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Discussion Starter #1
A (lucky) friend of mine just inherited a large sum (around 350k). She is intending to use the money to help build a home, probably in 2 -3 years from now.

She currently has it parked across several high interest accounts (to stay within CDIC limits), earning approx. 2%. She is curious if there is are better/higher rate of return place for her to park this cash for 2 - 3 years. There are three areas she has been wondering about:
-- "retail/consumer" options

-- would she qualify from anything deemed "high-net" (even though it is only a 350k deposit)

-- or even "commercial/business" options (?) if she were to do it through a broker/advisor.

Obviously she is concerned about security of the funds (e.g. CDIC etc.) and liquidity/being able to access it in a couple years.

Any recommendations from the forum on this? Many thanks.
 

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If she wants liquidity and safety, then she's probably doing the best thing. Otherwise, she may want to shop around for 2-3 year GIC's which may offer a slightly higher rate of return. I'm seeing 2 year GIC's @ 2.6% and 3 year @ 3.0%. As well, GIC rates are negotiable with your banker.
 

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Ally I believe offers a 4% 5 year GIC, but also allows you to call the GIC early and receive part (or all?) of the earned interest. Depending on the penalty, it may be worthwhile to go this route.
 

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There was an article posted here somewhere, about the Ally penalty.....it wasn't much of a penalty...U might be able to use the search to find it.
 

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Discussion Starter #6
There was an article posted here somewhere, about the Ally penalty.....it wasn't much of a penalty...U might be able to use the search to find it.
Thanks for the suggestions folks. The Ally GIC is a bust - if withdrawn early it pays 1.5%, which is lower than many high interest savings accounts right now around 2%

Any other suggestions? She finds it hard to beleive that there are no better alternatives given it is (to her anyway) a very large deposit!
 

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It sounds like your friend is operating under the assumption that there are "special" rules or deals when you get some "serious" money. However, you can't have both security and liquidity (on one hand) and an enhanced return (on the other).

If she really wants to play somewhere in the market, she could slice off a tranche she's willing to lose and play with that. On one hand, she could end up boosting her total return. But on the other (I'm up to four hands in this one post alone!) she could make nothing or even have a loss. Risk and return are inextricably intertwined and if she wants the absence of one (risk) she must accept a corresponding decline in the other (return).
 

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Indeed. My only other suggestion would be to to buy some individual bonds in highly rated Canadian companies, or provincial bonds. You should be able to yield more than 2% for a 3 year term that way. There is ever-so-slightly higher risk doing this (not CDIC insured).
 
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