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Discussion Starter #1
I am new to investment. How do you rate Stock Market GIC such the one offered by HSBC BANK?
COMMENTS HIGHLY APRECIATED.
IMARK
 

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I would never recommend an index linked GIC. The reduction in interest you earn will always be more than the prospective risk the bank faces. Ask why you want this product?

If you think stocks will rise, then open broker account and buy an ETF directly. Or use TD's e-funds if you don't have much money (essentially low-fee index mutual funds - (I don't have any direct knowledge just the posts on these boards)).

If you want protection of your principal buy the straight GIC. Learn how to calculate the interest rate of a progressive GIC here. Or split your money 50:50.
 

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Discussion Starter #5
thank you Leslie

I would never recommend an index linked GIC. The reduction in interest you earn will always be more than the prospective risk the bank faces. Ask why you want this product?

If you think stocks will rise, then open broker account and buy an ETF directly. Or use TD's e-funds if you don't have much money (essentially low-fee index mutual funds - (I don't have any direct knowledge just the posts on these boards)).

If you want protection of your principal buy the straight GIC. Learn how to calculate the interest rate of a progressive GIC here. Or split your money 50:50.
Yes I have to agree that it will need a great recovery next 3 years to make this product viable and I don't expect that.
I am really stuck with my life earnings (cash) and can not find a secure way to bring me some income more than the low interest rate offered presently by bank:confused:
 

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Yes I have to agree that it will need a great recovery next 3 years to make this product viable and I don't expect that.
I am really stuck with my life earnings (cash) and can not find a secure way to bring me some income more than the low interest rate offered presently by bank:confused:
Split them 50/50 or 60/40 or whatever your risk tolerance is.
Then with one portion buy a best possible GIC and invest the other portion into a low fee broad market ETF like XIU or XIC.
Those index linked GICs are garbage.
 

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If you want to guarantee your principal, but also get a bit into stocks, then you could buy a standard GIC and invest the interest you will make on the GIC or bond into the market.

So for a simple example, say you have $100,000 to invest and want to ensure that you at minimum have $100,000 after a year. Then buy about $98,xxx in a 2% GIC and invest the ~$2,000 in the market. This is a do it yourself market indexed GIC. Even if you loose 100% of your market money, you will still get your 100K back at the end of the year. :)

Not too attractive given today's GIC rates, but still an interesting concept.
 
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