Five things GIC investors need to know

by Rob Carrick

Owning guaranteed investment certificates is kind of like watching paint dry.

That’s the point, right? Zero drama.

But the lack of excitement with GICs also works against them. Although there are some ins and outs to GIC investing, they get little attention in an investing universe that cares mainly about stocks and bonds. Let’s fix that, with a list of five things GIC investors need to know.

1. Credit unions are beating the banks

McVay and Associates, a consultant to the financial industry, says bank market share for GICs has fallen by 4.6 per cent over the past five years, with credit unions benefiting most and trust/mortgage loan companies next. Banks aren’t competing much on rates, and so investors are increasingly going elsewhere.

Big bank five-year GICs were going for 1.75 to 2.3 per cent this week; credit unions, trust companies and online alternative banks were widely offering at least half a percentage point more. Unless they offer premium rates, small players like credit unions have trouble competing against banks in the GIC business. Keep in mind that money raised through the sales of GICs is lent out in the form of mortgages. Without a brisk GIC business, a lender can’t be a player in mortgages.

McVay and Associates says the two financial institutions making the biggest gains in GICs are Home Trust and Equitable Bank, both of which are mortgage lenders. Home Trust was advertising a 2.9-per-cent rate on its website this week, while Equitable Bank offered 2.91 per cent.

2. Not all deposit insurance plans are created equal

Canada Deposit Insurance Corp. is a federal Crown corporation that protects member bank and trust company deposits for up to $100,000, including GICs with terms of five years or less. Find a list of CDIC members online at cdic.ca/Pages/Members.aspx.

Credit unions have their own provincial deposit insurance plans and they vary in how they operate. Of particular interest is the plan in Manitoba, where several credit unions operate online banking divisions offering premium rates on GICs and high interest savings accounts. Examples are AcceleRate Financial, operated by Crosstown Civic Credit Union; Achieva Financial, operated by Cambrian Credit Union; and, Hubert Financial, run by Sunova Credit Union.

The Deposit Guarantee Corp. of Manitoba (DGCM) exceeds CDIC by providing unlimited protection of deposits at credit unions and their online banking divisions. But because DGCM is not part of the Manitoba government, the strength of the protection it offers is not quite at the level of the federally backed CDIC. Note that your deposits in Manitoba credit unions are protected regardless of what province you live in.

When selling GICs from Manitoba-based credit unions, deposit broker GIC Wealth Management takes special steps to ensure clients understand their deposit insurance. “We have them acknowledge and sign a waiver that it isn’t government-insured,” said Brandon Brot, a partner at the firm.

If you’re considering a GIC from any credit union, visit its website first to check out the details of its deposit insurance plan. Some of these plans – Ontario and Alberta, for example – are provincial government agencies or have government backing.

3. Deposit brokers can get you top rates

Deposit brokers offer much the same type of service as mortgage brokers – they survey a wide range of financial firms for the best rates available and they handle the paperwork for you. Deposit brokers are paid directly by GIC sellers and their compensation is pegged to the amount invested and the term. Customers of deposit brokers pay nothing out of pocket.

Here’s an example of why consulting a broker is worthwhile. Early this week, the brokers at GIC Wealth Management were offering five-year GICs in the 3.15-per-cent range from Home Trust. That’s a better rate than Home Trust advertised on its website.

Mr. Brot, of GIC Wealth, said financial companies looking to raise funds will sometimes reach out to brokers with special rate offers. “Any broker who has been around for quite some time usually has relationships with the institutions.”

Mr. Brot said his firm deals with about 40 different financial institutions. When clients invest $25,000 or more, the firm will make house calls to pick up and deliver documents.

You can find a deposit broker near you using a search engine offered by the Registered Deposit Brokers Association.

4. Deposit brokers are primarily salespeople

The RDBA administers a few designations for the industry, including the Registered Deposit Broker (RDB). But unless a broker has additional accreditation like the certified financial planner (CFP) or registered financial planner (RFP), it’s best to regard him or her as a seller of GICs and not as a financial adviser.

When handing money over to a broker, be sure it’s in the form of a cheque made out to the financial firm you’re investing with. Ultimately, you’re a customer of that firm, not the broker. “If we were to go out of business tomorrow, it wouldn’t impact you because you have a certificate directly with your institution,” Mr. Brot said.

The online broker GIC bid.com works along the same lines – it matches you with the best rate offered by the 10 or so financial firms it works with and then leaves it up to the bank, trust or credit union to finalize the investment with the client.

