[AltaRed]

My recollection is per post #398 but I agree one needs to specifically ask their brokerage of their process. It may differ between registered and non-registered accounts

In the case of RBC DI back in 2015, upon specific request from the Executor (me), GICs in a non-registered account were matured with accrued interest and paid out as cash to the beneficiaries. RBC did charge $100 admin fee per GIC for the privilege. The other option is to direct the brokerage to sell on the secondary market BUT this is a very risky proposition. There are normally heavy discounts in the secondary market.

 

[OneSeat]

OK - as usual thank you all for your various replies.

The BMO-IL GIC expert just called back - apologised for her delay and said
- GICs with less than 1-1/2 years to maturity would be liquidated and the money credited to the beneficiaries
- other GICs would be transferred to My Estate Account until maturity - which we certainly do not want.

I will now approach other GIC providers to see what their terms are.

Any alternative investments to suggest?
- more equities + more HISAs for rainy days?

 

[AltaRed]

I don't know what you mean by "GIC providers" but I am assuming you mean the brokerage itself that is the custodian (holder) of the GICs rather than the issuers of GICs. At some level, the individual GIC issuers like Home Trust, BNS, CT Bank, Equitable Bank might be amenable to intervening (with crystallization) to a death. All they would need to do is issue a 'maturity notice' to BMO IL and BMO IL would act on their instructions. Remember BMO IL is simply the order taker. They don't lay out the T's and C's for the GICs themselves.

When Desjardins closed Zag Bank, they issued instructions, in my case to Scotia iTrade, on how to mature and pay out outstanding GICs and interest. It was a good deal in that case.....full interest owing to date of maturity.

You will always find some estate issues with holdings/securities that don't have good liquidity. Bonds are better but one takes a haircut on them to some extent because the only buyer is the brokerage's bond desk and one has to sell into their Bid price posted.That is the benefit of bond ETFs over both individual bonds and GICs.

As an aside, I am in the process of dismantling the 5 year bond/GIC ladders for myself, my spouse and my ex-spouse in our RRIFs and substituting VCNS as a proxy (VCIP is an option too). We are in our early/mid-70s and I do not want a POA or an Executor to have to deal with crystallizing a bond/GIC ladder upon any of our deaths. It is much easier to sell VCNS or VCIP into the market instead. We will be done with our ladders sometime in 2024-2025.

 

[Covariance]

OK - as usual thank you all for your various replies.

The BMO-IL GIC expert just called back - apologised for her delay and said

• GICs with less than 1-1/2 years to maturity would be liquidated and the money credited to the beneficiaries
• other GICs would be transferred to My Estate Account until maturity - which we certainly do not want.

I will now approach other GIC providers to see what their terms are.

Any alternative investments to suggest?
- more equities + more HISAs for rainy days?

Were they clear in regard to what liquidation meant? IE you receive accrued interest to date of liquidation, or you just get your original investment back (without interest)? And any fees?

The treatment on greater than 1-1/2 to maturity is a transfer in kind which I have seen TD do.

 

[OneSeat]

You will always find some estate issues with holdings/securities that don't have good liquidity..................
I am in the process of dismantling the 5 year bond/GIC ladders in our RRIFs and substituting VCNS ..................

Were they clear in regard to what liquidation [of GICs] meant?
The treatment on greater than 1-1/2 to maturity is a transfer in kind which I have seen TD do.

Thanks both for your information - all helps to clear my mind on this significant subject. I have now decided not to buy any more GICs and hope that we both outlive the oldest current one (4-1/2 years). The money will go into stocks or Asset ETFs - and we will be buying them progressively as the GICs mature. Being able to "liquidate tomorrow" is a worthwhile relief.

 

[Flugzeug]

Bought a 3 year BNS GIC @ 3.3% today. It was higher than both the 4 and 5 year best rates on RBC DI which were 3.13% and 3.21% from Equitable Bank.

 

[Covariance]

Bought a 3 year BNS GIC @ 3.3% today. It was higher than both the 4 and 5 year best rates on RBC DI which were 3.13% and 3.21% from Equitable Bank.

