Category Archives: Finances

Gifts that Help Save for Your Child’s Future without Contributing to an RESP

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Many articles suggest you should ask relatives, especially grandparents, to give money to your children’s RESPs instead of give toys or books. Personally, I’m not convinced. Most children would prefer a tangible gift that they could play with immediately to an intangible promise on a piece of paper. And many grandparents want to see the big smiles and watch the fun begin.

Written: 2013
Reviewed: 2023

However, sometimes a gift can be something to play with today and also something to help a child save for the future.

Gifts that Will Help a Child’s Financial Future

Most of us hope our children will grow up and move out at some time in the misty years ahead. I can still remember when I moved out to attend university. That was when I realized how little I owned.

I didn’t have a desk, a lamp, a bed, a chair, or a chest of drawers. I also didn’t have a spoon, a fork, a knife, a can opener, a plate or a bowl. In fact, the list of what I didn’t have was endless.

Chances are good your relatives won’t be interested in giving your children desks to be saved for when they leave home. (Although if they are interested, go for it!) However, if the children are young, your relatives may want to give gifts that combine play value with practical long term value.

Just Like the Real Thing, because It IS the Real Thing
Instead of plastic toy measuring cups and spoons, why not encourage relatives to give the real thing? A child age 3 or older is safe playing with good quality metal measuring cups and measuring spoons. They can use them for pretend play and for real cooking fun with their parents and relatives. And the children can keep them and take them with when they launch one day. To make the gift more interesting include a bag of chocolate chips or the ingredients for cookies to play with.

Once children are past the age of poking each other in the eye and sticking things in electrical sockets, real tools also become a great gift. Hammers, screwdrivers, pliers and other basic hand tools make great toys especially when combined with a project to assemble such as a bird feeder. Again, the tools can be kept for when the children are trying to assemble their own furniture or hang their pictures in their future apartment.

Give to Children Today to Save Tomorrow

Gifts like these will save your child (or you) money in the future. Everything that is bought and kept is one less thing that will be needed in the future. And hey, if the quality of purchased goods continues to deteriorate items bought today will be better quality than what will be available in the future. (I’m still using the hair dryer my grandparents gave me as a teen.) Win win!

Gifts that are Investments in the Future

Examples of gifts to consider include:
For any age

  • baking sheets
  • mixing bowls
  • measuring cups and spoons
  • cookbooks
  • cutting boards

For the old enough to know better crowd

  • rolling pins
  • whisks
  • cutlery
  • hammers
  • screwdrivers
  • pliers
  • wrenches
  • saws
  • chisels
  • small gardening tools, such as trowels and hand rakes

For tweens and teens

  • electric mixers
  • popcorn makers
  • sewing machines
  • soldering irons
  • tea pots and mugs
  • good kitchen knives and scissors
  • pizza cutters
  • funky floor lamps

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Have you had to help equip someone starting up their first home? What did you have to get? Could it have been stockpiled easily years before until needed? Please share your experiences with a comment.

Pros and Cons of Buying GICs in a Self-Directed Online Brokerage Account

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When we opened a self-directed online brokerage account, I wanted to check if we should use it to invest in GICs. (GICs are guaranteed investment certificates.) I wanted to know what the pros and cons were of buying GICs this way. And I wanted to understand why the banks would offer this service seemingly for free. In short, I wanted to understand the pros and cons of buying GICs in a brokerage account.

Written: 2012
Reviewed: 2023
Revised: 2023

I admit we have a large amount of our RRSP savings in GICs. It’s what I need to sleep peacefully.

What Do BMO InvestorLine and CIBC Investor’s Edge Offer for Sale for GICs?

In registered self-directed InvestorLine accounts and Investor’s Edge accounts in 2023, the minimum purchase size for a RRSP GIC is $5000. After that, it goes up by increments of $1. So you can buy a $5000 GIC, a $5001 GIC or a $5123 GIC, your choice.

This $5000 starting point is a bit of a nuisance if you have dividends coming in that you want to re-invest in a GIC. However, if you stagger your GIC maturity dates widely enough, you could always add to an existing GIC after it matures and before you re-invest it.

The GICs listed for sale are offered by a wide variety of bank, credit union, trust company and other financial institutions. For further information, also see the article: Comparing GIC Interest Rates for BMO InvestorLine and CIBC Investor’s Edge Accounts.

Pros of Buying GICs within a Self-Directed Online Brokerage Account

  • BMO InvestorLine and CIBC Investor’s Edge sell GICs from trust companies which offer higher rates than many Canadian banks.
  • When they mature, the principal and interest for the GICs are paid back into your InvestorLine or Investor’s Edge account in cash.
  • You can invest with a variety of financial institutions without having to set up separate RRSP or TFSA accounts with each of the institutions. Instead, you manage everything through your one self-directed RRSP account and your one self-directed TFSA account.

Cons of Buying GICs within a Self-Directed Online Brokerage Account

  • In 2023, the minimum investment is $5000 for BMO InvestorLine and CIBC Investor’s Edge. (Always check minimums before purchasing, as the banks can change them without notice.) If you buy GICs directly from financial institutions, the minimum required investment is usually much lower than this.
  • They do not offer GICs from every financial institution in Canada.So you cannot buy a Tangerine GIC through InvestorLine. They usually offer GICs from about 20 institutions though, and the list of places changes from time to time.
  • For BMO and CIBC, the GICs cash out back into your account at the end of their term. Wasn’t this a Pro? Well, yes, but the possible drawback is that you have to keep an eye on your maturity dates and remember to re-invest them..
  • You have to buy a GIC by the daily cutoff time to ensure you get the rate posted at the time of purchase. At the time this was written, the cutoff time for BMO InvestorLine purchases was 3:45 p.m. “except on early closing days.” This deadline is not emphasized. You have to remember it.The cutoff time for CIBC Investor’s Edge is 4 p.m. but they state that if they cannot complete the order by day’s end they will cancel it and you will have to start again on the next trading day. You can’t apply to buy the GICs in the evening or on weekends.
  • You cannot cancel a GIC purchase order once placed. This is annoying if the rate increases during the day, after you placed your order but before your order is filled at the start of the next business day.To be fair, this is also the way equity purchases work. You can’t cancel your purchase order of Bell stock just because it’s now $1.50 less a share than when you bought it 10 minutes ago!

Disclaimer
All fees and commissions, and minimum purchase requirements were accurate at the time of writing in 2023. Always check with a financial institution for policy changes before making any commitments or investments.

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Do you use a self-directed brokerage to manage your GICs? Do you prefer to keep your GICs independently with a financial institution? Please share your experiences with a comment.