5. Insurance company GICs are worth a look

Sometimes called guaranteed interest accounts (GIAs), insurance company GICs offer competitive interest rates and an estate planning benefit that makes them particularly attractive to seniors.

Mr. Brot said that upon death, the proceeds from a GIA would be paid directly and without penalty to a designated beneficiary. This money would not be part of the deceased person’s estate, and it would not be subject to probate, legal and other legal estate fees. Should you want to discreetly leave money to someone after you die, GIAs are an option.

If an insurer is a member of Assuris, the policyholder protection agency for the insurance industry, its GIA deposits are covered for amounts up to $100,000.

http://www.theglobeandmail.com/globe-investor/personal-finance/household-finances/five-things-you-should-know-about-gics/article14935982/#dashboard/follows/

Warren Bevan

http://www.kereport.com/2013/05/18/metals-minerals-investment-conference/
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The Global-Warming Panic Is a Distant Memory

By Robert Prechter, editor of The Elliott Wave Theorist

A non-event that recently had the media buzzing was the dearth of discussion of the global-warming issue during the presidential debates, not to mention nearly everywhere else on earth over the past year.

This is another social change predicted in The Elliott Wave Theorist in the face of vicious opposition. This excerpt highlights the key points:

Sometimes scientists herd as much as investors do, and this study [by NASA] appears to be a case of extreme expression following a long-established trend. I am not a climatologist, but I am a student of manias and herding, and that is what the global-warming craze appears to be about.

My purpose here is not primarily to make a case against man-made global warming. My primary intent is to take a look at the question from the point of view of a social psychologist to decide whether it appears to be the result of hysteria. The points above establish that there are two sides to the global-warming question. Yet only one has captured the public's imagination (and I choose that word consciously). The global-warming scare is highly reminiscent of the Alar scare, in which Congress called upon the expertise of movie stars; the ozone-depletion scare and the acid-rain scare, which have all but vanished; the claim that pesticides were making frogs lame (it turned out to be a virus); the rash of reports of devil worshippers, who were never found; the national child-care molestation hysteria, which turned out to be almost entirely contrived; the panic in Europe over poison in Coca-Cola; and any number of like manias. Hysteria often signals the end of a trend.

There is powerful evidence of herding at the social level on the global-warming issue. Commentary on the subject is even selling theater tickets. And like all past social trends that were ending, there is a rush to extrapolate. The temperature data from which modelers at NASA derive their extrapolations are scant, the projection is extreme, and their tone is strident. When any writers, including scientists, extrapolate 29 years' worth of temperature data to predict an imminent apocalypse of biblical proportions in an environment of waxing social focus, rising panic, and calls for government obstruction, one must acknowledge the likelihood of social-psychological forces behind such a report and investigate whether the data support the prediction.

The crowd fearing global warming rejects as heretics professors and scientists who challenge all these methods and conclusions, whether they be at MIT or Stanford. Such rejection is akin to what happens near the end of a financial mania, such as the peak of the real estate mania [in 2005], when bears were dismissed as delusional.

GW advocates told me that doubting man-made global warming is akin to denying evolution, but the GW movement has not a little taste of old-time religion in its accompanying admonition of humanity: Man is evil; he is destroying the earth; he is "fouling his own nest," as one scientist on the Web says. Scientists are usually good at their fields but not necessarily at recognizing their own political, moral, and philosophical biases.

One thoughtful scientist took issue with the term "hysteria." But the term applies here to social activity, not the overt behavior of any particular individual. In 2005, when I was speaking about real estate hysteria and warning people against investing in property, people sporting a rather bemused expression would coolly respond, as if instructing an alien who lacked understanding of the way things worked on Earth, "They are not making any more land" and "It's all about location." They would say this with utmost calm. They had thought about it and sifted through the evidence. They were not hysterical but rational and thoughtful. At least, this was the appearance of behavior at the individual level. At the collective level, something else was going on. The number of people participating in the real estate market was unprecedented, and their borrowing, building, and bidding activities, collectively, were extreme.

Advocates of man-made global warming may appear sober as judges individually, but they are participating in a mass movement, complete with press releases, student rallies, pop concerts, movie documentaries, and an underlying tone of moral crusade.

I think the current frenzy over the subject is probably a symptom of peaking cycles in both climatic temperature and social psychology. But unfortunately 70 years from now most of us won't be around to know the answer. What I expect, based upon observing mass movements, is that this fear, too, will go away.

