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Discussion Starter #1
A good few years ago I bought a series 18 Canada Premium Bond, and as I'm now in the anniversary period, I was planning on cashing them in (since I know how an investing portfolio/strategy set up).

Except that according to my statement, I earned 5% interest during 2009. 5% is a pretty decent return that's probably better than what I'm getting in the bond portion of my portfolio, so now I think that it may be worthwhile to just let them mature. Of course, my real question is why was the interest rate 5%?

On the rates table on the Canada savings bonds website, it lists the interest rate for series 18 bonds at 1.75% for 2009, so why are the returns for the bond I hold so much higher? Am I misunderstanding the interest rate table or my statement?
 

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I think the table is confusing, but start at the left and figure out when each anniversary date was and it will make sense. The P18 series was issued Feb.1, 2001, and the interest columns are "for the year beginning in ___ based on the issue date." So under 2008, you will find 5%, which was for the year beginning Feb.1, 2008, but running to Feb.1, 2009. Since it was paid in 2009, it is 2009 income.
 

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Thanks, I get it now. If I leave it in I'll be getting 1.9% over the year until the Feb 1, 2011, when it matures. So redeeming it would probably be a good idea, although considering that it could likely spend most of the year in cash, it may not matter hugely.
 

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If you don't mind locking it up you could put it into a 5-yr. GIC at a higher return. But with everyone predicting interest rates are going to increase one hates to lock the money in.
 
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