Tag Archives: CDIC

Is My Money In Savings Accounts and GICs At Simplii Financial Protected by CDIC Insurance?

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Simplii Financial is the new name for what used to be called President’s Choice Financial. It’s also a somewhat new business and is owned and run by CIBC. Recently I read a question about what kind of CDIC insurance Simplii Financial offered on cash deposits and guaranteed investment certificates so I decided to check.

Be Careful Of the Insurance Maximums If You Have Money at CIBC and Money at Simplii Financial

First, deposits at Simplii Financial are insured by the Canada Deposit Insurance Corporation, CDIC.

HOWEVER, the limit of $100 000 we’re all so used to reading applies to any money you have in that type of account at both CIBC and Simplii Financial, because they are both insured under one policy.

For example,

we have

  • a joint CIBC chequing account
  • a joint Simplii Financial chequing account
  • a joint Simplii Financial savings account

We are only insured up to $100 000 deposited in total in those accounts. If we bought any regular GICs at CIBC or Simplii Financial, those would also be insured only if the total of the 3 bank accounts and all of the GICs was $100 000 or less.

Because CDIC treats your money the same if it’s at CIBC or at Simplii Financial, which is part of CIBC, you may want to make sure you understand the maximums and don’t exceed them if you bank with both institutions.

Are Tangerine and ScotiaBank Accounts Insured Together To One CDIC Maximum Also?

No.

I checked whether this was also the case with Tangerine. After all the Bank of Nova Scotia bought out Tangerine.

But no, they have separate CDIC insurance. So you can reach the $100 000 limit on, say a savings account at ScotiaBank and also reach the $100 000 limit on another savings account at Tangerine and you will be insured separately to the full amount on each of them.

We don’t bank with BNS so we never checked this before. I’m glad I learned about the limits on CIBC/Simplii Financial though. It’s unlikely I’d ever have more than $100 000 in the two banks but better to know now that find out the hard way later that we’re not fully insured!

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Do you keep money at both CIBC and Simplii Financial? Did you know you had to keep the totals across the 2 banks in the different categories under $100 000 each? Please share your experiences with a comment.

 

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

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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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Do you remember when Canada Trust was not part of TD? Please share your memories of other trust company takeovers with a comment.