–The Elliott Wave Theorist, June and July 2007

http://www.caseyresearch.com/cdd/how-to-spot-a-market-top

waltzing matilda

"Waltzing Matilda" is Australia's most widely known bush ballad. A country folk song, the song has been referred to as "the unofficial national anthem of Australia".

The title is Australian slang for travelling by foot with one's goods (waltzing, derived from the German auf der Walz) in a "Matilda" (bag) slung over one's back. The song narrates the story of an itinerant worker, or "swagman", making a drink of tea at a bush camp and capturing a sheep to eat. When the sheep's owner arrives with three police officers to arrest the worker for the theft, the worker commits suicide by drowning himself in the nearby watering hole, after which his ghost haunts the site.

The original lyrics were written in 1895 by poet and nationalist Banjo Paterson. It was first published as sheet music in 1903. Extensive folklore surrounds the song and the process of its creation, to the extent that the song has its own museum, the Waltzing Matilda Centre in Winton, Queensland. In 2012, to remind Australians of the song's significance, Winton organised the inaugural Waltzing Matilda Day to be held on 6 April, the anniversary of its first performance.

The song was first recorded in 1926 as performed by John Collinson and Russell Callow. In 2008, this recording of "Waltzing Matilda" was added to the "Sounds of Australia Registry" in the National Film and Sound Archive which says that there are more recordings of "Waltzing Matilda" than any other Australian song. ~quoted from: Wiki dot org ~waltzing matilda

http://www.youtube.com/watch?v=WgLtzD6JxcA

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Blood Red the Sun

A lesson in bartering, and having the correct currency to barter with.

During the Frog Lake massacre, April 2, 1885 two white women were taken captive. In his book “Blood Red the Sun”, author William Bleasdell Cameron who was at the scene, writes how Adolphus Nolin, a French/Cree Metis set out to save the first woman.

“From other Indians he learned that one of the women was in the lodge of Manichoos, a murderer of the morning, with his Cree wives. Nolin lifted the lodge-flap and entered. He barely glanced at the captive cowering there, dazed by shock and grief, her face deadly pale, her wide eyes mirroring the horror that had overwhelmed her when her beloved husband had fallen dying at her side. It would not answer for the half-breed to appear as the friend of the stricken moonias isquayo. That might jeopardize them both. Instead he said casually in Cree:

“I see you have a white wife now.”

The Indian nodded. “Uh-huh.” He tried hard not to show his elation.

“You are lucky,” Nolin remarked. “Now, look at me, a man part white yet I have no white wife, nor could I get one. No wonder you feel proud.”

Manichoos continued to dissemble; he raised a deprecating hand. “No; it is nothing; I am not proud. What is a wife, more or less, to me? If you want a white wife, buy this woman here.”

Nolin shook his head. “No. I could not buy your woman. You would ask too much. I am poor.”

“She is not young, neither is she pretty,” Manichoos commented. “I would not ask much – two horses, maybe.”

Nolin clapped a hand over his mouth. “There! I knew I could not buy her. Two horses! That is a fearful price. I have only one horse. I will pay that for her.”

Manichoos was not in the mood to haggle. “Two horses,” he insisted stolidly.

Nolin rose. “Tesqua. Wait a little. Perhaps I can get another horse.” Leaving, he spoke for the first time to the captive. “Take courage! You shan't be harmed. I'll be back and you'll be taken away from this cur.” He hurried back to Pritchard. “It's Mrs. Delaney, Johnny. Manichoos has her. He wants two horses for her and won't look at my pony.”

Pritchard's answer was prompt. “Take one of mine; I've two. And don't lose any time getting her over here. He might change his mind. Or one of the other swine might buy her.”

- end quote.

“Blood Red the Sun” can be read here. I quoted from “The rescue of the white women”.

http://www.ourroots.ca/toc.aspx?id=12317&qryID=9997125b-b4db-456e-8b75-c3fb3dd1e180
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misc.

Markets, gold, bonds

Jim welcomes back noted technician Charles Nenner this week. Charles sees a new stock market high into late April or early May. He also sees the economy picking up until the end of the year, but risk is also rising as well. Charles sees late April as a high risk period for the markets in terms of a correction. He is also very bearish on bond funds, and urges investors to get out of them as soon as possible. Charles is also out of gold in the short term, as he sees a rally in the US dollar ahead.

http://www.financialsense.com/financial-sense-newshour/2013/03/16/charles-nenner/bond-funds-get-out-while-you-can

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