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Those who buy GIC, what was the maximum interest rates of 5 year GIC you have seen since 2008?
Looks like my highest were these ones, issued before rates were slashed
Scotia @ 4.60% issued 2008-02-06
Scotia @ 4.50% issued 2008-08-01

If I start after the central bank rates were cut to near zero, the next highest I had was Assiniboine Credit Union @ 3.10%

It looks to me like we now have the highest GIC yields since the start of the financial crisis in late 2008, when rates went to zero. That's pretty amazing already.
 

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I think we're getting near the point where guaranteed, risk-free returns start to make the risky returns of stocks look bad. In theory, stocks should actually outperform inflation, not just match it, but it's hard to imagine this happening in the short term.

Personally, I will start scratching my head when I see GICs at 5%. Should I dump new money in my index funds, or just buy a GIC? 🤔 I guess the correct answer will be to follow my asset allocation plan, but man... investing can be hard sometimes.
 

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The day that GICs reach 5% and people start selling their stocks to buy those GICs, I'll happily buy those stocks during that dip.
 

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I think we're getting near the point where guaranteed, risk-free returns start to make the risky returns of stocks look bad. In theory, stocks should actually outperform inflation, not just match it, but it's hard to imagine this happening in the short term.
It depends on interest rates and that is the point of increased interest rates, i.e. to take money out of the system and to do it on a positive real rate of return basis. While corporations can increase prices most of the time due to inflation, their cost of debt climbs as well and their margins get squeezed. They become worse off on a net basis and profits stagnate, if not decline. That makes fund flows to bonds and GICs more attractive.

My take is central bankers are going to have to raise rates considerably more at least temporarily from now through probably 2023 to whack-a-mole the inflation rate.
 

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My take is central bankers are going to have to raise rates considerably more at least temporarily from now through probably 2023 to whack-a-mole the inflation rate.
Unfortunately there's also politics at play in this (or maybe that's a good thing?)

Especially in the US, the Democrats are losing what little support they have due to the high inflation. So Dem-leaning politicians and economists want the central bank to be more aggressive and extinguish inflation. There's political pressure to raise rates, I think.

I get nervous when political pressures interfere with experts doing their jobs. Maybe it means the Federal Reserve could over shoot and keep tightening even as the economy weakens? They haven't even started reducing their balance sheet yet. The earliest that can begin is June so we haven't really seen the effects of "tightening" yet.

These US matters are important because the Bank of Canada always aligns their policy with the Federal Reserve.
 

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Central bankers are mindful of 'overshoot' but these things are very tricky to manage...much like asking a Panamax to be maneuverable in harbour. They've already been slow to act and while they may be able to keep the horse in the pasture, it has left the barn. I think they will have to apply some stiff short term increases (a few 50bp increases in a row) and then moderate thereafter until they see the effects. They stand to never get on top of it if they are always chasing tail pipes as the car accelerates away. That in my mind would be a worse scenario.

Nothing in today's economy and the surges in inflation and ultimately interest rates is good for the Dems in the mid-terms. The incumbent is always blamed for what is wrong/hurting. Add Biden's bumbling of the Ukraine situation (shut up already to avoid more damage), the Dems are on point to get slaughtered this Fall.
 

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On the evolution of the rate increases in this tightening cycle I agree with @AltaRed - my base case - through to July meetings - a steady series of rate increases and implementation of QT. Then a pause followed by a big reveal by the Fed at Jackson Hole with expectation through to year end.
 

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We have some RESP money sitting in account from a broken GIC ladder from December. The fund is approximately 50% VEQT 50% fixed. I was going to transfer transfer the funds over to my DIY account and buy VBAL going forward. Now that various quarterly rungs have expired rates have started to climb. I am considering rebuilding the ladder. Will likely put half available cash into a 5 year ladder now and the second half into another ladder in the fall.

Investments | Wyth

The 1 year is now sitting at 3% and the 5 year at 4%. I could likely eek outa .25% by moving institutions but for the difference it isn't worth the hassle.
 

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We have some RESP money sitting in account from a broken GIC ladder from December. The fund is approximately 50% VEQT 50% fixed. I was going to transfer transfer the funds over to my DIY account and buy VBAL going forward. Now that various quarterly rungs have expired rates have started to climb. I am considering rebuilding the ladder. Will likely put half available cash into a 5 year ladder now and the second half into another ladder in the fall.

Investments | Wyth

The 1 year is now sitting at 3% and the 5 year at 4%. I could likely eek outa .25% by moving institutions but for the difference it isn't worth the hassle.
Depending on when the children will take withdrawals - if they are in the next five years - you could consider matching each annual withdrawal date with a maturing FI instrument and doing away with the ladder altogether. Eg each September a maturing FI security. You would then have a hedging portfolio and return seeking portfolio. The hedging portfolio, being 100% FI and held to maturity would have minimal interest rate risk (only on the reinvestment of the interest payments received). And the return seeking portfolio can be fully optimized for growth (subject to your risk tolerance).
 

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It's like you read my mind @Covariance Withdrawal start is likely 6 years away. This should give some flexibility in creating an education cash wedge. As part of the rebalancing I will likely add VBAL to the equity side as well as we move closer to withdrawal time. I would have liked to have had this account weighted to more risk when it was first started but as it was a joint decision we went with a more conservative portfolio initially. Unfortunately, my wife has become less risk averse just in time when interest rates start climbing. :p

Regardless the government matching makes for an exceptional return.
 

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I couldn't find the thread, but someone asked... why would anyone buy a GIC?

Take a look at the market today, and the last few months, and maybe it will be more clear why GICs can be useful. Guaranteed positive returns with no volatility.
 

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Why would I invest in a GIC? | Canadian Money Forum

I believe this is the thread that you were seeking. Days like today will definitely result in calls to advisors and posts about should I sell. I made a lot of buys in the past 6 months and some are flat a few are up and most are down. I am not concerned as this too shall pass. I do have some cash sitting in account that was set to lock into some GICs with my bank waiting for a rate match. Should the market see a few more days in a row like today I will definitely look at putting them into equity instead.
 

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Here's my historical GIC rate data. These are the highest 5 year GIC rates I found, from big bank issuers only, at my discount brokerage. Sampled at random intervals.

The run-up you see in 2018 was the previous rate-hiking attempt by central banks. As you might recall, it caused problems and they quickly abandoned that plan and slashed rates again.
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