How to Buy a Guaranteed Investment Certificate, GIC, at Tangerine

Posted on 2014 06 25 by BetCrooks

Right now, the interest rates offered for GICs are very low. I would not actually recommend buying a GIC at these rates unless it’s the only fixed income investment you can find that fits your portfolio. However, I am trying to review the products and services offered by PC Financial and Tangerine, so today I checked into how to buy a GIC.

Are Tangerine GICs Redeemable?

In the old days, when the company was ING Direct, you used to be able to cash their GICs. Technically, that meant they weren’t really conventional guaranteed investment certificates. In general, GICs cannot be cashed until they mature. ING Direct used to even pay you interest if you cashed your GICs before maturity: Admittedly they paid less interest than if you held them to maturity, but it was still some compensation for tying up your money.

Recently, however, ING Direct Canada was purchased by Scotiabank. And even more recently, this ability to cash GICs early and even receive a small amount of interest has vanished from their product descriptions.

*** However today (June 25, 2014) when I bought a GIC I discovered that the option still exists, at least for now! When I reached the “Here’s What’s Going to Happen” review screen, I noticed the details about what I was buying said “You may redeem this GIC before the end of the term, but if you do, you will not receive the posted rate of interest. Instead, a fixed annual Early Redemption Rate of 0.5% will apply.”

So apparently you may have to *almost* buy a GIC and check whether or not it is still cashable. They could change this offer at any time. You can’t tell till you have almost paid for the GIC.

How Much Do I Have to Invest In Each GIC at Tangerine? What’s the Minimum?

If you do need to buy GICs and if they are not cashable early or if they are cashable but you are not likely to need the entire amount at one time, it’s a good idea to buy several smaller GICs with different maturity dates.

For example, if you have $5000 to invest, you could buy a $500 GIC each month for 10 months. Then you will get access to $500 (plus interest) of your cash each month as they mature.

If you are buying GICs at a discount online brokerage, you may have to invest a minimum of $5000 to get one GIC. (RBC Direct Investing let’s you invest as little as $3500 for one GIC in a RRSP; BMO InvestorLine and CIBC Investor’s Edge require $5000 per GIC in a RRSP.)

How small an amount will Tangerine allow you to invest in a GIC?

Well, I tried buying a regular GIC with an amount of $1 and it was rejected. The error message says: “For this Account, transaction amounts need to be at least $10.”

That’s interesting. The interest rate for a 1.5 year GIC is posted as 1.55%. If I invest $10 I will earn 15.5 cents after 18 months. I wonder if they will round it up to 16 cents, or down to 15? I’ll have to check in 18 months.

What Types of GICs Can I Buy at Tangerine.ca?

Registered and Non-Registered GICs from Tangerine

There are several choices:

GIC
RSP GIC
TF GIC Be careful! This is a TFSA GIC and counts as part of your TFSA!*
(Believe it or not, there is a person appealing for forgiveness from the CRA because he thought it was just “tax free” and not part of his TFSA, so he over-contributed to his TFSA and now faces a fine of $50 a month. Why it would be “tax free” if it wasn’t a TFSA is beyond me. But be informed: a TF GIC is a TFSA investment.)
RIF GIC
US$ GIC

If you buy a RSP GIC

and pay for it with money from your savings or chequing account you are making a new contribution to your RRSP.
and pay for it with money from your RSP Savings account, you are not making a new contribution.

If you buy a TF GIC

and pay for it with money from your savings or chequing account you are making a new contribution to your TFSA.
and pay for it with money from your TFSA Savings account, you are not making a new contribution.

Check your RRSP and TFSA contribution room before making any new contributions to avoid penalties for over-contributing.

Terms to Maturity for GICs from Tangerine

There are also several choices for the length of the term to maturity.

Tangerine offers GICs with terms of

90 days
180 days
270 days
1 year
1.5 years
2 years
3 years
4 years
5 years

WATCH the interest rates before buying, though. Right now, the terms shorter than 1 year are paying less interest than keeping your money in their savings account!

Annual Pay or Compound Interest GICs from Tangerine

You can also select whether to receive your interest payment at the end of each year, for a multi-year GIC, or to leave it with the principal to earn compound interest until the end of the GIC’s term.

For example, if you buy a 5-year GIC, you can get paid your interest at the end of each of years 1, 2, 3, 4 and 5, or you can leave the interest in the GIC and receive all 5 years’ interest, plus the interest earned on the interest itself, at the end of the five years.

How to Invest in a GIC at Tangerine.ca

Log in to your Tangerine account/s.
From the Saving link on the navigation bar at the top of the screen, select Guaranteed Investments.
For a regular GIC (not in your RRSP, TFSA, RRIF or in US$) beside the heading Tangerine Guaranteed Investment (GIC) click on the Learn More button. Read through the information about this product.
If the information looks ok and you want to buy a GIC click on the Open an Account button.

