money.

As with interest payments, the capital usually arrives in your cash account on the business day after the certificate matures. In the transaction history, this payment will be back dated to the date the certificate matured.

Typical Types of GICs Offered for Purchase by BMO InvestorLine

  • GICs cashable after 30 days with a term of 1 year (all other GICS are NOT cashable!)
  • 1 year GICs that pay interest when they mature
  • 1 year GICs that pay interest twice per year (note they offer lower interest rates than those that pay interest only once per year)
  • 1 year GICs that pay interest monthly (note these often have interest rates comparable to the semiannual GICs)
  • 2, 3, 4, or 5 year GICs that pay interest at the end of each year
  • 2, 3, 4, or 5 year GICs that pay interest at maturity, and the interest compounds after each internal annual payment of interest
  • 2, 3, 4, or 5 year GICs that pay interest twice per year (note they offer lower interest rates than those that pay interest only once per year)
  • 2, 3, 4, or 5 year GICs that pay interest monthly (note these often have interest rates comparable to the semiannual GICs)

NOTE: No GICs are listed with terms longer than 5 years. This is good as CDIC only insures GICs with terms of 5 years or shorter.

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Have you purchased GICs through an online brokerage? Were you satisfied with the process? Please share your experiences with a comment.

Early Retirement. Be Very Afraid: It Could Happen to You!

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Once again this week, I have been forcefully reminded that early “retirement” is not a choice for many Canadians. It’s something that happens to them, not something they select. Basically, your boss walks into your office one morning and says, “Sorry but we don’t want you any more. You can take this ‘bridging’ package and retire early. Or you can be fired. Your choice.”

That’s more or less what’s happening to up to 45 employees of RBC.

For those who have been busy trying to cling on to the storm-swept rock that is their own job, here’s what’s happened.

The Royal Bank of Canada has chosen to outsource and offshore some jobs. That’s not particularly surprising although it’s always unpleasant. The brouhaha has developed because of how they handled the transition.

RBC hired a company, iGATE Corp., to do the work in future in India. However, that company has brought the new workers to Canada to be trained by the current Canadian RBC staff. In fact, they may be here being “trained” for as long as two years, according to some news stories, although it appears 3 months is more likely, according to other reports.

The RBC staff have been told they are welcome to apply for any internal vacancies, but unless they find a job by the end of April, they will be out of work. (That was according to an early CBC news report.) Most of the affected staff, according to the CBC report, are in their fifties or older and are very gloomy about their prospects of finding a job if they are pushed out the door.

Forced Early Retirement Can be a Financial Disaster

Many workers in their early fifties are just paying off their mortgage. In fact, a study released this week by CIBC says most Canadians expect to be 57 before they pay off the mortgage. These workers are often counting on paying off their home and then using the extra cash flow to boost their pension and possibly help their children with education expenses. Usually the last 10-15 years of your working life are when you finally start to be able to accumulate cash, money that will be very welcome if not essential during retirement.

Being forced out at, say 55, can be devastating. It’s very unlikely an older worker will walk out one door and straight in another. Months or even years of lost salary loom. And anecdotally most older workers I’ve seen end up working in a different lower-paying field for the rest of their career. Many end up starting small businesses which, while they can be emotionally rewarding, are rarely as financially beneficial as employment income at the top of a salary grid with dental and health benefits.

Don’t Be Complacent: Save Early and Save Lots

If a company decides to layoff and restructure, or outsource or offshore, there’s little an older worker can do to stop them. The best I can suggest is that people try to keep their skills current and flexible. If you’ve been working 20 years in one company, do you even have a résumé? It may be worth taking a bit of time to draft one. If you see weaknesses (Does your company still use Win95? What professional organizations do you belong to? Did you somehow shift around within the company without ever getting hands-on managerial experience?) try to address them within your current job or through a continuing education course or two.

For those just starting your careers, don’t think you’ll have lots of time to save for retirement later. Build an emergency fund first, then start socking away money against the unforeseen. Or at the very least, continually invest in yourself by upgrading your skills and adding to your education either through formal courses or informal mentoring. Perhaps plan on how a hobby could become a career if needs must.

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Have you or a friend been forced into early retirement? What advice do you have for the rest of us? Please share your experiences with a comment.