Tag Archives: GICs

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.

How Much Money Will I Get at Various Rates for GICs and Dividends

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For many people, high school is a long time ago and math was never their favourite subject. Here’s a quick refresher to show how much money you will earn on money in a bank account, in a GIC or from dividends if you know the annual rate.

Rates Bank Advertise for Bank Accounts and GICs

If you go to a bank website, like at Tangerine.ca, you can see a list of the rates they pay for GICs and bank accounts. It is listed as a percentage, like 1.4%. The rate is how much money they pay for a year. Even though it may be a daily interest account, you won’t earn the advertised percentage unless you money stays in the investment for 365 days. This article will tell you how much money you would earn at that advertised rate on your savings.

Yields (Rates) for Shares or Stock in a Company

If you buy a share of a company in the stock market, it may pay a dividend. That’s a cash payment that may be paid once a month, once every three months, or once a  year. No matter which way they pay, they usually quote how much the dividend is per year as a percentage.

For example if you buy shares in Bell right now the dividend is about 5%. This article will also tell you how much money you would earn with a dividend of 5% based on the number of dollars of shares that you bought. For example, if you bought $2500 worth of shares, you would look below to see how much money the dividend is in the “you will get paid” column for $2500 at the percentage rate quoted for your dividend.

The maximum you can put into your TFSA for 2014 and beyond is $5500 a year, which is why I’ve included that amount in the tables below.

How Much You Will Earn per Year at 5% Annually on Your Bank Account, GIC or Dividend Stock

If the rate is 5% per year and

you invest you will get paid
$100 $5
$500 $25
$1000 $50
$2500 $125
$5000 $250
$5500 $275

If it’s a daily interest bank account you will actually get slightly more because you will get paid interest on the interest as well.

How Much You Will Earn per Year at 4% Annually on Your Bank Account, GIC or Dividend Stock

If the rate is 4% per year and

you invest you will get paid
$100 $4
$500 $20
$1000 $40
$2500 $100
$5000 $200
$5500 $220

If it’s a daily interest bank account you will actually get slightly more because you will get paid interest on the interest as well.

How Much You Will Earn per Year at 3% Annually on Your Bank Account, GIC or Dividend Stock

If the rate is 3% per year and

you invest you will get paid
$100 $3
$500 $15
$1000 $30
$2500 $75
$5000 $150
$5500 $165

If it’s a daily interest bank account you will actually get slightly more because you will get paid interest on the interest as well.

How Much You Will Earn per Year at 2% Annually on Your Bank Account, GIC or Dividend Stock

If the rate is 2% per year and

you invest you will get paid
$100 $2
$500 $10
$1000 $20
$2500 $50
$5000 $100
$5500 $110

If it’s a daily interest bank account you will actually get slightly more because you will get paid interest on the interest as well.

How Much You Will Earn per Year at 1% Annually on Your Bank Account, GIC or Dividend Stock

If the rate is 1% per year and

you invest you will get paid
$100 $1
$500 $5
$1000 $10
$2500 $25
$5000 $50
$5500 $55

If it’s a daily interest bank account you will actually get slightly more because you will get paid interest on the interest as well.

How Much You Will Earn per Year at 0.25% Annually on Your Bank Account, GIC or Dividend

Some bank accounts have really low interest rates. I know some actually pay only 0.25% a year.

If the rate is 0.25% per year and

you invest you will get paid
$100 $0.25
$500 $1.25
$1000 $2.50
$2500 $6.25
$5000 $12.50
$5500 $13.75

If it’s a daily interest bank account you will actually get slightly more because you will get paid interest on the interest as well.

How to Calculate How Much Money You Will Earn in One Year for any Rate and any Investment

You can calculate how much money you will earn in one year using a calculator and the following math:

  1. Type in the interest rate or the dividend yield. For example, for a rate of 3.25% type in: 3.25
  2. Press the divide ÷ or / key.
  3. Type in 100.
  4. Press the Enter or = key.
  5. Press the times * or x key.
  6. Type in the amount you have invested. For example, type in: 5500
  7. Press the Enter or = key.

For this example you would type:
3.25 / 100 = x 5500 =
and get
178.75
which means $178.75 is the amount you get for investing $5500 at 3.25% for one year.

You can see why it’s a good idea to save a lot for retirement!

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Have you ever thought you were getting $80 a year and then found out it was $8? With interest rates so low, it can be a real shock!