To Buy a Regular Tangerine GIC

In the Amount $ field, type how much you want to invest in this one certificate.
If applicable, click to select USD or leave it to select Canadian dollars.
If you have a purpose for the GIC such as saving for your child’s dental work, you can type in a reminder in the Nickname text box.
I typed: super low investment.
From the Account term drop-down list, select the length of time you want to invest the money.
For example, pick a 1.5 year term for a GIC that matures 1 year and 6 months from today.
From the Fund from this account drop-down list, select where to get the money to buy the GIC.
If you want to delay the purchase, click on the Effective Date field and select which day you wish to buy the GIC.
From the Maturity instructions drop-down list, select whether you want the money paid out to your bank account when the GIC matures or whether you want to have Tangerine immediately buy you a new GIC with the same term instead.
(Since you can’t cash most GICs, it’s probably better for most people to have the GIC pay out to your bank account in cash when it matures so that you can consider what you want to do next before you commit.)
From the Interest options drop-down list, for a GIC with a term of more than one year, you can choose whether Tangerine will pay you the interest for the previous year into your bank account; or whether it will keep it in the GIC so that you will earn interest on your interest in the following year/s.
NOTE: If the GIC is not in a RRSP, RRIF or TFSA you will have to pay income tax on the interest each year even if you don’t get paid the interest that year!
From the Selected Account for payout drop-down list, select where you want Tangerine to pay the interest and the principal when the GIC matures.
If necessary, change the answer to Is this a joint Account? To Yes; otherwise leave it to the default setting of No.
For legal reasons, confirm that you are the only person benefitting from this investment. (e.g. that you are not investing money for another company or person.)
From the drop-down list, select why you are saving the money.
Click on the links to read through the Terms and Conditions and the Privacy Code statements. The more important information is located under the Account Terms link at https://www.tangerine.ca/en/legal/account-terms/index.html If the information is acceptable, click on the Yes button to accept them.
Click on the Next button.

If you put in an acceptable amount for the Amount, you will move on to the
You’re almost done… here’s what’s going to happen
review page.

Read the details for what you’re planning to buy.
Wow. My investment will mature on Christmas Day in 2015. That’s sweet. Imagine getting 15 or even 16 cents for Christmas!
Everything looks good, so I will click on the Confirm button.
Click on the Print button to print a copy of this transaction. This is important because if you want to cash your GIC early you may need to have the proof from this page that you are entitled to receive a low interest rate of 0.5% if you have kept the investment long enough.
Once you’ve finished printing the receipt, click on the Continue Banking button.
If you’re finished banking, click on the Log Me Out link.
To increase security, clear your browser cache and close your browser session.

Related Reading

Buying a GIC at President’s Choice Financial
Buying a GIC at BMO InvestorLine
Buying a GIC at RBC Direct Investing
Buying a GIC at CIBC Investor’s Edge

Join In
Do you buy GICs to lock up your money so you don’t spend it recklessly? If you do, does a cashable GIC make sense? Please share your views with a comment.

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Our Expectations for Retirement

Posted on 2014 06 20 by BetCrooks

I come from an extended family that has always kept its needs simple and has almost never relied on credit. So does my husband. Watching how our relatives have lived in retirement has set my general expectations for my own retirement.

1: We Will Have Our Own Small Home Before Retirement

All of our family has always had a paid-for small home before retirement. Some of them, admittedly, built that home themselves. Others inherited a family home which no one could ever mistake for a mansion. A very few of them sold that home early into retirement and moved into rental housing that appealed to them more than home ownership—but they moved because they chose to not because they had to.

We have had our home fully paid off for several years. So that expectation for retirement has been met.

We might decide to move again but I doubt very highly that we would move somewhere that we couldn’t fully pay for with the money generated by selling where we live now. We are also not averse to renting if needs be.

2: We Will Never Fully Stop Working

Not all of our relatives had “career” types of jobs. Of the ones that did, though, most stopped working in a formal 9-5 way at or before 65. But they didn’t fully stop working.

Among our extended family, “retired” members have worked after retirement as

carpenters
choir leaders and accompanists
antique finders-restorers-and-sellers
supply teachers and tutors
business consultants
couriers
desktop publishers
investors
fine wood workers
retail employees
potters
bookkeepers
music teachers
farmers

and probably some other things that I don’t know about.

These jobs are in addition to their work as volunteers.

Neither my husband nor I intend to fully stop working at retirement either. There are so many interesting types of work to be done that it seems unlikely we wouldn’t want to try something.

We’ve also seen within the family how earning some extra money can make a retirement more pleasant. Because this extra income is not budgeted for or required, it can be spent on whatever brings joy.

