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Discussion Starter · #1 ·
I joined the forum when I was widowed in 2014, very risk averse, so invested in a GIC ladder. I have been drawing down RRSP/RRIF and adding to TFSA, gifting to kids, travelling before Covid. I have cash sitting at .25% because I am reluctant to lock it in for 5 years at such low rates. I have a defined benefit pension, CPP, OAS and a paid for home. I am looking for an investment to keep up with inflation but low risk. Is that even possible?
 

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Do you have HISA at rates above 1%?
 

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^ My answer to the OP's question is "unlikely".

But more of the question "why would you?" ...as you seem to be financially set with ... drawing down RRSP/RRIF and adding to TFSA, gifting to kids, travelling before Covid. Plus have a defined benefit pension, CPP, OAS and a paid for home.

Ie. why take on more risk(s) than you need to? given where you're at in life.
 

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Ie. why take on more risk(s) than you need to? given where you're at in life.
There should be many options to get better than 0.25% that have no risk for the short term. Even at scotiabank I can get 0.65% in a savings account over a 1 year period.
 

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^ Don't disagree that .65% is better than .25%. But what's the rate of inflation currently? >1% but <2% as per Stats Canada? [Seems more than 2% to me in the real world].

Anyhow, as OP's question was about keeping up with inflation with "low" risk and 5 years GIC is out of the question, sounds to me she would like a more than 1% "low" risk (not risk-free) investment.
 

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Anyhow, as OP's question was about keeping up with inflation with "low" risk and 5 years GIC is out of the question, sounds to me she would like a more than 1% "low" risk (not risk-free) investment.
Looking at ratehub it appears a 1 yr GIC (CDIC insured) can get you into the 1.3-1.5% range but those may not be available directly throught the OPs bank.
 

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Personally, I would buy something like VCIP, which is a conservative asset allocation ETF, or VRIF, which is designed for retirees and generates about 4% per year in income. However, if you really don't want any risk at all, neither of these would be suitable since they both invest in stocks and bonds and there's no guarantee.
 

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To stay ahead of inflation, you need something that will yield over 2%. There are many ways to do this, but as you earn more than GICs are paying, your risk goes up. But with a pension, CPP, OAS and a paid for home, perhaps some risk is tolerable?

You could look at an etf that holds say Canadian Bank stocks. The value of the etf may fluctuate or even drop if interest rates rise. But you will still get the yield based on your initial investment (they seldom cut dividends) and you may get some growth in the etf value.

Another option would be preferred shares. Rather than choose them, perhaps an ETF like ZPR. It too will likely lose value if interest rates go up. But it will be re-investing in new preferreds so may eventually catch up.

A bond fund might be something similar, although yield might be lower than preferreds.

For better GIC yields, you have to go outside of big banks. Not always that easy (but not impossible) if your RRIf is with your bank. Here are some GIC rates. 5yrs are over 2%!

Good Luck
 

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At the very least move monies to an on line bank like EQ. Today, CIBC pays 1/2 percent on our small eSavings account. EQ bank pays 1.25 percent. It takes about 3 key stokes for us to move any monies over to EQ.
 

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Discussion Starter · #12 ·
Thanks for replies. I consolidated my banking to BMO as I wanted to streamline my assets and make it easier for my children (and me). I know that is not always the most profitable. I will take a look at the ETF suggestions.
 

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I'm in the EQ group. Got tired of the low interest at the banks. Opened EQ several years ago when it was much better interest and just moved spare cash there as it was easy access. There have been several juicy short term GIC's along the way and it's so easy. Rates are currently very low but much better than a brick and mortar bank. You can link it to your BMO bank account and easily move funds back and forth. There's usually an intro bonus of $20 if you get a referral from a friend or family member too....who doesn't want free cash ?
 

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The only money we have in our bank is day to day monies in a seniors cheque account (free) plus a very small eSavings account. We transfer all monies to EQ. We moved everything away from the bank. Low interest rates, high fees, poor service.

We do not have any term deposits. Rates should go up soon but our inflation rate means that we essentially loose money on every dollar in our bank.

IF you are looking at funds, especially from the bank, pay close attention to the MER, ie the management percentage fee.. Bank advisors like to recommend those funds with high MERS. That is how they get goaled. They love to place you in funds that have a 2 or 3 management percent fee. They get paid before you do.
 

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First of all, congrats Emma on doing well since a devastating time....re: drawing down RRSP/RRIF and adding to TFSA, gifting to kids, travelling before Covid, etc.

Have you considered a small cash wedge? I.e., putting your cash in a savings account (EQ Bank, etc.) getting 1%+ and then investing in a balanced fund thereafter?

It could mimic your "defined benefit pension" and you could certainly keep up with inflation longer-term vs. GICs.
 

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The banks are sneaky, well ours is ? Any time we want to change an account or add anything, they make it so difficult and tell us we have to make an appointment to see an advisor. What a joke, We told them a few years ago that I handled our own investments and wasn't interested in their savings plans because they are so low. I think they see our investments and transfers etc and think they can keep trying.
 

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Discussion Starter · #17 ·
I am assuming I would need to open both a TFSA and a RRIF account with EQ?
 

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No. We only have a HISA, high interest daily savings accounts at EQ-individual and joint. Have no idea about the transfer costs at your institution.

We did however decide to move my our TFSA's away from CIBC a few years ago.

There was a service charge of $150. per TFSA if we transferred to another financial institution. There was no fee if we simply cashed it and deposited the monies in our account. This is what we did.

We waited to do this until mid December. Then, in January placed that cash in another TFSA. Saved us $300 in fees and took 10 minutes.

The bank did not volunteer this information......it was buried in their on line TFSA data sheet.

We stopped dealing with our bank years ago-with the exception of a no charge seniors cheque account, a very low balance HISA, and a safety deposit box. Their service charges were incredibly high, their interest rates were low, their investment advice was poor.
 

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There was a service charge of $150. per TFSA if we transferred to another financial institution. There was no fee if we simply cashed it and deposited the monies in our account. This is what we did.

We waited to do this until mid December. Then, in January placed that cash in another TFSA. Saved us $300 in fees and took 10 minutes.
Most of the brokerages reimburse the transfer out fee and offer various promotions too. I transferred from TD to Questrade a couple of years ago and received around $750 including transfer out fee.
 

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Most of the brokerages reimburse the transfer out fee and offer various promotions too. I transferred from TD to Questrade a couple of years ago and received around $750 including transfer out fee.
Yes. RBC Direct reimbursed us the $700. fee that National Bank charged us when we moved our equity accounts. All we had to do was ask beforehand.

It is surprising what you can get when you simply ask. Better rates, upgrades at hotels, etc, discounts, you name it. Never be shy to ask. The worst possible outcome will be a polite no.
 
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