Yes. It's inverted between those two terms. The 5 year rate (3.1) is below the 3 year at the moment (3.3)

 

[cainvest]

Rates keep climbing, 3.45 for 5 year .. about the same for 3 year.
1 year around 2.3.

 

[james4beach]

So exciting! Anyone think we'll see 4% GICs this year?

 

[m3s]

So exciting! Anyone think we'll see 4% GICs this year?

Why not

It's certainly less than inflation

 

[Covariance]

So exciting! Anyone think we'll see 4% GICs this year?

Yes I do.

 

[MrBlackhill]

So exciting! Anyone think we'll see 4% GICs this year?

Why not

It's certainly less than inflation

So depressing! Anything think we'll see 6% inflation this year?

 

[james4beach]

So depressing! Anything think we'll see 6% inflation this year?

Maybe those of us who think it's depressing are working in the wrong industries.

Banking & finance likes inflation. So do high paid executives. CEOs sometimes have targets to hit (before they get paid their millions), like share price. Inflation helps achieve these metrics and can help milk $$ out of the public company. Much easier to hit your share price target when there's a 6% annual tail wind.

Executives also keep increasing their own pay, while refusing to increase the pay of regular workers. So very wealthy people can easily handle high inflation... it's really no big deal.

Those who issue and trade securities, asset managers, and middle men, bankers also like inflation because it results in greater velocity and more action (generally) giving them a chance to take more in fees. Plenty of opportunities to milk $$ out of the hands of the public.

 

[Covariance]

For those abandoning their ladders. It's worth remembering that rebalancing is a discipline. And it is tested the most when the crowd is doing something else. IE it becomes increasingly contrarian. Falling back to the goals helps. A ladder is a really effective tool to address structural risk in a fixed income portfolio, and to manage to a target duration.

 

[m3s]

Maybe those of us who think it's depressing are working in the wrong industries.

Banking & finance likes inflation. So do high paid executives. CEOs sometimes have targets to hit (before they get paid their millions), like share price. Inflation helps achieve these metrics and can help milk $$ out of the public company. Much easier to hit your share price target when there's a 6% annual tail wind.

Executives also keep increasing their own pay, while refusing to increase the pay of regular workers. So very wealthy people can easily handle high inflation... it's really no big deal.

Those who issue and trade securities, asset managers, and middle men, bankers also like inflation because it results in greater velocity and more action (generally) giving them a chance to take more in fees. Plenty of opportunities to milk $$ out of the hands of the public.

Yes inflation is also great for the government

They tax capital gains and income even if the real return is negative. So you pay income tax on your 4% GIC even if the real return is negative. Ingenious scheme

Inflation is also good for those in debt or borrowing to invest because the value of the debt decreases. Inflation is only bad for the responsible savers who didn't irresponsibly borrow to invest

It's mostly bad for the middle class. Particularly the responsible middle class saver

 

[Covariance]

Yes inflation is also great for the government

They tax capital gains and income even if the real return is negative. So you pay income tax on your 4% GIC even if the real return is negative. Ingenious scheme

Inflation is also good for those in debt or borrowing to invest because the value of the debt decreases. Inflation is only bad for the responsible savers who didn't irresponsibly borrow to invest

It's mostly bad for the middle class. Particularly the responsible middle class saver

Inflation most severely impacts those who can not save because they need to spend all of their income on living expenses. Their standard of living goes backwards. When it gets really bad they realize they have nothing to lose and build barricades, light things on fire and revolt. They try to overthrow governments. Trust me on this. It's not pretty.

 

[m3s]

They try to overthrow governments. Trust me on this. It's not pretty.

Not according to Chrystia Freeland today quoting Janet Yellen in her budget speech

Money printing is great and increasing money supply is good for GICs. Inshallah

 

[james4beach]

For people who don't like the longer term bond funds, take a look at XSH (short term corporates).

It now has an average yield to maturity of 3.4%. About the same as GICs, but this might be easier for some than managing a GIC ladder.

This is a 3 year term fund. There's just about no interest rate risk involved in this if your time horizon is 3 to 5 years.

 

[OneSeat]

Money printing is great ........................

For those who don't have much.
Not so great for those who have worked hard to get some

 

[james4beach]

Scotia 5 year is now 3.65% (through iTrade)

BoC rate hike coming this week.