Most of our relatives were and are very conservative spenders. It is difficult for some of them to spend their retirement savings, for example, on a few weeks in the sun during the winter. They brood about the high costs of nursing homes and don’t want to draw-down their capital when it might mean the difference between a good or intolerable nursing home in the future.

Having a few extra thousand dollars of income earned that same year makes it feel acceptable to them to take that enjoyable beach vacation, buy that new computer, give that young relative an expensive gift, or indulge in their hobbies.

I expect we, too, will want to keep working, for the work itself and for the extra funds.

We are both already widening our horizons in anticipation of this. My husband recently finished a continuing education college certificate program in one of his interests. I can see a variety of possible part-time opportunities in that field of interest.

I’ve created this website: while it’s not an income-generating proposition, I can list several opportunities it has created for money-paying work, should I decide to pursue them.

3: We Will Travel But We Are Not Travellers

Most of our family has enjoyed brief journeys every year or two in retirement. A few were limited financially to staying in their home province throughout their retirement. None has travelled extensively (e.g. for months at a time) after retiring with the exception of a few one-off 6-week trips.

Like many of our family, we enjoy brief travels both on this continent and further abroad. We hope to be able to make similar short trips periodically in retirement.

Fortunately, my husband and I are both satisfied with about the same amount of travelling per year. It can be more of a challenge if one partner derives huge joy from extended travel and the other loathes it.

Neither of us would be heartbroken if we were unable to travel. That leaves us in a good place: if our finances permit, we will enjoy some short trips; if they don’t, we will not suffer.

4: Our Hobbies Will Not Provide a Financial Burden and Will Provide a Creative Experience

The members of both of our extended families are very active, involved people. They enjoy a diversity of hobbies and none of them have been the park-in-front-of-the-TV all evening type.

Watching and talking to our relatives about their interests has shown us what a diversity of things there are enjoy. Many of these things have low or no costs.

For example, if you want to garden but can’t afford plants or tools and live in a high rise, there is often a community garden that needs volunteers to help tend and raise flowers and crops. If there isn’t, it’s often just a matter of being the catalyst to get one dug!

Judging by how often my husband and I have trouble finding enough time to participate in all of the activities and hobbies we enjoy, I think we’ll be fine in retirement.

And several of our favourites require almost no cash: my husband can enjoy sketching even on the backs of advertising flyers with a HB pencil stub and I can successfully search for wildlife in even the most degraded roadside ditch. Having proper drawing supplies and a great camera can make both hobbies better but they aren’t critical to the enjoyment.

5: We Will Inherit from Our Relatives

I fully expect to inherit from my relatives if they die before me. I also expect that I will use that 25 cents to create something beautiful in their memory: most probably by buying wildflower seeds at a local meet.

6: We Will Have a Sufficiency if Not a Superfluity of Income

Our relatives have almost all had a sufficient income in retirement. Admittedly that is because they all had very simple expectations. None of them considered an extravagant new car (or indeed any car, in some cases), the newest electronics or frequent meals eaten in restaurants to be part of their needs. They kept their needs to a minimum and only spent beyond that if their income exceeded their needs.

We’ve been saving steadily all of our working lives to help provide for our future. At this point, we believe we have a sufficient amount accumulated to provide for our true needs in retirement. We don’t intend to stop saving, however, because we could be wrong. And if we are right, it only means we would have extra income, which is a welcome problem.

7: We Will Continue to Enjoy Living After Retirement but We Will Not Defer Living Until Retirement

We always try to balance, however, our saving for the future with our wishes for the present. There isn’t always a future as we’ve seen too many times.

So we challenge ourselves at least twice a year and ask ourselves what we would regret if we lose the opportunity to ever do it? Usually the answer is nothing. But when we identify something that genuinely matters to us, we try to get it done, now, before it can become a regret.

One of my closest relatives waited until he was in his eighties to first visit the country from which his ancestors came to Canada. He had a great time exploring (alone! and not speaking or reading the language) and even went back again the following year. He almost left it too late, however, as shortly after his second trip, his health took an unexpected turn.

We’ve had other friends enter retirement as widows and widowers, shocked and bewildered to find they no longer had their life’s partners at their sides as they had planned.

We know it can happen to anyone, even us. So we try to achieve the balance between saving for the future with spending now for what holds meaning and importance.

8: Our Health In Retirement

We have no expectations for our health in retirement. We’ve watched relatives suffer and succumb young and others outlive their annuities.

Like many, we try to do what we can to maintain our health in case that may help us continue to enjoy good health longer. We don’t brood excessively about it, though.

By not deferring the things that matter most to us, we hope that if we do suffer ill health in retirement, it won’t be as devastating to our dreams.

What Expectations Do You Hold for Retirement?

Those are some of our beliefs and plans for retirement. Have you pieced together what you expect?